AXIS Q1 profits fall; warns on weaker conditions
AXIS Capital enjoyed some growth in its first quarter results, especially in its reinsurance book. But a mixture of lower investment income and property losses hit its profitability as its CEO warned on weaker market conditions.
AXIS made a net profit in the quarter of $137 million compared with $303 million for the corresponding period of 2013, a decline of 54 percent. Its operating income was $137 million compared with $227 million for the first quarter of 2013. Its combined ratio for the quarter was 91.9 percent compared with 83 percent a year earlier.
Its gross premiums written increased by 4 percent to $1.8 billion thanks to growth of 1 percent in its insurance segment and 6 percent in its reinsurance segment. Its net premiums written increased by 6 percent to $1.7 billion.
Its insurance segment reported gross premiums written of $602 million and underwriting income of $17 million for the current quarter, compared with $41 million for the first quarter of 2013. The quarter’s underwriting result reflected a combined ratio of 96.3 percent, compared with 89.9 percent in the prior year quarter.
The company’s reinsurance business reported gross premiums written of $1.2 billion in the first quarter, up $70 million, or 6 percent. It said the increase in the gross premiums written was primarily due to a number of treaties written on a multi-year basis, specifically in the property, catastrophe and motor lines. This unit reported underwriting income of $92 million compared with $130 million in the first quarter of 2013. The segment’s combined ratio increased to 82.1 percent for the current quarter, compared with 72.5 percent in the first quarter of 2013.
Albert Benchimol, chief executive of AXIS Capital said: “AXIS reported first quarter operating income of $1.24 per share and operating ROE of 10.6 percent. We ended the quarter with diluted book value per share of $47.13, an increase of 3 percent over the quarter. In addition, we returned to shareholders over $200 million through share repurchases and dividends. This year’s quarter was impacted by lower investment income from alternative investments and higher property losses in the insurance segment.
“While market conditions have weakened a little, there remain many opportunities for profitable business across our core book. We also continue to have success in developing and nurturing new business initiatives. We completed a successful first season of coverage in our Weather & Commodities business, and we recently brought on a new Healthcare Professional Liability team. Our strategy of growing and diversifying our consolidated portfolio is delivering highly satisfactory results.”