Axis Capital rating affirmed after property catastrophe exit

Axis Capital’s decision to exit the property catastrophe reinsurance business has improved its profitability, leading to its financial strength rating of A being affirmed by ratings agency AM Best.

AM Best said the outlook for the Bermuda-based re/insurer is stable.

The agency added: “The ratings reflect Axis’ balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, favourable business profile and appropriate enterprise risk management (ERM) from the group’s risk profile.”

It said: “Axis’ operating performance is assessed as adequate, as its underwriting results over the recent five-year period have been volatile.

“However, Axis has implemented corrective measures to address and reverse volatility by exiting the property-catastrophe reinsurance business. These implemented changes have favourably impacted profitably measures with the group’s loss and combined ratios improving significantly.”

AM Best said that despite some recent changes to its business mix, the group still retains a well-diversified profile as a specialty underwriter of complex risks with a significant presence in the Lloyd’s market.

Former Axis chief executive officer Albert Benchimol announced in 2022 that the company was exiting the property catastrophe reinsurance segment to focus on specialty lines. That change has been carried on by his successor Vincent Tizzio (pictured)

AM Best said Axis continues to maintain the strongest levels of risk-adjusted capitalisation, supported by financial flexibility at the holding company level and within the operating subsidiaries, while also reflecting capital management strategies that have included consistent common and preferred dividends, as well as share repurchases.

“Reserves have consistently run off favourably over the last 10-year period, reflecting the company’s reserving controls efficiency. Financial leverage is elevated when compared to its peers, but remains largely in line with the company’s expectations,” AM Best said.