AXS
Axis Capital Holdings LTD
NYSE
8-K: AXIS Capital Reports Strong First Quarter Results, Driven by Specialty Insurance Growth
Sentiment:
Quarterly Report
1 May 2024 4:19 PM
AXIS Capital announced a first quarter net income of $388 million, or $4.53 per diluted common share, and operating income of $220 million, or $2.57 per diluted common share, demonstrating strong financial performance.
Better than expected
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.
Summary
- AXIS Capital reported a net income available to common shareholders of $388 million, or $4.53 per diluted common share, for the first quarter of 2024, compared to $173 million, or $2.01 per diluted common share, in the same period last year.
- Operating income for the first quarter of 2024 was $220 million, or $2.57 per diluted common share, up from $200 million, or $2.33 per diluted common share, in the first quarter of 2023.
- The company's annualized return on average common equity (ROACE) was 32.1%, and the annualized operating ROACE was 18.2%.
- Gross premiums written increased by 11% to $2.7 billion, with the insurance segment growing by 11% and the reinsurance segment by 12%.
- The combined ratio was 91.1%, with the specialty insurance business achieving a combined ratio of 86.6%.
- Net investment income increased by 25% to $167 million, driven by higher yields on fixed maturities.
- Book value per diluted common share increased by 5.7% to $57.13, compared to December 31, 2023.
- Total capital returned to common shareholders was $100 million, including $62 million in share repurchases and $38 million in dividends.
Sentiment
Score: 8
Explanation: The document presents a very positive picture of AXIS Capital's financial performance in Q1 2024, with strong growth in premiums, net income, and operating income. The company's strategic initiatives and focus on specialty insurance are paying off, and the management commentary is optimistic. While there are some minor negatives, the overall tone is very positive from an investment perspective.
Positives
- The company demonstrated strong financial performance with significant increases in net income and operating income.
- The specialty insurance business performed exceptionally well, achieving a low combined ratio and record premium production.
- The company capitalized on favorable market conditions, growing gross premiums written by 11%.
- Net investment income saw a substantial increase due to higher yields on fixed maturities.
- Book value per diluted common share increased, reflecting positive financial results.
- The company returned a significant amount of capital to shareholders through share repurchases and dividends.
Negatives
- Reorganization expenses of $12 million were incurred, primarily related to severance costs from the 'How We Work' program.
- The reinsurance segment experienced a decrease in net premiums written by 4%.
- The current accident year loss ratio, excluding catastrophe and weather-related losses, increased by 5.0 points in the reinsurance segment due to elevated loss experience in marine and aviation lines.
- The acquisition cost ratio increased by 2.9 points in the reinsurance segment, primarily related to adjustments attributable to loss-sensitive features.
Risks
- The cyclical nature of the insurance and reinsurance business could lead to periods with excess underwriting capacity and unfavorable premium rates.
- Natural and man-made disasters, including the potential increase of exposure to natural catastrophe losses due to climate change, could impact results.
- Emerging claims, systemic risks, and coverage and regulatory issues, including increasing litigation, could pose challenges.
- The company faces competition and consolidation in the insurance and reinsurance industry.
- Changes in the political environment of certain countries in which the company operates could affect business.
- General economic, capital, and credit market conditions, including banking and commercial real estate sector instability, could impact performance.
- Changes in tax laws could affect the company's financial results.
Future Outlook
The company expects to incur increased taxes in Bermuda beginning in 2025 due to the Corporate Income Tax Act 2023. They also expect to utilize the net deferred tax asset of $163 million mainly over a 10-year period.
Management Comments
- Vince Tizzio, President and CEO of AXIS Capital, stated that the results of the first quarter evidence that AXIS is elevating its financial performance, producing consistent returns and strong metrics.
- He also noted that the company continued to capitalize on generally favorable market conditions, growing gross premiums written by 11% over the prior year period.
- Tizzio highlighted the strong performance of the specialty insurance business, achieving a combined ratio of 86.6% and record first quarter premium production.
Industry Context
The results reflect a positive trend in the specialty insurance market, with AXIS Capital leveraging favorable conditions to achieve strong growth and profitability. The company's focus on targeted markets and underwriting discipline aligns with industry best practices.
Comparison to Industry Standards
- AXIS Capital's 18.2% annualized operating ROE is competitive with other specialty insurers such as W.R. Berkley (WRB) and Markel (MKL), which also target similar returns.
- The combined ratio of 91.1% is a strong result, indicating effective underwriting and claims management, and is comparable to industry leaders like Chubb (CB) and Travelers (TRV).
- The 11% growth in gross premiums written demonstrates AXIS's ability to capture market share, which is a key metric for growth-oriented insurance companies.
- The 25% increase in net investment income is a positive sign, reflecting effective investment strategies, and is in line with the performance of other insurers with similar investment portfolios.
Stakeholder Impact
- Shareholders will benefit from the strong financial results, increased book value per share, and capital returns through share repurchases and dividends.
- Employees may experience changes due to the 'How We Work' program, which aims to simplify the operating structure.
- Customers will benefit from the company's continued investment in its underwriting platform and expansion of its specialty product set.
- Creditors will be reassured by the company's strong financial position and ability to meet its obligations.
Next Steps
- The company will host a conference call on May 2, 2024, to discuss the first quarter financial results.
- The company will continue to execute its 'How We Work' program to build a more efficient, connected, and data-driven organization.
- The company will continue to invest in its global underwriting platform and expand its specialty product set.
Key Dates
- December 27, 2023: The Government of Bermuda enacted the Corporate Income Tax Act 2023, which will apply a 15% corporate income tax for fiscal years beginning on or after January 1, 2025.
- March 31, 2024: End of the first quarter for which financial results are reported.
- May 1, 2024: Date of the press release and 8-K filing reporting first quarter 2024 results.
- May 2, 2024: Date of the conference call to discuss the first quarter financial results.
Keywords
insurance, reinsurance, financial results, premiums, combined ratio, net income, operating income, ROACE, investment income, book value
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.
Disclaimer: This summary was generated by artificial intelligence and its accuracy is not guaranteed. The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.