AXS
Axis Capital Holdings LTD
NYSE
10-Q: AXIS Capital Reports Q1 2025 Results: Underwriting Income Rises Despite Catastrophe Losses
Sentiment:
Quarterly Report
30 April 2025 4:23 PM
AXIS Capital's Q1 2025 results show an increase in underwriting income and a combined ratio of 90.2%, despite facing $49 million in catastrophe and weather-related losses.
Worse than expected
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.
Summary
- AXIS Capital Holdings Limited reported a net income available to common shareholders of $187 million, or $2.30 per common share, for the first quarter of 2025.
- The operating income was $261 million, or $3.17 per diluted common share.
- Gross premiums written reached $2.8 billion, with net premiums written at $1.8 billion and net premiums earned at $1.3 billion.
- The company experienced pre-tax catastrophe and weather-related losses, net of reinsurance, of $49 million, including $32 million attributable to California Wildfires.
- Net favorable prior year reserve development was $18 million.
- Underwriting income amounted to $163 million, with a combined ratio of 90.2%.
- Net investment income was $208 million, while net investment losses totaled $30 million.
- Foreign exchange losses were $57 million, and the income tax expense was $44 million.
- The company repurchased 5.0 million common shares for a total of $465 million.
- The company completed a loss portfolio transfer reinsurance agreement with Cavello Bay Reinsurance Limited, a wholly-owned subsidiary of Enstar Group Limited to retrocede a portfolio of reinsurance business predominantly related to 2021 and prior underwriting years.
Sentiment
Score: 6
Explanation: The report shows mixed results, with increased underwriting and investment income offset by catastrophe losses and foreign exchange losses. The company is executing on its strategy, but faces challenges in the current market environment.
Positives
- Underwriting income increased to $163 million.
- Net investment income increased to $208 million.
- Net favorable prior year reserve development was $18 million.
- The company's high-quality commercial mortgage loan portfolio has a weighted average debt service coverage ratio of 1.7x and a weighted average loan-to-value ratio of 78%.
- The company's fixed maturities portfolio had a weighted average credit rating of A+.
- The company's fixed maturities, short-term investments, cash and cash equivalents had a weighted average credit rating of AA-.
Negatives
- The company experienced $49 million in pre-tax catastrophe and weather-related losses.
- Foreign exchange losses were $57 million.
- Net investment losses totaled $30 million.
- The effective tax rate for the three months ended March 31, 2025 was 18.6% compared to (46.0%) for the three months ended March 31, 2024.
- The company's mortgage loan portfolio had an allowance for expected credit losses of $26 million.
Risks
- The current trade and geopolitical environment introduces uncertainty across several dimensions including potential impacts on economic growth, loss costs, and the threat of a recessionary environment.
- Following multiple years of rate increases outpacing loss cost trends across the specialty sector, overall pricing has moderated and in some sectors is softening.
- The wholesale channel continues to experience substantial submission growth due to dislocations in the standard lines markets.
- Pricing momentum in non-proportional reinsurance continues while our proportional reinsurance business is benefiting from rate increases in the underlying business.
Future Outlook
The overall outlook for the property and casualty market remains favorable for specialty insurance and reinsurance carriers, and AXIS remains positioned to drive profitable growth in 2025 and beyond.
Management Comments
- 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.
Industry Context
The report notes that the overall outlook for the property and casualty market remains favorable for specialty insurance and reinsurance carriers, despite some moderation in pricing and increased competition in certain lines of business.
Comparison to Industry Standards
- The report does not provide specific comparisons to industry standards or competitors.
- However, it mentions that the company believes its presentation of certain non-GAAP measures follows industry practice and facilitates comparison of its performance with its peer group.
Stakeholder Impact
- The company's performance impacts shareholders through earnings per share, book value, and dividends.
- The company's underwriting activities impact clients and distribution partners by providing risk transfer products and services.
- The company's corporate citizenship program supports communities and contributes to a more sustainable future.
Next Steps
- The company will continue to execute on its commitment to advance AXIS as a specialty underwriting leader that delivers consistent, profitable growth.
- The company will continue to focus on underwriting discipline and targeted profitable growth.
- The company will pursue attractive opportunities by employing a focused underwriting strategy and selective appetite.
- The company will continue to return excess capital to shareholders by way of dividends and share repurchases.
Legal Proceedings
- The Company is subject to routine legal proceedings, including arbitrations, arising in the ordinary course of business.
- The Company is not party to any material legal proceedings arising outside the ordinary course of business.
Related Party Transactions
- During 2025, the Company invested an additional $5 million in Monarch Point Re, a collateralized reinsurer which is jointly sponsored by the Company and Stone Point.
- During 2025, the Company advanced $96 million to Monarch Point Re.
- On April 24, 2025, the Company completed a loss portfolio transfer reinsurance agreement with Cavello Bay Reinsurance Limited, a wholly-owned subsidiary of Enstar Group Limited.
Key Dates
- January 1, 2025: Bermuda corporate income tax of 15% applied to Bermuda pre-tax income effective January 1, 2025.
- February 6, 2025: Authorization under the Company's Board-authorized share repurchase program for common share repurchases approved in May 2024 was exhausted.
- February 19, 2025: The Company's Board of Directors approved a new share repurchase program for up to $400 million of the Company's common shares.
- March 23, 2025: The $300 million Facility was amended to extend the tenors of issuable letters of credit to March 31, 2027.
- March 31, 2025: End of the quarterly period.
- April 24, 2025: The Company completed a loss portfolio transfer reinsurance agreement with Cavello Bay Reinsurance Limited, a wholly-owned subsidiary of Enstar Group Limited.
- April 30, 2025: Date of report.
Keywords
reinsurance, insurance, underwriting, premiums, losses, investment, capital, AXIS Capital, financial results
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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