There may be insurers competing for perceived opportunities in the terrorism insurance market, but AXIS Capital isn't one of them, the company's chief executive said this morning, referring to what he believes is "irrational" behavior in the market.
John Charman, chief executive officer and president of the Bermuda-based company, highlighted terrorism as a line of business that exemplifies aggressive competitive behavior in the insurance marketplace. His comments came during a conference call this morning after the company reported a record second-quarter net income of $223 million.
Still, an analyst asked if there might be new opportunities emerging in the line as a result of the extension of the Terrorism Risk Insurance Act.
"No," Mr. Charman replied flatly. "We have been dramatically reducing our exposure to terrorism over the last 18 months because of what I consider to be irrational and unmonitored underwriting behavior.
"Underwriting businesses are using substantial amounts of capacity…and are pricing in ways which I don't believe properly reflect the risk.
"We will continue to reduce that portfolio into the future….We'll have to think about something else that we can do," he said.
He continued: "I'm very concerned about nuclear, chemical and biological creeping into coverage for terrorism. I really do not believe, even on the retention basis, that it's appropriate for the industry to provide that form of coverage.
"That's something that the world has yet to really grapple with, let alone try to price," he said.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.