AM Best has affirmed the financial strength rating of A+ (Superior) and the long-term issuer credit ratings (Long-Term ICR) of “aa-” of the operating subsidiaries of AXIS Capital Holdings.
Additionally, AM Best has affirmed the Long-Term ICR of “a-” and the existing long-term issue credit ratings (Long-Term IR) of AXIS Capital Holdings. The outlook of these ratings remain negative.
According to AM Best the ratings reflect AXIS’ balance sheet strength, which the rating agency categorises as strongest, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management (ERM) from the group’s risk profile.
However, the negative outlook reflects concerns regarding AXIS’ operating performance. Historically, AXIS’ operating performance was among the top in its peer group. Concerns have centered on the group’s insurance segment, with combined ratios trending higher and underwriting income pressured by 2017’s insurance segment underwriting losses, which eroded just over four years of underwriting income due to natural catastrophe losses. However, AXIS has taken measures to address these issues and, despite elevated catastrophic activity in 2018, the insurance segment produced its strongest results since 2014. Overall earnings for 2018 were impacted by natural catastrophe losses, but they remained well within risk tolerances. Going forward, AM Best’s expectation is that AXIS’ operating performance will continue to show measurable improvement.
AXIS continues to maintain levels of risk-adjusted capitalisation that place its balance sheet strength in the “strongest” category. The group’s balance sheet assessment also benefits from a favorable amount of financial flexibility and flexible capital within operating subsidiaries, but also reflects capital management strategies that have included consistent common and preferred dividends, as well as share repurchases.
AM Best views AXIS’ business profile as favourable and the group consistently ranks in the top half of AM Best’s Global Reinsurance Top 50 while also maintaining a well-regarded profile as a specialty underwriter of complex risks. The group’s ERM is sophisticated and embedded throughout the organisation. AM Best believes that AXIS’ risk management is appropriate given its complex risk profile.
The FSR of A+ (Superior) and the Long-Term ICR of "aa-" have been affirmed with negative outlooks for the following subsidiaries of AXIS Capital Holdings Limited: AXIS Specialty; AXIS Re SE; AXIS Reinsurance Company; AXIS Specialty Europe SE; AXIS Surplus Insurance Company; AXIS Insurance Company.
AXIS, AM Best, ratings, financial strength, affirmation, caveats, negative outlook