Keeping pace with innovation: Axis reflects on the first year of Energy Transition Syndicate 2050

By Rebecca Delaney

April 14 - (The Insurer) – One year on from the launch of Axis Energy Transition Syndicate 2050, Elliot Lyes and Joe Dutton caught up with Sustainable Insurer to reflect on the journey so far

Syndicate 2050 formally commenced underwriting on April 1, 2024 with a stamp capacity of 100 million pounds ($132 million).

Axis had been granted in-principle approval by Lloyd’s for Energy Resilience Syndicate 2050, before undergoing a subtle rebrand to reflect the syndicate’s intent to provide cross-class capacity to insure assets and activities supporting the transition to net-zero by 2050.

“The first year of Syndicate 2050 has been both a success and an incredible learning curve for us,” explained Lyes, active underwriter at Axis Energy Transition Syndicate 2050.

“Twelve months in, we recognise the rapid evolution in the transition space requires laser focus by our underwriting and engineering teams on areas of innovation and in evolving our understanding of risk, particularly around nascent technologies.”

Dutton, who serves as energy innovation lead at Axis, added that the syndicate has provided cover both for risks that were anticipated (primarily led by existing developers of renewable energy projects), and for a combination of newer technologies.

He noted that while established technologies such as wind, solar and battery storage are no longer considered ‘new’, constant evolutions in demand, competition and innovation has placed pressures on technology suppliers and project developers.

This means there is an emphasis on ensuring that the syndicate’s underwriting and knowledge keeps pace with the scale of this innovation, and that this is reflected in pricing, and terms and conditions.

“As time has gone on and awareness of the syndicate has grown, we are seeing submissions from more diverse risks and companies, with the newer forms of technologies that are being developed to facilitate the energy transition,” said Dutton.

“The submissions that we’re seeing from brokers reflect the wider energy transition market so, for example, we are now seeing a higher volume of things like hydrogen, geothermal, and carbon capture and storage projects than when Syndicate 2050 started.”

Submissions also included activities supporting the transition such as the construction and financing of clean tech factories, including EVs, energy transport and storage, energy efficiency schemes, and the transport of clean tech components.

“We anticipate the range and volume of risks will continue increasing and as a team we need to continue to evolve, and to review and refresh our offering in line with the market,” Dutton continued.

In the first nine months of Syndicate 2050, the platform reported gross written premiums of $43.5 million. The property class of business accounted for 50.4% of premium production ($21.9 million), followed by credit and political risk at just over one-quarter ($12.1 million).

Dutton said it is projected that property’s share of GWP will be closer to 30% in 2025, with construction and credit and political risk both making up a similar portion of the total.

Syndicate 2050 also offers ancillary lines of business to support transition-related services and activity, including cargo, terrorism, cyber, accident and health, and financial lines.

Although these exposures currently collectively contribute a lower proportion to the portfolio, it is expected that these products will develop scale over time into an annually renewable portfolio of complementary coverages.

Broker facilities accounted for $241,000 of GWP in 2024, with Lyes highlighting that well-designed facilities are expected to continue to have a role in the market, provided they can drive efficiencies by reducing duplication among follow markets and provide high-quality risk data.

“This also means an elevated role for relevant and specialist lead markets across all lines,” he added.

Syndicate 2050 posted a net combined ratio of 125.4% for its nine months of activity in 2024. This led to an underwriting loss of $1.4 million, which it said is within expectations for a syndicate’s inaugural year owing to higher administration and start-up costs.

Lyes confirmed that Syndicate 2050’s planned 2025 stamp capacity remains “broadly similar” to 2024 (100 million pounds).

“Following an encouraging initial year, we expect to consolidate and continue to build out the cornerstone and associated product offerings, selectively underwriting through a dynamic market,” he concluded.