Axis posts strong results; Benchimol explains merger rationale
Bermuda-based Axis Capital, the company which recently unveiled an $11 billion merger with PartnerRe, has posted a solid set of results for 2014.
Its net profit increased to $771 million for the year, compared with $684 million in 2013. The company posted flat gross written premiums (GWP) of $4.7 billion for 2014.
However, for the full year 2014, Axis reported operating income of $563 million, compared with $633 million in 2013.
On the merger with Bermuda-based PartnerRe, Albert Benchimol, president and chief executive officer of Axis, said: “Axis has the breadth and depth, coupled with innovation and technical strength, to provide clients with a meaningful, multi-faceted relationship and the financial strength and full-scale services that set us apart from smaller players.
“Nevertheless, we determined that greater scale and resources would provide even more benefit to our clients and shareholders, and last week we announced an exciting merger of equals with PartnerRe that would create a top 20 global P&C leader with more than $10 billion in gross premiums written and $14 billion in capital.”
He added that: “The union of our two strong companies will allow us to do even more for our clients and partners in distribution, develop and convert on more business opportunities, generate significant expense and capital synergies, and deliver greater value creation for our shareholders."
In its reinsurance segment, GWP grew by $38 million or 2 percent to $2.4 billion for the year. Growth was primarily driven by a number of treaties written on a multi-year basis, especially in the liability, property and catastrophe lines, and included $131 million of written premiums relating to future underwriting years. The growth was partially offset by a decrease in the professional lines, driven by timing differences, non-renewals and decreased treaty participations.
Axis’ insurance segment posted a decrease of $24 million or 1 percent in GWP to $2.5 billion for 2014. The company said that the decrease was primarily driven by a reduction in the professional lines, reflecting the reshaping of its US D&O portfolio undertaken during the year, and decreases in the property lines which were impacted by continuing competitive market conditions. It added that the decreases were partially offset by growth in its liability lines in the US casualty markets and increases in the aviation lines.
Its combined ratio deteriorated slightly to 91.6 percent for 2014, compared with 91 percent for 2013.
Benchimol said: “Each of our segments performed well and delivered solid underwriting results, reflecting low cat activity, ongoing favourable reserve development and a broadly diversified, well-constructed portfolio of risks.
“In addition, our fourth quarter results showed meaningful positive results from the targeted portfolio enhancements on which we have worked diligently throughout the year. The market environment has become increasingly competitive, particularly in the reinsurance market, but Axis has leveraged its attributes to mitigate the worst effects of a highly competitive market.
