AXS
Axis Capital Holdings LTD
NYSE
8-K: AXIS Capital Holdings Amends Credit Facility, Reduces Committed Capacity
Sentiment:
Credit Facility Amendment
28 March 2024 5:11 PM
AXIS Capital Holdings Limited has amended its existing secured letter of credit facility with Citibank Europe plc, reducing the committed capacity and extending the tenors of issuable letters of credit.
Worse than expected
The reduction in the committed facility from $500 million to $300 million indicates a reduction in guaranteed credit availability, which is worse than the previous arrangement.
Summary
- AXIS Capital Holdings Limited has amended its $500 million secured letter of credit facility with Citibank Europe plc.
- The amendment reduces the committed utilization capacity to $300 million.
- An uncommitted secured letter of credit facility with Citibank Europe plc has been established.
- The tenors of issuable letters of credit have been extended to March 31, 2026.
- Updates were made to the facility's collateral and fee arrangements.
Sentiment
Score: 6
Explanation: The sentiment is neutral to slightly negative. While the company has secured an extension of its credit facility, the reduction in the committed amount is a negative factor. The addition of an uncommitted facility provides some flexibility, but it is not guaranteed.
Positives
- The extension of the tenors of the letters of credit to March 31, 2026 provides AXIS with longer term financial flexibility.
- The establishment of an uncommitted facility provides additional flexibility for future credit needs.
Negatives
- The reduction of the committed facility from $500 million to $300 million reduces the amount of guaranteed credit available to AXIS.
Risks
- The uncommitted facility is subject to Citibank's discretion, meaning AXIS cannot rely on it for guaranteed credit availability.
- Changes in collateral requirements could impact AXIS's liquidity.
Future Outlook
The amended facility provides AXIS with continued access to credit through March 31, 2026, with a reduced committed amount and an additional uncommitted facility.
Industry Context
This amendment is a common practice for companies to manage their financial obligations and credit facilities, especially in the insurance and reinsurance industry where letters of credit are frequently used to secure obligations.
Comparison to Industry Standards
- Many insurance and reinsurance companies utilize letters of credit to back their obligations, similar to AXIS.
- The reduction in committed capacity and addition of an uncommitted facility is a common strategy to balance cost and flexibility.
- Companies like Everest Re and RenaissanceRe also use similar credit facilities to manage their financial risks.
Stakeholder Impact
- Shareholders may view the reduced committed credit facility as a slight negative, but the extended tenor and uncommitted facility may be seen as positive.
- Creditors will be impacted by the changes to the credit facility, but the overall impact is likely to be neutral.
- Employees and customers are unlikely to be directly impacted by this change.
Next Steps
- AXIS will need to manage its credit needs within the new $300 million committed facility limit.
- AXIS will need to monitor the terms of the uncommitted facility and its availability.
- AXIS will need to ensure compliance with all collateral requirements.
Key Dates
- May 14, 2010: Original date of the Insurance Letters of Credit Master Agreement.
- January 27, 2012: Date of an amendment to the Insurance Letters of Credit Master Agreement.
- March 27, 2017: Date of another amendment to the Insurance Letters of Credit Master Agreement.
- December 18, 2015: Original date of the committed letter of credit facility letter.
- December 24, 2019: Date of an amendment to the committed letter of credit facility letter.
- March 31, 2021: Date of an amended and restated pledge agreement between ASL and the Bank.
- April 1, 2021: Date of another amendment to the committed letter of credit facility letter.
- April 21, 2021: Date of collateral account control agreements between AXIS Re SE, Axis Specialty Europe SE and The Bank of New York Mellon and CEP.
- June 10, 2021: Date of pledge agreements between AXIS Re SE, AXIS Specialty Europe SE and the Bank.
- December 29, 2023: Date of another amendment to the committed letter of credit facility letter.
- March 26, 2024: Date of the amendment and restatement agreement, the amended master agreement, the amended committed facility letter and the uncommitted facility letter.
- March 28, 2024: Date of the 8-K filing.
- March 31, 2025: End of the availability period for the committed facility.
- March 31, 2026: Extended tenor of the issuable letters of credit.
Keywords
letter of credit, credit facility, Citibank, AXIS Capital, secured facility, financial agreement, collateral, insurance, reinsurance
AXS
Axis Capital Holdings LTD
NYSE
Sector: Financial Services
Filings with Classifications
Better than expected
13 May 2025 4:30 PM
Investor Presentation
- The company reported record first quarter operating EPS.
- The company reported record diluted book value per share.
- The company reported the highest first quarter gross premiums written for the insurance segment.
Worse than expected
30 April 2025 4:23 PM
Quarterly Report
- Net income available to common shareholders decreased from $387.9 million to $186.5 million year over year.
- The effective tax rate increased from (46.0%) to 18.6% year over year.
Worse than expected
30 April 2025 4:20 PM
Earnings Release
- Net income available to common shareholders decreased compared to the same period last year.
