Axa XL reduces value of airline after Ukraine bankruptcy: Sources – Insurance Business

(Reuters) – Axa XL, part of French insurer Axa SA, is reducing the insurance it offers to airlines as it tries to protect its billion-euro business after a series of losses related to and Ukraine, two sealed and published sources told Reuters.

One of the top 10 players in the world’s aviation insurance, Axa XL is pulling back from underwriting risks on the war, sources said, reducing options for companies aircraft or sellers seeking protection against loss or damage caused by war.

The withdrawal of a major player like the Axa XL will make it harder to find this niche, potentially driving up costs and growth. prices for sellers and travelers.

The company has also begun to reduce some of its effects on the maritime sector, three other industry sources said.

Axa XL declined to comment.

The Axa XL retreat comes as the war in Ukraine nears its first anniversary in Feb. 24 and following months of heavy losses for many insurance companies in the world.

The conflict, which Russia calls a military crisis, could result in losses of between $10 billion and $20 billion worldwide, according to a report by an investor. Howden said last month.

The aviation industry is one of the classes of business most exposed to “the most current and future losses,” the report said.

Axa XL competes with other commercial insurers operating at Lloyd’s of London and in the wider London commercial insurance market and with US and Bermuda-listed companies.

The business generated 20% of Axa’s group revenue of 55.1 billion euros ($59.55 billion) in the first half of 2022, but only 14% of revenue of $4.1 billion.

The insurer said in its earnings statement that the war caused a 1.1 percent increase in the current year in property/casualty income, especially in aviation. .

Insurers are expecting huge losses as airline charter companies go to court to seek insurance payouts, with an estimated $10 billion tied to more than 400 planes stranded in Russia.

Reinsurers, which insure the insured, are also feeling the pinch. They have refused to provide protection for Russia, Belarus and Ukraine from January 1, said the businessmen.

Insurers are also taking action against reinsurers, meaning that Chinese or Middle Eastern airlines flying to Russia will unable to insure if shot down, said one source. Western airlines cannot get insurance for Russia because of the sanctions.

The actions have also affected the marine market, another one that has been heavily affected by the war in Ukraine.

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