Axis Capital's Vince Tizzio reports weaker Q2 combined ratio on reinsurance pullback

Axis Capital reported a weaker second-quarter combined ratio as catastrophe losses and a reduction in reinsurance business, including lower US casualty exposure and non-renewals, weighed on underwriting performance, with president and chief executive officer Vince Tizzio (pictured) saying the group continued to generate profitable growth despite an evolving risk landscape.

Its insurance segment CoR worsened to 90% from 85.3% a year ago, while the reinsurance combined ratio worsened to 94.5% compared with 92% a year ago.

Second-quarter gross written premium increased by 6% to $2.7 billion, lifted by an increase of $296 million in the insurance segment, attributable to all lines of business apart from cyber. 

But Q2 reinsurance GWP decreased by 25% to $440 million, primarily attributable to non-renewals and decreased casualty line sizes. Wall Street analysts have acknowledged the US casualty pullback as a prudent risk-management move, given rising social inflation and casualty market softness, even if it does create near-term revenue drag.

Total Q2 underwriting income was down 24% to $143 million. 

Its insurance business performed strongly with $2.2 billion in premiums, up 15.3% compared with last year, but reinsurance premiums fell by nearly 25% to $440 million. More than half of reinsurance premiums came from targeted short-tail lines. 

Second quarter net income was $251 million, up 16% on the previous year. 

For the six months to June 30, Axis Capital’s combined ratio worsened to 91.5% compared with 89.5% a year ago. 

H1 gross premiums written increased by 9% to $5.8 billion with insurance GWP hitting $4.21 billion (up 17.4%) while reinsurance GWP falling by 9.8% to $1.6 billion. 

For the six months to June 30, Axis Capital net income was $498 million, up 24% compared with the previous H1. 

Tizzio said: “Axis continued to generate consistent, profitable growth in the second quarter, amidst an evolving risk landscape impacted by the Middle East conflict and further transitioning market conditions.” 

Market reaction to Axis’s Q2 results was muted, given that its stock has already enjoyed a strong run-up prior to announcing its Q2 financials, gaining nearly 10% to 15% over the preceding 30 to 90 days.

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