AXIS Q2 results boosted by Novae acquisition and reserves
AXIS Capital delivered a robust set of results in the second quarter with both profits and gross written premiums increasing as the company reaped the rewards of its integration of Novae, which it acquired in 2017, and positive reserve development.
The company posted a net profit of $93 million, compared with $85 million for the second quarter of 2017; its operating income dipped, however, to $106 million compared with $110 million, in the same period the year before.
Its combined ratio was 93.1 percent in the quarter, an improvement on the 97.6 percent it posted a year earlier.
Its results were also boosted by favorable prior year reserve development of $60 million (insurance $24 million; reinsurance $36 million, compared to $71 million a year earlier.
Its gross written premiums increased by $288 million, or 21 percent, to $1.7 billion, with an increase of 34 percent in the insurance segment, primarily attributable to the acquisition of Novae, and an increase of 4 percent in the reinsurance segment.
Adjusting for the impact of the Novae acquisition, however, gross premiums written decreased by $36 million, or 3 percent, with a decrease of $29 million, or 4 percent in the insurance segment and a decrease of $7 million, or 1 percent in the reinsurance segment.
In its insurance book, gross premiums written increased by $262 million, or 34 percent, which included gross premiums written of $291 million attributable to property, professional lines, marine, and credit and political risk lines associated with the acquisition of Novae. Excluding the impact of the acquisition of Novae, gross premiums written decreased by $29 million, or 4 percent.
On the reinsurance side, gross premiums written increased by $26 million, or 4 percent, which included gross premiums written of $33 million attributable to catastrophe, marine and aviation lines associated with the acquisition of Novae. Excluding the impact of the acquisition of Novae, gross premiums written decreased by $7 million, or 1 percent attributable to liability and catastrophe lines, partially offset by an increase in credit and surety lines.
It said the decrease in liability was largely due to timing differences and a lower level of premiums written on a multi-year basis. The decrease in catastrophe lines was primarily due to premium adjustments, together with a lower level of premiums written on a multi-year basis and new business. The increase in credit and surety lines was largely due to favorable premiums adjustments and new business.
Albert Benchimol, chief executive of AXIS Capital, said: "The momentum of our transformation and portfolio optimization is evidenced in our second consecutive quarter of double digit ex-PGAAP ROACE2, as we further integrate Novae into our business and enhance our operating platform to deliver superior and sustainable profitability. As a result of our strong market position, we continue to attract and retain high-quality business, allowing us to deliver better risk adjusted returns despite ongoing challenging market conditions.
"In recent years, AXIS has taken a series of actions to improve efficiency and position the Company to be profitable under a wide range of market conditions. Our team’s efforts continue to gain real traction towards building a unique and differentiated hybrid underwriting platform that will drive long-term profitable growth. We still have plenty of work ahead of us, but we are showing encouraging results. We have a sound strategy focusing on attractive specialty lines, leadership and relevance in key markets, and a talented team focused on delivering outstanding expertise and service to our customers and partners in distribution, and superior results to our shareholders. As long as we remain focused on the steadfast execution of our strategy, the future for AXIS is very exciting."
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