DEF: AXIS Capital Reports Strong 2024 Performance, Driven by Specialty Underwriting Focus

AXIS Capital achieved a transformative year in 2024, delivering strong financial results and progressing towards its goal of becoming a leading specialty underwriter.

Summary

• AXIS Capital had a transformative year in 2024, marked by significant achievements aligned with strategic priorities.
• 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.
• The insurance segment achieved a combined ratio of 89.1% and generated $6.6 billion in gross premiums written, up 7.7% over the prior year.
• The reinsurance segment produced a combined ratio of 91.8% and generated $2.4 billion in gross written premiums, growing nearly 8%.

Sentiment

Score: 9

Explanation: The document presents a highly positive outlook for AXIS Capital, supported by strong financial results and strategic achievements. The company's focus on specialty underwriting and commitment to shareholder value creation contribute to a favorable sentiment.

Positives

• Record operating earnings per share were achieved.
• The company is well-positioned in attractive markets and poised to capitalize on emerging business opportunities.
• The 'How We Work' program continues to progress, enhancing all aspects of how the company operates.
• The company is making important investments in technology and AI capabilities.
• The company is advancing its award-winning Corporate Citizenship program.
• The company is committed to building on the momentum that it's achieved while delivering value to its shareholders and all its stakeholders.
• The company's 2024 Say on Pay vote received support from 96% of the votes cast.

Risks

• The document mentions a 'complex and rapidly evolving risk environment'.
• The document mentions that 'much work remains ahead' to realize the company's best potential.

Future Outlook

AXIS Capital anticipates sustained profitable growth and value creation in 2025 and beyond, driven by its position in attractive markets and emerging business opportunities.

Management Comments

• 2024 was a transformative year for AXIS as we took meaningful steps toward achieving our specialty leadership ambition, while producing one of the strongest years in our Company's history.
• As we shared at our 2024 Investor Day, our aspiration is to be the leading specialty underwriter, generating consistent top-quartile diluted book value per share growth.
• AXIS enters 2025 with confidence in our future, coupled with recognition that much work remains ahead, and we are deeply committed to helping our Company realize its best potential as a specialty underwriting leader.

Industry Context

The announcement highlights AXIS Capital's focus on specialty underwriting, a segment of the insurance industry that often commands higher premiums due to the complexity and unique risks involved. The company's performance reflects a broader trend in the industry towards specialization and disciplined underwriting.

Comparison to Industry Standards

• The document states that AXIS' aspiration is to be the leading specialty underwriter, generating consistent top-quartile diluted book value per share growth.
• The document states that the company's relative total shareholder return for the three-year period ending December 31, 2024 ranked in the 83rd percentile of our PSU peer group.

Management Changes

Related Party Transactions

• The Company engages SKY Harbor Capital Management, LLC, a portfolio company of investment funds managed by Stone Point, to manage certain of our debt portfolios representing approximately 11% of our total investments.
• We have an investment of $3 million in the Freedom Consumer Credit Fund, LLC Series B, the manager of which is Freedom Financial Asset Management, LLC, an indirect subsidiary of Pantheon Partners, LLC (Pantheon).
• We have a $92 million investment in Stone Points private equity fund, Trident VIII L.P. ('Trident VIII') and co-investments of $30 million.
• We have a $39 million investment in Stone Point's private equity fund, Trident IX L.P. ('Trident IX').
• We have a $48 million investment in Rialto Real Estate IV-Property ('Rialto') and co-investments of $23 million with Rialto Real Estate Fund IV-Property, a fund managed by a portfolio company of Stone Points private equity fund, Trident VII L.P.
• We have a $18 million investment in Stone Point Credit Corporation.
• We have a $7 million investment in a loan to Eagle Point Credit Management LLC, which is majority-owned by Trident IX.
• We have a $6 million investment in cumulative preferred shares of Aspida Holdings Ltd.
• We have a $43 million investment in Monarch Point Re, a collateralized reinsurer which is jointly sponsored by the Company and Stone Point.
• We have committed up to $25 million in Stone Point's private equity fund, Trident X L.P. ('Trident X').
• We have committed up to $60 million in a separately managed account to be managed by Stone Point Credit LLC.
• On December 13, 2024, we entered into a loss portfolio transfer reinsurance agreement with Cavello Bay Reinsurance Limited, a wholly-owned subsidiary of Enstar Group Limited ('Enstar') to retrocede a portfolio of reinsurance business predominantly related to 2021 and prior underwriting years.
• On February 3, 2025, we entered into a stock repurchase agreement with T-VIII PubOpps LP ('T8'), an investment vehicle managed by Stone Point, pursuant to which T8 agreed to sell 2,234,636 shares to the Company for an aggregate price of approximately $200 million.
• On March 5, 2025, we entered into a stock repurchase agreement with T8, pursuant to which T8 agreed to sell 2,139,037 shares to the Company for an aggregate price of approximately $200 million.

Stakeholder Impact

• The company is delivering long-term value to its colleagues, shareholders, customers, and other stakeholders.
• The company is supporting the diverse needs of its customers in today's dynamic risk landscape.
• The company is committed to building on the momentum that it's achieved while delivering value to its shareholders and all its stakeholders.

Next Steps

• The company will hold the 2025 Annual General Meeting of Shareholders on May 16, 2025.
• The company will continue to monitor and make progress against its commitment to a science-based aligned target of 50% absolute reduction of Scope 1 and 2 GHG emissions across its global operations by 2030, using a 2019 baseline.
• The company continues to prepare for the implementation of CSRD as well as monitor its reporting obligations under the CSRD.

Key Dates

Keywords

specialty underwriting, reinsurance, insurance, financial performance, executive compensation, corporate governance, premiums, ROACE, OROACE, DBVPS