AXIS Capital suffers $150m loss as prior year developments take toll

Bermuda-based AXIS Capital suffered a $150 million loss in the fourth quarter after recording net adverse prior year developments of $425 million, the company said last night. 

AXIS, which announced the prior year developments in a preliminary announcement last month, said it had underlying operating income of $254 million for the quarter.  

For the year, AXIS reported a $346 million profit for the year, which was affected by prior year reserve development of $412 million and underlying operating income of $847 million. 

Vince Tizzio, president and CEO of AXIS Capital, said: “This was a transformative year for AXIS, one where we further elevated all aspects of how we operate and go to market, and we believe the company is on a clear path to becoming a specialty underwriting leader. 

“We’re capitalising on favourable conditions in our chosen specialty markets while exhibiting underwriting discipline and strong cycle management. This was evidenced by our operating income of $486 million and a 4.5 point year-over-year improvement in the current accident year combined ratio to 91.8%.”

He added: "We’re energised by the continued profitable growth within our core specialty insurance business, highlighted by year-over-year increases in premium generation of 10% including new business premiums of 18%, and an excellent current accident year combined ratio of 87.4%. In parallel, we further solidified our repositioning of AXIS Re as a focused specialist reinsurer with increased profitability and reduced volatility.

"In 2023, through our 'How We Work' programme, we made significant improvements to our operational infrastructure, while investing in talent, and becoming a more efficient and consistent company. 

“We look ahead to 2024 with excitement. We have a robust global platform, strong and deep relationships with our customers, a great team and culture – and we’re relentlessly committed to taking this company to the next level."

Net investment income for the quarter was $187 million, compared to $147 million in 2022 as yields from the company’s fixed income portfolio improved. For the year, net investment income was $611 million. 

Overall, including realised and unrealised gains in investments, the company recorded investment income of $678 million compared to $335 million in the same period in 2022. For the year, total investment income was $990 million compared to a loss of $945 million in 2022. 

For the quarter, gross written premiums rose by $26 million to $1.8 billion. The company increased premium in the insurance segment by $113 million while reducing its reinsurance underwriting by $87 million or 30%.  

For the full year, gross written premiums rose by 2% or $184 million to $8.4 billion, with insurance underwriting increasing by $555 million or 10% while reinsurance underwriting dropped 16% or $413 million. 

The insurance segment took an underwriting loss of $61.6 million for the quarter and a profit of $260 million for the year. 

In the reinsurance segment, the company took an underwriting loss of $212 million for the quarter, with the prior year reserve development ratio rising to 69.8% compared to -0.8% in 2022. The combined ratio for the reinsurance segment for the quarter was 163%, although the current accident year ratio was a more palatable 93%. 

 For the year, the underwriting loss for reinsurance was $100.2 million.