Lead Forensics
New Podcast with Renaud Guidée, CEO, AXA XL


Technology focus – digital transformation and reinsuring cyber

04.03.24 AdvantageGo

The latest Voice of Insurance podcast featured Renaud Guidée, chief executive of AXA XL Re. He spoke about the reinsurer’s risk appetite and the market’s technological journey.

Ongoing technological transformation in the re/insurance market was a focus of conversation in the latest episode of the Voice of Insurance podcast, with AXA XL’s CEO, Renaud Guidée, as guest.

With executive experience in investment banking at Goldman Sachs and with a challenging AXA Group role as chief risk officer already under his belt, in his current role as AXA XL’s chief executive, Guidée is responsible for a $2.5bn global premium base.

He underlined the enduring role of human judgment, decision-making and relationships, despite the widespread digital change going on among re/insurance firms, in the London market and globally.

“Do I believe that our whole industry will become fully automated and underwriter-less? Certainly not,” he said. “I do believe that there will always be room for human connectivity and human judgment – relationships do matter,” he said.

“We need to strike the right balance and to make sure that technological progress comes as a support and not a substitution to our knowledge or insight and judgment provided by our decades of experience in underwriting,” said Guidée.

It is impossible to have a client-centred strategy without human relationships at the core, he emphasised.

Getting faster through automation will perhaps not change reinsurance’s nature, veteran re/insurance journalist and host Mark Geoghegan suggested – contrasting this with Guidée’s investment banking experience and that industry’s adoption of high frequency trading – the host suggesting “day trading cat risk” was unlikely to take off.

“We’ve seen a transformation of the securities and capital markets industry, but when it comes to insurance, not all papers have the same quality,” Guidée said, making it impossible to “allocate capacity blindly” with a high frequency machine learning algorithm.

“There’s so much differentiation, despite a shallow appearance of sameness, between the robustness that reinsurers can provide, that you can’t move full blown to something automated and formulaic. That being said, there’s progress to be made from the starting point we’re at now, in terms of transparency of price discovery and efficiency of capacity allocation,” Guidée added.

A few years ago AXA made a statement that it wanted to rein in its property catastrophe risk exposure, which has been the lifeblood of the AXA XL part of the business, since the XL Catlin acquisition in 2018.

Guidée said the segment was “probably overweight and underpriced”, something the firm had in common with many other insurers. The process is now complete, he revealed.

“What we did was right-sizing that business, recalibrating its share in our portfolio,” said Guidée. “All of that effort is behind us, and we are very happy with the business that we have now in our portfolio.”

Conversation moved to cyber re/insurance, in hot demand, the fastest growing class of insurance in the world, Geoghegan noted. Reinsurance capacity has been a concern to support the cyber market’s continued growth, he suggested, but that the market had reached “a level of maturity”.

“It’s maturing, I’m not sure if it’s matured,” Guidée said. “Cyber is a good example of what our industry is about. It’s about harnessing innovation. And it’s about the alignment of interests between insurers and reinsurers… it’s about the individual risk, it’s about the wordings, the terms and conditions, the risk selection.”

Cyber insurance still lacks “hindsight on the loss history”, compared to models for hurricane. New regulations, such as rules set by the US Securities and Exchange Commission, are also helping force firms that fall victim to cyber-attacks into fuller disclosures, he referenced.

“What is important is that we can get data transparency, so that we can build for the benefit of the broader economy and society, a record of incidents,” said Guidée.

Improving data will help underwriters better assess what the loss distribution profile for the product class, leading to better risk selection and pricing decisions. Guidée’s comments emphasised the importance of careful reinsurance risk selection for cyber.

“We are happy to support our clients provided we are comfortable with the approach to underwriting and the controls and the risk management framework that they have in place,” he added.

Latest Insights