AXA XL Reinsurance Credit & Surety market survey reveals substantial post-Covid growth

London - April 08, 2025

AXA XL Reinsurance today released the findings of its 2025 Credit & Surety Market Survey.

According to the global survey, conducted with senior executives in Q3 2024, the Credit & Surety sector demonstrated a remarkable degree of resilience in the post-Covid, volatile market environment, continuing to expand and benefitting from relatively benign loss ratios. The survey explores post-pandemic Credit, Surety and Political Risk market performance and key drivers; the growth of bank business; the impact of geopolitical tensions; ESG approaches and AI usage.

Felix Winzap, Head of Credit & Surety, Global Credit & Surety Reinsurance at AXA XL Reinsurance commented: "After over a decade of stability in the Credit & Surety sector, Covid-19, the Russia-Ukraine war and the Middle Eastern crisis increased uncertainty in the world's financial markets and economies. As a dedicated Credit & Surety reinsurer, it was time to analyse the potential impact of these events on the sector. We gathered insights on market performance and changing bank demand, explored ESG approaches and assessed the extent of AI usage. While 2022 to 2024 was marked by intense volatility, the survey reveals that it was also a time of recovery, evolution and success for Credit & Surety. Going forward, we concur with the survey respondents that the sector is poised for further growth."

Credit, Political Risk and Contract Frustration see substantial post-Covid growth

60% of the survey respondents observed substantial, steady growth in overall Credit, Political Risk and Contract Frustration market premium volume from 2022 to 2024. Key growth drivers included inflationary pressures, economic recovery and increased demand from banks. However, growth is expected to slow through to 2026 due to falling inflation, lower trade volumes, the potential impact of the Basel IV Accord on bank demand, increasing self-insurance and competitive pricing.

The survey found that market loss ratios have remained benign overall, although Political Risk and Contract Frustration loss activity has been increasing. Going forward, 90% of respondents expect loss ratios to deteriorate. Reflecting long-term sector profitability, all respondents with a global view reported substantial capacity increases, with the majority expecting this to stabilise through to 2026. Market terms and conditions have tightened for Political Risk and Contract Frustration, but have otherwise weakened, driven by low loss ratios, increased capacity and banks requiring the removal of exclusions when using insurance for capital relief.

Surety loss ratios attract new capacity

The majority of survey respondents reported substantial post-Covid growth in Surety premium volume, highlighting the key drivers of inflation, Covid stimulus packages, economic recovery, infrastructure investment, recapturing lost business from when Covid struck, and an enhanced ability to capture bank business. The majority expect Surety market growth to continue.
50% of respondents reported that Surety market loss ratios deteriorated post-Covid, however, overall loss ratios remain stable at generally low levels. There is plenty of capacity available in the market - 71% of respondents noticed an increase. Surety terms and conditions are becoming more flexible, and rates are mostly going down, even though economic risks are rising.

Bank business growth expected to continue

According to 75% of the survey respondents, business with banks grew from 2022 to 2024. Banks have an increased awareness of insurance, value the economic benefit of insurance and prefer to share exposures with insurers. Some insurers are firmly entrenched in the banks' business model. Banks were described as excellent partners for insurers due to their sophisticated underwriting and risk management, and respondents see enormous growth potential.

Uncertainty remains as regards the impact of Basel IV, but there is an expectation that irrespective of the Basel IV outcome, Credit and Surety products that benefit the banks, e.g. credit insurance required by banks for loans, will continue to experience growth.

Impact of geopolitical tensions described as manageable

73% of respondents experienced no impact on their business volume from geopolitical tensions, although selectivity has increased. The current situation - even though there have been losses - was described as manageable and within the range of acceptable volatility.

Market risk profiles shifting from fossil fuels to renewables

The survey revealed that insurance markets are strongly - and through diverse approaches - supporting the energy transition. Respondents highlighted that it is not just about infrastructure for renewables, but also about transitioning away from carbon, which also requires different interim steps and timings depending on the country/region.

Majority using, or on cusp of using, AI

75 % of the survey respondents' companies are using, or close to using, AI technologies. Of those reporting AI projects, 25% are developing purely in-house solutions, while the remainder are working with third-party providers.

Underwriting and risk assessment top the AI-usage area chart, with shared examples including fully automated risk assessment for smaller risks/ small bonds and data transfer from submissions into systems (data scraping). Respondents spoke of improved underwriting decision-making, new data, faster analytics and enhanced efficiency. In operations, AI is helping to reduce low-grade administrative tasks. Examples from risk management included identifying patterns in credit ratings to better model the portfolio. In claims management, AI is helping companies to better detect fraud.

Impressive growth outlook, but with a caveat

Overall, according to the survey's respondents, the Credit & Surety sector is poised for continued growth - although rising geopolitical tensions, protectionism and renewed volatility in the financial markets could adversely affect these predictions.

To download the full report click here.

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ABOUT AXA XL
AXA XL*, the property & casualty and specialty risk division of AXA, provides insurance and risk management products and services for mid-sized companies through to large multinationals, and reinsurance solutions to insurance companies globally. We partner with those who move the world forward. To learn more, visit www.axaxl.com


MEDIA RELATIONS:
Zoe Kay
Marketing and Communications Director, Reinsurance
AXA XL, a division of AXA
+44 (0) 7816 206656
Zoe.kay@axaxl.com

*AXA XL is a division of AXA Group providing products and services through three business groups: AXA XL Insurance, AXA XL Reinsurance and AXA XL Risk Consulting.