Axa XL was born 40 years ago in response to a crisis — and that responsiveness to the world’s risk-management needs remains part of the company’s DNA today, 40 years later.

That is the view of Noel Pearman, president and chief underwriting officer of Axa XL Bermuda, who said in an interview that the launch of XL was also an pivotal moment in the island’s business history.

“The creation of XL did more than just solve an immediate capacity problem,” Mr Pearman said.

“It reinforced Bermuda's position as a premier international business jurisdiction for managing complex risk. And our launch really demonstrated Bermuda’s ability to respond quickly and effectively to complex global risk challenges.

“So it established some characteristics for us, as an industry, in terms of innovation, entrepreneurial thinking, technical expertise, the access we have to capital, and the business of addressing difficult and emerging risks.

“Forty years later, those things are still important to us.”

A Time magazine cover in March 1986, bearing the words, “Sorry, America, your insurance has been cancelled”, summed up the depth of the crisis that XL’s formation addressed.

For a range of businesses, from large corporations to doctors and farmers, liability insurance suddenly became unaffordable or unavailable. Between 1984 and 1987, general liability premiums rose by triple digits in the US.

XL was formed by Marsh brokers Robert Newhouse and Robert Clements, working with 68 large US corporations, which became the shareholders. This came a year after the same brokers had spearheaded the founding of Ace, another pioneering Bermuda company.

Employee No 1 at XL was Brian O’Hara, who went on to become chief executive, leading the company 14 years as XL transformed from a niche player into a diversified global insurer and reinsurer.

After suffering a share price collapse as a result of its exposure to troubled credit insurer Security Capital Assurance during the global financial crisis of 2007 and 2008, XL bounced back under the leadership of Mike McGavick as CEO.

The company grew substantially in scale in 2015 through its acquisition of Catlin in a deal worth nearly $2.8 billion. Three years later, French insurance giant Axa bought XL for about $15.3 billion, creating today’s Axa XL.

Mr O’Hara was among the guests at the 40th anniversary broker reception held on July 14 and attended by more than 100 trading partners and present and past employees.

Mr Pearman said the company had evolved over time in response to the business environment, and in terms of its scale and scope of coverage.

“Despite that evolution, the core mission has remained remarkably consistent — helping clients solve complex risk problems,” Mr Pearman added.

Today, the range of risk exposures Axa XL helps its client manage include cyber-risk, climate-related events, supply-chain disruption, emerging liability trends, and artificial intelligence. However, the company’s focus has remained on technical underwriting, innovation, and science to solve client problems.

Over the years, the company has been successful in recruiting and developing Bermudians, such as Patrick Tannock, Mr Pearman’s predecessor leading the Bermuda operation. He believes the industry has made great progress in attracting Bermudians, but there is room for improvement.

“I'm very proud that our local insurance leadership team is 100 per cent Bermudian,” Mr Pearman said.

He added: “The industry has become more intentional about building the local talent pipeline. That includes things like internships, scholarships, graduate programmes, mentoring, and professional development opportunities.

“But the challenge is to keep building that pipeline, and to ensure younger Bermudians understand the breadth of opportunities available in the industry.”

He stressed there was a broader range of jobs in insurance than some might be aware of, beyond underwriting, including claims, actuarial, legal, finance, technology, HR, and executive leadership roles.

Over the years, Mr Pearman has seen a growth in community understanding of the international business sector’s importance to Bermuda’s employment, economic growth, education, and community development.

“The industry has become increasingly engaged in supporting Bermuda beyond its direct business activities,” he said. Scholarships, educational initiatives, charitable courses, and community programmes, and the work of industry bodies and individual companies had all helped to raise awareness.

“Go into a primary school and ask what an underwriter is and you would probably get a much better answer than many other countries,” he said.

Like many others who work in insurance, Mr Pearman said he “fell into it” after earning a degree in economics. After 25 years in the business, he feels fortunate that he did.

“I had no idea what I was going to do,” he said. “I was encouraged to apply to one of the local insurance companies for an underwriting position, in professional lines — the risk that leaders of organisations, directors, and officers sort of face when they lead large companies.

“And it just fit really well with my economics degree, my understanding of business, and my genuine interest in how the world really works — I was hooked.”

And the skills needed to make a good underwriter? An ability to deeply analyse facts and figures, read income statements, understand and modify contracts, negotiate, and to have “a good fork-and-knife game”, meaning being fun at dinner, Mr Pearman said.

Looking ahead at the how artificial intelligence could influence the jobs market, particularly at entry level, Mr Pearman suggested a nuanced impact was likely.

While AI might be capable of automating the work of some entry-level workers, he said experienced humans would always be needed.

“The interesting thing is that the only way to become a senior and experienced person is to have been a junior inexperienced person. And, with the help of AI, maybe you can create that level of sophistication and expertise while skipping some of the earlier steps.

“AI is a tool for us at this stage. Carpenters have better tools than they used to have, but they still need to be skilled to be the best at what they do. The way we look at it, we can scale and do more, rather than doing the same with fewer people.”

For Bermuda as a jurisdiction, Mr Pearman sees AI as an amplifier of strengths, for example, enhancing underwriting insights and efficiency, strengthening claims handling, and identifying patterns in large data sets more quickly, as well as potential impacts in areas including catastrophe modelling, risk assessment and portfolio management.

“AI is not going to replace the need for professional judgment,” Mr Pearman said. “The insurance industry is about understanding uncertainty, relationships, and complex decision-making.

“I see AI augmenting human expertise rather than replacing it. And for Bermuda, the opportunity is to embrace AI, while continuing to leverage its deep technical expertise that has always differentiated the marketplace.”

According to Mr Pearman, Bermuda’s evolution into a diversified global re/insurance hub in the decades since XL’s launch has been driven by the three-legged stool formed by the interaction between the regulator, the government and the industry — something he sees as difficult for other jurisdictions to replicate.

“They each have strengths that have helped to make this country exceedingly resilient over time,” he said. “You can copy all the principles, and all the underlying documents and the structures — but the deep understanding of what works and what doesn’t, and how these bodies interrelate — that’s a unique special sauce.

“This structure has helped to create competitive advantages including innovation, speed to market, access to high-quality intellectual and financial capital, as well as low barriers to entry, political stability, economic stability, and social stability.”

While he remains bullish on Bermuda’s future, there is no room for complacency, with competition from rival jurisdictions heating up and the cost of doing business always in sharp focus.

“We must continue to attract, develop, and retain world-class talent,” Mr Pearman said. “We need to maintain a regulatory framework that is globally respected, welcoming, while continuing to support innovation and growth.

“And we need to remain open to new forms of capital, emerging technologies, new risk-transfer solutions and evolving client needs.

“If we do this successfully, we will remain not only relevant, but also be at the top of our game.”