Managing global casualty exposures: challenges and solutions in international markets

As the reinsurance industry navigates evolving risks in international casualty markets, Axis Re's Simon Stirnemann discusses key challenges and opportunities, and effective strategies to address these complexities.

What are the primary challenges you're seeing in international casualty portfolios?

A significant concern is the exposure to US losses within international casualty portfolios. We're seeing situations where the primary drivers of loss in international portfolios are stemming from US exposures. This creates complex challenges that require careful attention to risk management, pricing and claims-handling capabilities.

Some suggest that rate increases alone will solve these challenges. What's your perspective?

Pricing alone is not the solution. While rate adequacy is important, the real threats we're seeing are nuclear verdicts, shock losses and increasing plaintiff activism, all of which introduce a high level of volatility that pricing alone cannot address.

How can insurers better manage these international exposures?

There are several critical elements. First is cautious capacity deployment – international insurers often offer limits on US risks that are significantly higher than those typically provided by US-based cedants. Second, enhanced data transparency and quality are essential for effective risk assessment. Finally, proper claims-handling infrastructure is crucial – particularly for US exposures, where local legal expertise is needed to manage claims effectively. At Axis Re, we focus on partnering with cedants who demonstrate strong underwriting discipline and technical capabilities, allowing us to build sustainable relationships while maintaining portfolio quality.

Looking beyond challenges, where do you see opportunities in the international market?

We're seeing significant growth opportunities driven by demographic shifts, particularly the rising middle class across emerging markets. Digitalisation is another key area opening new possibilities. Additionally, we're seeing an interesting evolution in how markets operate, with a growing focus on longer-tail casualty business that requires sustained commitment to building expertise and relationships.

How does Axis Re's strategy align with these market dynamics?

We're focused on selective growth and creating stable and profitable results over time. We've taken deliberate steps to reduce portfolio volatility, which allows us to concentrate on managing and developing our casualty portfolio in a measured way that benefits both our clients and our business over the long term.

One of our areas of focus is managing risk accumulation in international casualty towers. With towers reaching $500mn to $1bn in capacity, and multiple insurers participating, reinsurers find themselves exposed to the same risk through various cedants. We address this by partnering with cedants who uphold strong technical standards, ensuring our capacity is allocated where it can be most effective. This approach makes accumulation control a priority and underscores the need for enhanced data transparency across the market.

What's your outlook for the upcoming renewal period?

Success in 2025 renewals will depend on addressing these fundamental challenges around exposures and data transparency. For reinsurers to continue providing meaningful capacity, we need to see progress on several fronts – appropriate limit deployment, improved data quality and robust claims-handling capabilities.

What sets Axis Re apart from other reinsurers in this market?

We bring differentiated value through technical expertise and disciplined underwriting. Our data-driven insights enable us to tailor solutions to each client's specific needs, supporting sustainable growth for both parties.

We actively seek to work with partners who demonstrate a high level of expertise and operational rigour. By doing so, we ensure that our capacity is deployed where it can be most effective. This careful client selection and our insistence on high data quality standards mean that we can offer stability even in volatile sectors. We're here to build something lasting – not just to offer coverage, but to truly support our partners and customers in achieving their business goals.

Simon Stirnemann, head of international casualty reinsurance, Axis Re