Axis Specialty Australia’s withdrawal from the local insurance industry is evidence that the liability market is getting crowded, with too many insurers chasing too little business, according to local broking sources.

As insuranceNEWS.com.au reported in a Breaking News bulletin on Thursday, the company announced its decision to place its business into run-off and close renewals last week, and immediately stopped trading. Final details on winding down Axis Specialty Australia have yet to be announced.

It is understood about 45 Australian staff have been affected by the move, although the company’s Bermuda-based parent Axis Capital says 100 positions will be shed in relation to the withdrawal from Australia.

It is also understood CEO David Smith will stay on for a period, but will then leave the company.

Axis Specialty operated offices in Sydney, Melbourne, Brisbane, Adelaide and Perth. The only Axis office remaining in the Asia-Pacific region is in Singapore. 

In a statement issued from Bermuda last week, Axis Capital said it has reviewed its operations and identified markets “where its positioning would not allow it to generate appropriate and sustainable returns”.

The only market identified in this way in the statement is Australia.

Australian business will be written in future from Axis’ London and Singapore branches, and via its Lloyd’s Syndicate 1686.

Sources have told insuranceNEWS.com.au no decision has been made on whether the company will retain an in-house claims function or outsource it.

A leading broking source told insuranceNEWS.com.au the local management liability market, in which Axis Specialty has competed, is “getting stretched”.

“There are 43 vigorous competitors in the miscellaneous professional indemnity (PI) market alone, and I’d expect Axis just got tired of chasing the market down,” the source said.

“There’s only $1.4 billion premium in the PI market, so it’s a small pool and there’s a lot of companies chasing the same business.”

Axis Specialty also writes business in IT liability, property, directors’ and officers’, multimedia and financial institutions. 

Axis Capital President and CEO Albert Benchimol said in a statement announcing the closure that he remains “fully committed to the hybrid model under which insurance groups have both primary insurance and reinsurance activities, because this approach provides flexibility, balance and diversification in opportunities and risks”.