AXS
Axis Capital Holdings LTD
NYSE
10-Q: AXIS Capital Reports Strong First Quarter 2024 Results Driven by Underwriting and Investment Performance
Sentiment:
Quarterly Report
1 May 2024 4:23 PM
AXIS Capital Holdings Limited announced a robust first quarter for 2024, marked by significant net income growth and a solid underwriting performance.
Better than expected
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.
Summary
- AXIS Capital reported a net income available to common shareholders of $388 million, or $4.57 per common share, for the first quarter of 2024.
- The company's operating income was $220 million, or $2.57 per diluted common share.
- Gross premiums written reached $2.7 billion, while net premiums written totaled $1.7 billion.
- Net premiums earned were $1.3 billion.
- The combined ratio was 91.1%, with underwriting income of $146 million.
- Net investment income was $167 million, although the company experienced net investment losses of $9 million.
- The company recorded a foreign exchange gain of $24 million.
- Reorganization expenses amounted to $12 million.
- An income tax benefit of $125 million was recognized, including a $163 million net deferred tax benefit from Bermuda's Corporate Income Tax Act 2023.
- Total cash and investments stood at $16.8 billion, with fixed maturities, short-term investments, and cash equivalents comprising 89% of this total.
- The company repurchased 1.3 million common shares for $76 million.
- Common shareholders' equity was $5.0 billion, with a book value per diluted common share of $57.13.
Sentiment
Score: 8
Explanation: The document presents a very positive outlook with strong financial results, increased profitability, and strategic growth initiatives. The company's performance is better than expected, and the management's commentary is optimistic. However, there are some negative points such as net investment losses and reorganization expenses, which prevent a perfect score.
Positives
- The company experienced a significant increase in net income available to common shareholders.
- Operating income showed a strong performance, indicating solid core business operations.
- The combined ratio of 91.1% demonstrates effective underwriting.
- Net investment income increased by 25%, contributing to overall profitability.
- The company benefited from a substantial income tax benefit, boosting net income.
- Share repurchases indicate a commitment to returning capital to shareholders.
- Book value per diluted common share increased, reflecting positive growth in shareholder value.
Negatives
- The company experienced net investment losses of $9 million.
- Reorganization expenses of $12 million were incurred, impacting overall profitability.
- The reinsurance segment saw a decrease in net premiums earned by 18%.
Risks
- The cyclical nature of the insurance and reinsurance business could lead to periods of excess underwriting capacity and unfavorable premium rates.
- Natural and man-made disasters, including climate change and cyber-attacks, pose a risk to the company's exposure.
- Emerging claims, systemic risks, and regulatory issues could impact the company's financial results.
- The company faces increased competition and consolidation in the insurance and reinsurance industry.
- Changes in the political environment of certain countries could affect the company's operations.
- The company is exposed to general economic, capital, and credit market conditions, including banking and commercial real estate sector instability.
- The company faces operational risks related to technology, data security, and reliance on third-party systems.
- Changes in governmental regulations and tax laws could impact the company's financial performance.
Future Outlook
The company anticipates continued attractive pricing and positive rate movement across most business lines, with a focus on disciplined underwriting and targeted growth opportunities.
Management Comments
- Management believes that the company's market positioning, underwriting expertise, global platform, and strong relationships will provide opportunities for increased profitability.
- Management expects pricing momentum to slow across many lines but the ability to access well-priced new business should remain.
- Management continues to focus on underwriting discipline to drive targeted profitable growth among the specialty and casualty reinsurance lines that the company offers.
Industry Context
The results reflect a broader trend of strong performance in the specialty insurance and reinsurance markets, with companies focusing on disciplined underwriting and strategic growth. The company is leveraging its global platform to expand into new regions and address more transactional specialist business.
Comparison to Industry Standards
- The combined ratio of 91.1% is competitive with industry benchmarks for well-managed insurance and reinsurance companies.
- The growth in net investment income aligns with the trend of higher yields in the current interest rate environment.
- The company's focus on specialty lines and disciplined underwriting is consistent with strategies employed by other successful players in the sector.
- The share repurchase program is a common practice among companies with strong cash flow and a commitment to shareholder returns, similar to companies like RenaissanceRe and Everest Re.
- The company's book value per share growth is a key metric that is closely watched by investors and is comparable to other well-performing companies in the sector such as Arch Capital and W.R. Berkley.
Stakeholder Impact
- Shareholders benefit from increased net income, share repurchases, and a higher book value per share.
- Employees may be impacted by the 'How We Work' program, which includes reorganization and potential severance costs.
- Customers and distribution partners benefit from the company's strong financial position and commitment to service.
- The company's strong financial position and strategic growth initiatives provide stability for suppliers and creditors.
Next Steps
- The company will continue to focus on underwriting discipline to drive targeted profitable growth.
- The company will continue to pursue targeted growth opportunities by employing a disciplined underwriting strategy and appetite.
- The company will continue to implement a more focused distribution strategy while building mutually beneficial relationships with clients and partners.
- The company will continue to improve the effectiveness and efficiency of its operating platforms and processes through its 'How We Work' program.
- The company will continue to invest in data and technology capabilities, and tools to empower its underwriters and enhance the service that it provides to its customers.
Legal Proceedings
- The company is subject to routine legal proceedings, including arbitrations, arising in the ordinary course of business.
Related Party Transactions
- During 2018, the Company entered into a quota share retrocessional agreement with Harrington Re which was deemed to have met the established criteria for retroactive reinsurance accounting.
- During 2024, the Company entered into a reinsurer novation and replacement agreement with Harrington Re and a third party reinsurer with respect to this quota share retrocession contract.
Key Dates
- December 27, 2023: The Government of Bermuda enacted the Corporate Income Tax Act 2023.
- March 26, 2024: The company's $500 million letter of credit facility was amended.
- March 31, 2024: End of the reporting period for the first quarter results.
- April 26, 2024: There were 84,659,970 common shares outstanding.
- May 1, 2024: Date of the report.
Keywords
insurance, reinsurance, underwriting, investment, premiums, losses, combined ratio, net income, operating income, share repurchase, financial results, capital, Bermuda, tax, catastrophe
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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