Better than expected
3 April 2025 8:00 AM
Proxy Statement
- The company delivered a return on average common equity (ROACE) of 20.5% and an operating return on average common equity (OROACE) of 18.6%.
- Year-end diluted book value per share (DBVPS) grew by 20.7% to $65.27.
- Record operating earnings per diluted common share reached $11.18, a 98% increase over the prior year.
- The group combined ratio improved to 92.3%, a 7.6 point improvement.
- Total gross written premiums were a record $9 billion, up 7.8% over the prior year.
- Net investment income reached a record $759 million for the year.
Capital raise
26 February 2025 4:17 PM
Annual Results
- The company may require additional capital in the future, which may not be available or may only be available on unfavorable terms.
- Any equity or debt financing, if available at all, may be on terms that are not favorable to us.
- As economic and market uncertainty continues, it is possible that access to the capital markets may become more constrained and cost of capital may increase.
Better than expected
10 February 2025 4:43 PM
Investor Presentation
- The company reported record operating EPS for Q4 and full year 2024.
- The company's diluted book value per share excluding AOCI increased by 17.5% year-over-year.
- Gross premiums written for the group was up 11% year over year to $2.0B for the quarter, the highest production fourth quarter ever.
Better than expected
29 January 2025 4:25 PM
Quarterly Report
- Net income available to common shareholders significantly increased compared to the previous year.
- Operating return on equity improved substantially.
- Diluted book value per share showed strong growth.
Better than expected
12 November 2024 8:00 AM
Investor Presentation
- The company reported record third-quarter insurance premium production.
- Net investment income reached a record high for the third quarter.
- The diluted book value per common share increased significantly.
Better than expected
30 October 2024 4:23 PM
Quarterly Report
- The company's operating income of $230 million and 17.3% annualized operating ROACE exceeded expectations.
- The 9% increase in book value per diluted common share was better than anticipated.
- The 33% increase in net investment income was a positive surprise.
Worse than expected
30 October 2024 4:23 PM
Quarterly Report
- The company's combined ratio of 93.1% indicates an underwriting loss, which is worse than expected.
- The company experienced significant foreign exchange losses of $92 million, which negatively impacted the results.
Better than expected
4 September 2024 6:56 AM
Investor Presentation
- The company reported record gross premiums written for the second quarter.
- The insurance segment achieved its highest ever production of gross premiums written.
- The company's annualized operating ROACE was 19.1%, indicating strong profitability.
- Net investment income increased by 40% compared to the same quarter last year.
- Diluted book value per share grew by 16.3% over the last 12 months.
Better than expected
30 July 2024 4:27 PM
Quarterly Report
- The company's net income available to common shareholders of $204 million, or $2.42 per common share, exceeded expectations.
- The company's operating income of $250 million, or $2.93 per diluted common share, was better than anticipated.
- The company's underwriting income of $161 million was a strong result.
Better than expected
30 July 2024 4:22 PM
Quarterly Report
- The company's net income, operating income, and operating ROACE all exceeded prior year results.
- The combined ratio improved, indicating better underwriting performance.
- Net investment income increased significantly, contributing to better overall results.
Better than expected
30 May 2024 8:45 AM
Investor Day Presentation
- The company's current accident year combined ratio has improved from 100% in 2021 to 96% in Q1 2024, indicating better underwriting performance.
- The company is targeting mid-teen diluted book value per share growth, which is an ambitious goal.
- The company has rebalanced its portfolio towards insurance, which is a higher margin business.
Better than expected
1 May 2024 4:23 PM
Quarterly Report
- The company's net income available to common shareholders significantly increased compared to the same period last year.
- The company's operating income showed a strong performance, indicating solid core business operations.
- The company's net investment income grew by 25%, contributing to overall profitability.
Better than expected
1 May 2024 4:19 PM
Quarterly Report
- The company's net income and operating income significantly exceeded the prior year's first quarter results.
- The annualized return on average common equity (ROACE) of 32.1% and operating ROACE of 18.2% are strong indicators of improved profitability.
- The specialty insurance business achieved a combined ratio of 86.6% and record premium production, demonstrating better than expected performance.
Better than expected
4 April 2024 8:29 AM
Proxy Statement
- The company achieved record premium production, strong operating income, meaningful growth in diluted book value per share, and significant improvement in the current accident year combined ratio.
Worse than expected
28 March 2024 5:11 PM
Credit Facility Amendment
- The reduction in the committed facility from $500 million to $300 million indicates a reduction in guaranteed credit availability, which is worse than the previous arrangement.
Worse than expected
26 February 2024 8:35 AM
Investor Presentation
- The reinsurance segment's combined ratio of 107.6% indicates underwriting losses, which is worse than expected.
Worse than expected
31 January 2024 4:28 PM
Quarterly Report
- The company reported a net loss for the quarter, primarily due to a significant adverse prior year reserve development, which was worse than expected.
Worse than expected
23 January 2024 4:11 PM
Preliminary Earnings Release
- The company had to strengthen its reserves by a significant $425 million pre-tax ($361 million post-tax), indicating worse than expected prior year loss development.
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