AXA XL was founded in Bermuda to help big businesses that could not get the insurance they urgently needed. It started as a creative fix for a broken market and has since grown into a global engine for tackling complex risks. Now, 40 years later, the lessons from that journey are more relevant than ever.
When the liability market broke
In the early 1980s, the U.S. liability insurance market went into crisis. Large corporations suddenly found themselves exposed, under-insured. Between 1984 and 1987, general liability premiums rose by triple digits. Even strong, well-managed companies were unable to purchase sufficient coverage to protect their balance sheets. Time Magazine summed it up on its March 1986 cover, “Sorry, America, Your Insurance Has Been Canceled.”
Courts began awarding much larger damages for product liability, environmental claims, and professional liability, undermining insurers’ pricing assumptions. Losses soared, reserves proved inadequate; reinsurance became scarce; and insurers reacted by cutting capacity, sharply raising prices, and tightening terms, especially for high-limit umbrella and excess policies.
Traditional market structures, weighed down by regulation and legacy thinking, simply could not react quickly enough or creatively enough. Commercial insurance buyers looked offshore for capacity and new ideas, seeking a market that could move faster and structure coverage more creatively.
Why Bermuda?
Bermuda was ready for this moment. By the early 1980s, it had a mature insurance and reinsurance market with strong experience in both traditional coverage and innovative risk solutions. Its regulatory regime was pragmatic and business-focused, encouraging responsible innovation while maintaining sound oversight.
This balance was critical. Bermuda allowed bespoke structures and policy forms that were difficult to implement in the more heavily regulated U.S. market. Insurers could design coverage around the specific needs and risk profiles of large organizations, rather than simply tweaking standard off-the-shelf products.
Tax, capital, and corporate law created an efficient foundation for setting up and running insurance entities. Paired with Bermuda’s central location between the U.S. and Europe, this made the island an ideal hub for global risk transfer. International capital and underwriting talent flowed in, steadily building a deep concentration of expertise.
For companies facing capacity constraints and complex risks, Bermuda offered what the traditional market could not -- speed, innovation, and specialization.
A new kind of insurer
In 1985, Bob Clements of Marsh & McClennan helped 34 large global companies create ACE (American Casualty Excess) in Bermuda. They decided they couldn’t wait for the market to improve; if existing insurers wouldn’t provide the capacity they needed, they would build one that would, setting the stage for what followed.
A year later, Marsh brought together 68 Fortune 500 companies to form X.L. Insurance, which initially offered high-layer excess casualty and D&O coverage. Their vision was straightforward but transformative: build a well capitalized Bermuda based insurer offering high limits and tailored coverage to large corporates, back it with their own capital to add credibility, and move beyond being policyholders to become strategic partners in shaping products and risk appetite.
From day one, the company had a built-in client base of sophisticated buyers and a clear mission: to solve complex risk problems that the traditional market struggled to handle. X.L. Insurance grew through organic expansion and multiple mergers and acquisitions that broadened our capabilities and global footprint, a journey that ultimately led to AXA Group’s acquisition of XL Group and the creation of AXA XL.
For AXA XL, from both an insurance and reinsurance perspective, Bermuda provided the ideal environment to refine a model grounded in strong capital, technical excellence, and innovative structuring, allowing us to deploy and extend substantial limits for buyers of risk transfer.
Bermuda as a complex risk powerhouse
Over time, Bermuda developed into a global hub for large and complex risks. It is recognized for specialized underwriting in excess liability, professional lines, directors and officers (D&O) liability, and other complex property and casualty exposures. Clients come to Bermuda to place complex programs with very large limits, whether on a single risk or across integrated programs.
At the core of this evolution is talent. Bermuda’s market has invested heavily in building deep technical underwriting expertise, advanced actuarial analytics, and sophisticated scenario modeling capabilities. These skills are critical for managing low-frequency, high-severity events, and emerging risk patterns that fall outside traditional historical data, especially when assessing the capital needed to support large and extended limits.
Besides traditional insurance and reinsurance, Bermuda played a major role in pioneering alternative risk transfer strategies, like captives, as well as integrated risk solutions. Building on that expertise, the island’s market has been leading the development of structures that combine insurance, reinsurance, capital markets, and risk management in new ways, whether via large, multiline programs, extended-limit towers, or innovative vehicles designed to address specific exposures.
For AXA XL, from both an insurance and reinsurance perspective, Bermuda provided the ideal environment to refine a model grounded in strong capital, technical excellence, and innovative structuring, allowing us to deploy and extend substantial limits for buyers of risk transfer.
Built around clients, not just policies
Because large corporations helped build AXA XL, client focus was not a marketing slogan. It was and remains the business model. Complex risks cannot be priced or managed effectively at arm’s length. Ongoing collaboration with clients is essential: understanding how their businesses and exposures evolve, sharing data and insights to refine underwriting and enhance risk management for everyone involved, and maintaining open dialogue on emerging risks, limits, retentions, and achievable outcomes.
For more than 40 years, AXA XL’s Bermuda platform has been powered by this feedback loop. Clients contribute deep knowledge of their operations and strategies; AXA XL contributes capital, analytics, and a cross-industry view. Together, we develop solutions none of us could achieve alone.
What AXA XL’s next 40 years looks like
Looking back at what we’ve learned in the last 40 years, a few lessons stand out that will continue to shape how we at AXA XL help our clients confront complex risks:
- Innovation fills the gaps when traditional capacity falls short. The Bermuda story shows that when the market is under pressure, new structures, entities, and partnerships can, and should emerge. And tough challenges often spark the best ideas.
- Solutions are stronger when built together. The best outcomes happen when clients and insurers collaborate. Our founding business model, in which clients were also capital providers and partners, set a blueprint for today.
- Specialized platforms matter. Markets like Bermuda, with functional regulation and deep expertise, are crucial for responding quickly to new and unusual exposures.
While AXA XL’s capabilities have expanded over the years, a core purpose remains the same: helping large organizations address their toughest risks and providing large, meaningful limits for complex exposures.
What has changed is the risk landscape -- fast-paced AI developments, systemic cyber threats, climate-driven volatility and physical risk, fragile global supply chains, the rapid rise of intangible assets, constantly reimagined business models, and shifting legal, regulatory, and social expectations. Tackling this new wave of challenges will take the same fundamentals that worked 40 years ago: strong, stable capital; sharp technical insight; advanced analytics; and clients who are willing to collaborate and challenge the status quo.
As AXA XL celebrates four decades in Bermuda, the island is still a critical launchpad for what comes next. Together, AXA XL and Bermuda remain well positioned to help large organizations navigate the next 40 years, turning today’s risk pressures into tomorrow’s catalysts for change.
