French general insurer AXA has launched its second securitization of motor insurance risks, based on individual motor policies underwritten by its German, Belgian, Italian and Spanish arms.
The E450 million securitization aims to transfer to the financial markets the deviation above a certain level of the cost of claims on the underlying liabilities – over six million of individual motor contracts underwritten through multi-distribution channels, representing E2.6 billion of premiums in 2006, spread across the four covered countries.
Less than 18 months after the successful securitization of AXA France’s motor portfolio, this operation goes one step further by combining individual motor portfolios from four countries into a global portfolio providing diversification of risks.
This new transaction further demonstrates AXA’s permanent search for innovation, which is a key driver of our Ambition 2012 program, said Denis Duverne, AXA’s CFO and member of the management board. Through this pan-European securitization, AXA intends to crystallize the economic benefits of mutualization and diversification and to anticipate the expected evolution of the regulatory environment (Solvency II), which will take into account the retained risks.
We are confident that the market for ILS will continue to develop, as they are an efficient risk and capital management tool for the insurance industry, as well as a new attractive asset class for investors.