AXIS Capital profit jumps in Q2 amid pivot to specialty lines
Bermuda-based global re/insurer AXIS Capital’s profit surged substantially in the second quarter, fuelled by improvements in the insurance segment and rising interest rates for its investment portfolio. The company capitalised on “favourable market conditions” across the majority of its lines, leading to steady growth in its target markets.
AXIS, which pivoted from underwriting property catastrophe and property risks to specialty lines in 2022, said net profit for the year to date almost doubled to $315 million from $168.8 million in the first half of 2022.
Net profit available to common shareholders for the second quarter of 2023 was $143 million, compared with $27 million seen in the same period last year.
Operating income per share was $2.23, up from $1.74 a year earlier. This beat consensus earnings estimates of $1.77, according to Zacks Equity Research.
Net investment income for the second quarter of 2023 was $137 million, compared to $92 million, for the second quarter of 2022, due to increased yields from fixed maturities.
“AXIS delivered strong top- and bottom-line results in the quarter as we further positioned the company as a specialty underwriting leader,” said chief executive officer Vincent Tizzio (pictured).
“Consistent with our strategic priorities, in the quarter we drove profitable growth across our target markets while generating record performance in numerous areas including the best second quarter premium production in our company’s history, as well as both the best ever premium and new business production for our specialty insurance business.”
He added: “In the first half of 2023, we have accelerated the positive momentum in our performance while capitalising on favourable market conditions across the vast majority of our lines and leveraging our global platform to elevate our business, culminating in the delivery of our strongest ever six-month operating income per share.”
AXIS said gross premiums written increased by $171 million, or 8% ($194 million, or 9%, on a constant currency basis), to $2.3 billion, largely due to increases in the insurance segment.
Net premiums written increased by $130 million, or 10% ($152 million, or 12%, on a constant currency basis), to $1.4 billion with an increase of $152 million, or 17% in the insurance segment, partially offset by a decrease of $22 million, or 5% in the reinsurance segment. AXIS’ combined ratio fell to 91.5% from 93.4%.
In the insurance segment, gross written premium rose 14.6% to $1.68 billion from $1.47 billion, while net premiums were up 17.4% to $1.02 billion from $869.4 million.
Underwriting income was $114.6 million, up 22.2% from $93.8 million but the combined ratio rose to 86.4% from 84.5%
AXIS said the rise in insurance GWP was due to increases in property, marine and aviation, and liability lines due to favourable rate changes and new business, and accident and health lines due to new business, partially offset by a decrease in professional lines reflecting the reduction in activity in transactional liability business, together with “an unattractive pricing environment for US public D&O business”.
In the reinsurance segment, GWP fell 6.8% to $600 million from $643 million due to decreases in catastrophe and property lines as the company exited those areas. Ongoing specialty lines rose by four per cent as underwriting increased in credit and surety and professional lines.
Net premiums fell 4.9% to $425.3 million from $447.4 million while underwriting income rose 47.9% to $33.8 million compared to $22.9 million.
The combined ratio rose to 92.7% from 88.4%.
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