10-K: AXIS Capital Reports $1.1 Billion Net Income for 2024, Driven by Underwriting and Investment Performance

• AXIS Capital reported a net income available to common shareholders of $1.1 billion for the fiscal year ended December 31, 2024.
• The company's operating income reached $952 million, or $11.18 per diluted common share.
• Gross premiums written totaled $9.0 billion, with net premiums written at $5.8 billion and net premiums earned at $5.3 billion.
• Pre-tax catastrophe and weather-related losses, net of reinsurance, amounted to $226 million, including losses from Hurricanes Milton, Helene, and Beryl, and the Red Sea Conflict.
• The company experienced net favorable prior year reserve development of $24 million.
• Underwriting income was $571 million, with a combined ratio of 92.3%.
• Net investment income reached $759 million, while net investment losses were $139 million.
• Foreign exchange gains amounted to $51 million.
• Reorganization expenses totaled $26 million.
• The company recorded an income tax benefit of $56 million, including a net deferred tax benefit of $177 million related to Bermuda's Corporate Income Tax Act 2023.
• At year-end, AXIS Capital had total cash and investments of $18.0 billion, with 88% in fixed maturities, short-term investments, and cash and cash equivalents, boasting an average credit rating of AA-.
• Total assets stood at $32.5 billion, with a reserve for losses and loss expenses of $17.2 billion and reinsurance recoverable on unpaid and paid losses and loss expenses of $7.4 billion.
• Debt amounted to $1.3 billion, resulting in a debt to total capital ratio of 17.8%.
• The company repurchased 3.1 million common shares for $216 million.
• Common shareholders' equity was $5.5 billion, with a book value per diluted common share of $65.27.

Score: 7

Explanation: The document presents a generally positive outlook with strong financial results, but also acknowledges existing and potential risks and challenges. The sentiment is cautiously optimistic.

• Strong net income and operating income performance.
• Growth in gross premiums written.
• Improved combined ratio indicating better underwriting profitability.
• Increased net investment income.
• Active capital management through share repurchases.
• Strong common shareholders' equity and book value per share.
• Strategic initiatives like 'How We Work' are underway to improve efficiency.

• Significant catastrophe and weather-related losses impacted net income.
• Net investment losses were incurred.
• Reorganization expenses related to strategic initiatives impacted earnings.

• Insurance risk related to unpredictable catastrophes and man-made disasters.
• Potential adverse effects from economic and social inflation.
• Impact of global climate change and increasing regulation.
• Competition and consolidation in the insurance/reinsurance industry.
• Global economic conditions could affect business and investment performance.
• Dependence on a few brokers for a large portion of revenues.
• Potential for a downgrade in financial strength or credit ratings.
• Increasing scrutiny and evolving expectations regarding environmental, social and governance matters.
• Cybersecurity threats and other data security incidents.
• Failure to comply with data protection, privacy and cybersecurity laws and regulations.
• Changes to existing regulation and supervisory standards, or failure to comply with them.
• Potential government intervention in the insurance industry.
• Violation of laws and regulations relating to sanctions and foreign corrupt practices.
• Volatility in the price of common shares.
• Constraints on ability to pay dividends and make payments on indebtedness due to holding company structure.
• Difficulty in enforcing judgments against the company or its directors and executive officers.
• Anti-takeover provisions in the bye-laws could impede an attempt to replace directors or effect a change in control.
• Changes in tax laws resulting from the recommendations of the Organization for Economic Corporation and Development could materially adversely affect us.
• Liability to tax under the Corporate Income Tax Act 2023 of Bermuda.
• Non-U.S. companies may be subject to U.S. tax.
• Changes in U.S. tax law could adversely affect us.
• Non-U.K. companies may be subject to U.K. tax.
• Changes in U.K. tax law could adversely affect us.
• Non-Irish companies may be subject to Irish tax.
• Changes in Irish tax law could adversely affect us.
• Changes in tax laws resulting from the proposals included in the European Commissions draft third Anti-Tax Avoidance Directive could materially adversely affect us.
• Business may be adversely affected by a transfer pricing adjustment in computing taxable profits.
• Future changes in current accounting practices may adversely impact our reported financial results.

The overall outlook for the property and casualty market continues to be largely favorable for specialty insurance and reinsurance carriers. AXIS remains positioned to drive profitable growth in 2025 and beyond.

• We are executing on our commitment to advance AXIS as a specialty underwriting leader that delivers consistent, profitable growth.
• With a strengthened book of business, and an expanding footprint in attractive specialty markets, we believe AXIS remains positioned to drive profitable growth in 2025 and beyond.

The document indicates that the insurance/reinsurance industry is highly competitive and undergoing extensive technological change. The company is focused on adapting to these changes to maintain its competitive position.

• The document mentions that the company competes with major U.S., Bermuda, European and other international insurers and reinsurers, including Lloyd's syndicates.
• It also competes with new companies entering the insurance/reinsurance markets and alternative capital providers.
• The company believes it can achieve positive differentiation through underwriting expertise, customized solutions, and top-caliber claims service.
• The company benchmarks its compensation packages against similarly-sized specialty insurance, reinsurance and financial services companies in its talent markets.

• Shareholders benefit from strong financial results, share repurchases, and dividend payments.
• Clients and distribution partners benefit from a broad range of risk transfer products and services, and strong capacity.
• Employees benefit from investments in talent development, health, safety, and wellness programs.
• Communities benefit from the company's corporate citizenship program.

