AXIS Capital reports 2017 loss

AXIS Capital Holdings made a net loss of $38 million for the fourth quarter of 2017, a fall from the profit of $131 million it saw for the same period of 2016.

The quarterly results contributed to the company reporting a net loss for 2017 of $416 million. In 2016 the company made a profit of $465 million.

Non-GAAP operating income for the fourth quarter of 2017 was $20 million, compared with non-GAAP operating income of $101 million, for the fourth quarter of 2016. For the year ended December 31, 2017, AXIS Capital reported non-GAAP operating loss of $265 million, compared with non-GAAP operating income of $410 million for the same period in 2016.

"The fourth quarter of 2017 extended the themes established earlier in the year: Significant catastrophe activity, higher attritional property losses, the ongoing effects of the Ogden rate change in the UK, and the cumulative impact of several years of intense competition,” said Albert Benchimol, president and chief executive officer of AXIS Capital. “Although our loss for the year is clearly disappointing, we operate in an industry that experiences occasional high-severity events. To balance against this, we manage our risks to ensure we remain strong and able to provide the seamless, high- quality protection our clients and partners in distribution have come to expect of us. The actions we have taken over recent quarters to reduce earnings volatility have helped to temper the impact to our financial results in a period where industry catastrophe losses were in excess of $100 billion. We closed 2017 with a diluted book value per share of $53.88, a decrease of 7.5 percent from December 31, 2016, which is not unreasonable when compared to the scale of market losses observed during the period.

"Notwithstanding the industry backdrop, it was a very successful quarter and year from an organisational development perspective, as we closed on the acquisition of Novae and made further progress on strategic initiatives, all of which have contributed to the delivery of a much stronger platform with differentiated positioning and leadership positions in key markets.

"This was the first quarter in which we included Novae in our financial reporting and, as such, there are a number of moving parts in our results. We remain pleased with the progress we have made thus far in integrating this business into AXIS and laying the groundwork to realise significant value from the transaction. Our experience to date indicates the strategic and financial benefits from the acquisition of Novae will exceed our initial expectations.

"As we look ahead, our stronger industry positioning and increased relevance in our core markets have allowed us to take advantage of improving market conditions at recent renewals, and establish positive momentum as we move past the 1/1 renewals and deeper into 2018, to deliver enhanced profitability."

In the fourth quarter gross premiums written increased by $366 million, or 50 percent, to $1.1 billion, with an increase of 65 percent in the company’s reinsurance segment and an increase of 47 percent in its insurance segment, with the increase in the insurance segment primarily attributable to the acquisition of Novae Group, which closed at the beginning of the quarter.

After adjusting for the impact of the Novae acquisition, gross premiums written increased by $121 million, or 17 percent, with an increase of 62 percent in AXIS Capital’s reinsurance segment and an increase of 7 percent in its insurance segment. Net premiums written increased by 57 percent to $729 million, whilst net premiums earned increased by 31 percent to $1,211 million.

Gross premiums written over 2017 increased by $586 million, or 12 percent, to $5.6 billion, with an increase of $178 million, or 8 percent, in its reinsurance segment and an increase of $408 million, or 15 percent, in its insurance segment. Net premiums written increased by 7 percent to $4.0 billion, whilst net premiums earned increased by 12 percent to $4.1 billion. AXIS Capital reported a combined ratio of 113.1 percent, up from the 95.9 percent it reported in 2016.