AXIS ups prior year reserves by $425 million
Claims increases in liability and professional lines have prompted AXIS Capital Holdings to increase its prior year reserves by $425 million.
Specialty re/insurer AXIS said the claims increases related to 2019 and prior years as it announced a fourth quarter loss of $150 million compared to a $40.9 million profit in 2022. However, its full-year net income in 2023 was $346 million compared to $192.8 million in 2022.
The company’s prior year reserve strengthening would result in a post-tax increase of $361 million and is attributable to both its insurance and reinsurance segments in liability lines and professional lines predominantly related to 2019 and older accident years. This amount is equal to 4.5% of net loss reserves on September 30, 2023, the company said.
Vince Tizzio (pictured), president and CEO, said: "The decisive actions we are taking this quarter address reserve development that is predominantly related to 2019 and older accident years as current economic and social inflation trends impact the overall US casualty market.
“We undertook a rigorous review that included an examination of trend assumptions, emerging development patterns, new industry data, and current legal trends.
"AXIS concludes the year with a portfolio that is well-positioned in the market, underpinned by our strong capital position. We approach the future with confidence and our team is relentlessly committed to achieving our specialty leadership ambition."
He added: "AXIS delivered strong underlying performance in 2023 and we believe the Company is on a clear trajectory to becoming a specialty underwriting leader.
“This was a year where we drove consistent premium growth with double-digit increases across the vast majority of our specialty insurance lines, and continued to cultivate a diversified and resilient portfolio, further improved and streamlined our operating model, and grew the tailored products and capabilities that we provide to our customers.”
In the fourth quarter, the company took a $23.6 million investment loss compared to $42.5 million in the same period in 2023. The company took a $106.9 million operating income loss in the quarter.
For the quarter, the company’s combined ratio rose 30 points to 124.6% combined ratio from 94.1% in 2022.
For the year ended December 31, 2023, the company’s anticipated net income was equivalent to $4.02 per diluted common share and it had an operating income of $486 million, or $5.65 per diluted common share, compared to $498 million in 2022.
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