Large loss events extend loss development profiles: AXIS

Large loss events tend to extend the loss development profiles for property classes in years where events occur, relative to years with comparatively benign catastrophe activity, according to AXIS Capital Holdings.

Communicating its loss development triangle data for 2002 to year end 2018, AXIS reported adjustments to its ‘loss triangles’ from specific catastrophes. The most recent were the Atlantic hurricanes of 2018, namely Hurricanes Florence and Michael, Typhoons Jebi and Trami, and the Californian Wildfires and aggregate treaty losses in the same year.

Loss development triangle data tracks how claims, both known and unknown, change over time and includes accident year summary exhibits, on a gross, ceded and net basis, as well as written and earned premiums, among other financial information.

“While not exhaustive, we consider that these events may lead to altering of development profiles for their respective accident years,” the document said.

The report highlighted the Atlantic hurricanes of 2017, Harvey, Irma and Maria, and the Mexican earthquakes, as well as the Californian wildfires and aggregate treaty losses that year. It also pointed to the Japanese earthquake and tsunami and SuperStorm Sandy in 2012, the 2011 February New Zealand earthquake, the 2010 earthquakes in Chile and New Zealand, the 2008 Atlantic hurricanes Ike and Gustav, the 2005 Atlantic hurricanes Katrina, Rita and Wilma, and the 2004 Atlantic hurricanes Charley, Frances, Ivan, and Jeanne.

Year end 2018 figures for AXIS reinsurance business showed a total net reserve of $5.3 billion, with an IBNR of $3 billion, meaning IBNR accounted for 56.3 percent of total net reserves.

In the same period the company’s insurance business showed total Net Reserves of $3.75 billion, with an IBNR of $2.5 billion, with IBNR accounting for 67.2 percent of total net reserves.