Axa XL has dismissed speculation that it is pulling back from Australian financial lines, with the insurer confirming that it will continue to provide "best in class" solutions and accept new business.

UK-based publication The Insurer revealed earlier this month that Axa XL would “further curtail” its risk appetite for directors’ and officers’ (D&O) insurance and other financial lines business in the London market.

Axa XL told brokers “it intends to non-renew a large part of its existing UK D&O book between now and 1 January 2021,” the publication reported. It had already suspended writing new London D&O business.

But a spokeswoman for the insurer told insuranceNEWS.com.au the decisions are strictly limited to the London market and any suggestions that they have been mirrored in Australia are false.

“Axa XL remains committed to the Australian financial lines market, and continues to accept new submissions,” she said.

“Axa XL will continue to provide best in class financial lines solutions to its Australian clients and broker partners.”

However, the insurer acknowledges the current challenges in the sector which have worsened as the coronavirus pandemic has taken hold.

“Axa XL is exercising comprehensive risk selection in a challenging financial lines market, which has suffered long term profitability challenges and faces economic slowdown risk, exacerbated by COVID-19,” the spokeswoman said.

Axa XL is a significant provider of D&O capacity in London and globally.

A spokesman told The Insurer that it will continue to review its financial lines business underwritten in the London market “in light of our ongoing concerns around the level of claims, pricing and profitability”.

“Given this portfolio is particularly vulnerable to an economic downturn and also due to the general increase in the legal and regulatory risk landscape impacting our insureds, we will be applying a much more restrictive and selective underwriting approach to all financial lines business written in the London market, with immediate effect,” the spokesman said.

“Please note that this restriction only applies to financial lines business underwritten in the London market.”