Fitch affirms IFS rating of AXIS Capital

Fitch Ratings has affirmed an insurer financial strength (IFS) rating of A+ to the operating subsidiaries of AXIS Capital, although states several key rating triggers that could lead to a downgrade.

AXIS Capital’s IFS is driven by a good competitive position and strong capitalisation, according to Fitch.

Catastrophe losses had challenged operating results but remain consistent with current ratings.

However, Fitch highlights an expectation for continued weakness in the reinsurance sector that will challenge AXIS Capital’s earnings.

“The ratings reflect Fitch's negative sector outlook on global reinsurance, as the fundamentals of the reinsurance sector have deteriorated with declining premium pricing and weakening of terms and conditions, particularly for property catastrophe risk. This is leading to consolidation in the reinsurance sector as companies aim to enhance their relative competitive positions,” said Fitch.

Fitch suggests a significant loss of capital from a catastrophic event that is worse than expectations or industry/peer results, or an inability to raise capital following a large loss could lead to a downgrade of AXIS Capital’s ratings.

Triggers that could also lead to a downgrade include an extended period of underwriting losses or GAAP fixed-charge coverage below 7x for a sustained period, or a deterioration of relative market position due to further consolidation in the reinsurance sector.