AXS
Axis Capital Holdings LTD
NYSE
8-K: AXIS Capital Reports Strong Second Quarter Results, Driven by Underwriting and Investment Gains
Sentiment:
Quarterly Report
30 July 2024 4:22 PM
AXIS Capital announced a robust second quarter with net income of $204 million and operating income of $250 million, driven by strong underwriting performance and increased investment income.
Better than expected
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.
Summary
- AXIS Capital reported a net income available to common shareholders of $204 million, or $2.40 per diluted common share, for the second quarter of 2024, compared to $143 million, or $1.67 per diluted common share, in the same period last year.
- Operating income for the quarter was $250 million, or $2.93 per diluted common share, up from $191 million, or $2.23 per diluted common share, in the second quarter of 2023.
- The company's annualized return on average common equity (ROACE) was 16.2%, and the annualized operating ROACE was 19.9% for the quarter.
- The combined ratio improved by 1.1 points to 90.4% in the second quarter.
- Book value per diluted common share increased to $59.29, a rise of $2.16, or 3.8%, compared to March 31, 2024.
- For the first six months of 2024, net income available to common shareholders was $592 million, or $6.93 per diluted common share, and operating income was $470 million, or $5.50 per diluted common share.
- Net investment income for the second quarter of 2024 was $191 million, a 40% increase compared to $137 million in the second quarter of 2023, primarily due to higher yields on fixed maturities.
- Gross premiums written increased by 7% to $2.4 billion, with the insurance segment growing by 8% and the reinsurance segment by 4%.
Sentiment
Score: 8
Explanation: The document presents a very positive outlook with strong financial results, improved metrics, and strategic initiatives showing progress. The management commentary is optimistic, and the overall tone suggests confidence in the company's future performance. There are some minor negatives, but the positives significantly outweigh them.
Positives
- The company achieved record operating EPS of $2.93 in the second quarter.
- AXIS Capital saw a 17% net premiums written growth in its specialty insurance business.
- The company's 'How We Work' transformation program is enhancing operations and reducing costs.
- The book value per diluted common share increased by 16.3% over the past twelve months.
- Total capital returned to common shareholders was $176 million year to date.
- The company's fixed maturities portfolio saw a book yield of 4.4% at June 30, 2024, compared to 3.9% at June 30, 2023.
Negatives
- Reorganization expenses of $14 million were incurred, primarily related to severance costs from the 'How We Work' program.
- Net premiums written in the reinsurance segment decreased by 11% in the second quarter.
- The acquisition cost ratio in the insurance segment increased by 1.0 point.
- The current accident year loss ratio in the insurance segment increased by 2.0 points.
Risks
- The document mentions risks related to natural and man-made disasters, including potential increases in exposure to natural catastrophe losses due to climate change.
- There are risks associated with emerging claims, systemic risks, and coverage and regulatory issues.
- The company faces risks related to competition and consolidation in the insurance and reinsurance industry.
- The document highlights risks related to general economic, capital, and credit market conditions, including banking and commercial real estate sector instability.
- There are risks associated with changes in governmental regulations and potential government intervention in the industry.
- The company faces risks related to changes in tax laws.
Future Outlook
The company is intent on building on its momentum and is pleased with the actions it is taking across all aspects of its business.
Management Comments
- Vince Tizzio, President and CEO of AXIS Capital, stated that this was an excellent quarter and first half of the year for AXIS, defined by consistent, profitable results and strong diluted book value per share growth.
- He also mentioned that the company delivered on its stated goals, producing an annualized operating ROE of 20%, record operating EPS of $2.93, and a combined ratio of 90.4%.
- Tizzio noted that the company continued to lean into attractive specialty markets where they hold leadership positions, while tapping into their deep distribution relationships.
- He highlighted the progress made in enhancing operations through the 'How We Work' transformation program.
Industry Context
The results reflect a positive trend in the specialty insurance and reinsurance market, with AXIS Capital leveraging its leadership positions and strategic partnerships to drive growth and profitability. The focus on specialty lines and expense management aligns with broader industry trends towards efficiency and targeted growth.
Comparison to Industry Standards
- AXIS Capital's 19.9% operating ROACE is strong compared to the average for the insurance industry, which typically ranges from 8% to 12%.
- The combined ratio of 90.4% is also competitive, indicating efficient underwriting practices, with many competitors in the specialty insurance space aiming for a combined ratio below 95%.
- Companies like Chubb and The Hartford, which also operate in the specialty insurance market, have reported similar improvements in their combined ratios, but AXIS's growth in net premiums written in the insurance segment at 17% is particularly notable.
- The 40% increase in net investment income is also significant, reflecting a successful strategy in managing their fixed income portfolio, which is a key driver of profitability for insurance companies, and is higher than many of its peers.
- The book value per diluted common share growth of 3.8% in the quarter is also a positive sign, indicating strong capital management, and is comparable to other well-managed insurance companies.
Stakeholder Impact
- Shareholders will benefit from the increased net income, operating income, and book value per share.
- Employees may experience changes due to the 'How We Work' transformation program, but the program aims to improve productivity.
- Customers will benefit from the company's focus on specialty markets and strong underwriting capabilities.
- Creditors will see the company's strong financial position as a positive sign.
Next Steps
- The company will host a conference call on July 31, 2024, to discuss the second quarter financial results.
- The company will continue to implement its 'How We Work' transformation program.
- The company will continue to execute its share repurchase program.
Key Dates
- July 30, 2024: Date of the press release and 8-K filing, announcing second quarter 2024 results.
- July 31, 2024: Date of the conference call to discuss the second quarter financial results.
Keywords
insurance, reinsurance, financial results, underwriting, investment income, combined ratio, premiums, ROACE, book value, capital management
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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