AXIS Capital celebrates record specialty production in third quarter
Bermuda-based AXIS Capital’s pivot away from property catastrophe re/insurance to specialty appeared to be continuing to pay off in third quarter as it turned a profit of $181 million compared to a loss of $17 million in 2022.
The Bermuda-based re/insurer said gross premiums written increased by 12% to $1.9 billion with an increase of $140 million or 11% in the insurance segment and an increase of $58 million or 15% in the reinsurance segment.
The company recorded an 89.7% combined ratio excluding catastrophe losses, up from 88.1% in 2022 and reported that catastrophe and weather-related losses were $42 million primarily due to the Hawaii wildfires and Hurricane Idalia, with $37 million of the losses falling on the insurance segment.
“AXIS delivered another strong quarter as we produced excellent results across multiple measures. The quarter was highlighted by record operating earnings per share on both a third quarter and year-to-date basis,” said Vincent Tizzio, chief executive officer.
“The continued positive momentum in our performance reflects the progress we’ve made in enhancing our integrated underwriting strategy to drive outstanding cycle management, deliver consistent profitable results and generate increased book value per share.”
He added: “During the quarter, we continued to grow in our chosen markets across both our insurance and reinsurance businesses, while capitalising on favourable market conditions across nearly all our lines.
“This included achieving our highest-ever third quarter production on record for our specialty insurance business, coupled with an 88.2% combined ratio in the quarter. The repositioning of AXIS Re as a more focused and less volatile specialist continues to take hold as evidenced by a 92.7% combined ratio and solid new business growth in our key areas.
“Through our ‘How We Work’ initiative we’ve continued to enhance our operating model to increase our agility and efficiency. We’re energized for the future and see exciting upside potential for our business as we lean further into our markets to unlock new revenue opportunities, maximise our strong distribution relationships, and fully leverage our global platform to deliver value to our customers.”
The company said it entered into a quota share retrocession agreement with an effective date of January 1, 2023 and ceded premiums of $244 million to newly formed retrocession reinsurer Monarch Point Re as a result. It recorded a loss expense of $7 million with regard to the retroactive element of the agreement.
Corporate expenses rose $15 million to $41 million due to performance related compensation costs and executive related compensaton costs “associated with the transition in our senior leadership”, while the company also recorded reorganisation expenses of $29 million including severance costs associated with “the departure of certain employees mainly attributable to our ‘How We Work’ programme which focuses on simplifying our operating structure”.
The company’s insurance segment saw GPW rise 10.6% to $1.46 billion while underwriting income closed at $104 million, up from $15.7 million a year earlier. Excluding catastrophes, the segment’s combined ratio was unchanged at 84.2%.
AXIS said the main driver was due to increases in property, liability and marine and aviation lines offset by decreases in cyber lines and professional lines, especially in US D&O underwriting.
The reinsurance segment’s GPW rose 15% to $448.2 million and turned an underwriting profit of $42.4 million compared to a loss of $44.8 million in 2022.
Most of the increase was due to increases in liability and credit and surety lines, the company said. Net premiums written decreased by $169 million or 65% due to the retrocession agreement with Monarch Point Re.
Excluding catastrophe losses, the segment’s combined ratio rose to 91.9% from 89.2%.
Net investment income rose to $154 million compared to $88.2 million while net unrealised losses were $157 million compared to $296.5 million in 2022.