• The company plans to close the loss portfolio transfer reinsurance agreement with Enstar during the first half of 2025.
• The company will continue to implement its 'How We Work' program to improve operating efficiency.
• The company will continue to monitor and adapt to evolving market conditions and regulatory requirements.

• The company has related party transactions with Stone Point Capital, LLC and its affiliates, including management fees and investments in Stone Point's private equity funds.
• The company entered into a loss portfolio transfer reinsurance agreement with Cavello Bay Reinsurance Limited, a wholly-owned subsidiary of Enstar Group Limited.

• 1934: Securities Exchange Act of 1934 mentioned.
• 1966: Exempted Undertakings Tax Protection Act 1966 of Bermuda mentioned.
• 1978: Insurance Act 1978 of Bermuda mentioned.
• 1981: Bermuda Companies Act 1981 mentioned.
• 1982: Lloyd's Act 1982 mentioned.
• 1986: Internal Revenue Code of 1986 mentioned.
• 2000: Financial Services and Markets Act 2000 mentioned.
• 2000: Insurance Acts 1909 to 2000 mentioned.
• 2001: Company founded in 2001.
• 2002: Company incorporated in 2002.
• 2010: Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 mentioned.
• 2012: Financial Services Act 2012 mentioned.
• 2014: Central Bank Acts 1942 to 2014 mentioned.
• 2016: BMA granted full equivalence under Solvency II on January 1, 2016.
• 2016: Company issued $550 million of 5.50% Series E preferred shares on November 7, 2016.
• 2019: Terrorism Risk Insurance Program Reauthorization Act of 2019 signed on December 20, 2019.
• 2020: Company exited Engineering business in 2020.
• 2020: U.K. withdrew from the EU on January 31, 2020.
• 2021: AXIS Specialty Underwriters' coverholder agreement with Syndicate 1686 terminated, effective December 31, 2021.
• 2022: All regulatory licenses in Florida for AXIS Specialty Underwriters, Inc. were terminated in 2022.
• 2022: Company exited Catastrophe and Property business in June 2022.
• 2022: AXIS Specialty Bermuda obtained reciprocal jurisdiction reinsurer status with Missouri during 2022.
• 2022: BMA published a revised version of the Insurance Code of Conduct in August 2022.
• 2022: UK Branch of AXIS Specialty Europe is now fully regulated by both the PRA and the FCA on October 28, 2022.
• 2023: Company exited Aviation business effective January 1, 2023.
• 2023: Bermuda insurers and insurance groups were required to be compliant with sections 1 through 7 of the Insurance Code by September 1, 2023.
• 2023: Bermuda insurers and insurance groups were required to be compliant with applicable parts of section 8 of the Insurance Code by March 1, 2023.
• 2023: OECD released proposed model legislation for Pillar Two on December 20, 2021, which was approved by 135 countries.
• 2023: Bermuda government enacted a corporate income tax on December 27, 2023, effective for accounting periods starting on or after January 1, 2025.
• 2024: AXIS Specialty Bermuda ceased writing new business through its branch in Singapore, effective January 1, 2024.
• 2024: Contessa Limited was dissolved on April 11, 2024.
• 2024: Syndicate 2050 commenced underwriting business on April 1, 2024.
• 2024: Company's Board of Directors approved a new share repurchase program on May 16, 2024.
• 2024: Company's Board of Directors approved a new share repurchase program on February 19, 2025.
• 2024: AXIS Specialty Insurance Bermuda was incorporated on August 19, 2024.
• 2024: AXIS Specialty Insurance Bermuda was licensed on December 17, 2024.
• 2024: Company entered into a loss portfolio transfer reinsurance agreement with Cavello Bay Reinsurance Limited on December 13, 2024.
• 2025: Final rules regarding BMA supervision of group holding companies expected to be published during the first quarter of 2025.
• 2025: Loss portfolio transfer reinsurance agreement with Enstar expected to close during the first half of 2025.
• 2025: Bermuda corporate income tax will apply for accounting periods starting on or after January 1, 2025.
• 2025: AXIS Corporate Capital UK II Limited provides 100% capital support to Syndicate 1686 with effect from January 1, 2025.
• 2025: OECD published administrative guidance on January 15, 2025 regarding transition rules for deferred tax accounting attributes.
• 2025: Consultation period for BMA plans to directly supervise group holding companies ended in January 2025.
• 2025: Company entered into a stock repurchase agreement with T-VIII PubOpps LP on February 3, 2025.
• 2025: Annual meeting of shareholders to be held on May 16, 2025.
• 2027: TRIP extended through December 31, 2027.
• 2030: AXIS Capital committed to fully phasing out thermal coal from its insurance and facultative reinsurance portfolios no later than 2030 in OECD countries.
• 2035: Bermuda resident companies have an assurance that if any legislation is enacted in Bermuda that would impose tax computed on profits or income, or computed on any capital asset, gain or appreciation, or any tax in the nature of estate duty or inheritance tax, then the imposition of any such tax will not be applicable to our Bermuda resident companies or any of their respective operations, shares, debentures or other obligations until March 31, 2035.
• 2040: AXIS Capital committed to fully phasing out thermal coal from its insurance and facultative reinsurance portfolios no later than 2040 globally.