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Axis Capital has seen its net income drop in the first quarter of 2017 as the reinsurance underwriting profit plummets.
Axis Capital has reported that its first quarter 2017 net income came to $5 million, a substantial fall on the $28 million it posted for the first quarter of 2016.
The reinsurance segment reported underwriting income of $3 million for the first quarter, compared to $82 million in the first quarter of 2016. The combined ratio was 98.5 percent compared to 82.3 percent in the same period in 2016. This included an increase in the current accident year loss ratio of 6.9 points to 70.0 percent, including 2.2 points attributable to catastrophe and weather-related losses, and 4.7 points attributable to a combination of factors, including changes in business mix, rate deterioration and the impact of the Ogden rate change (1.8 points) on the motor lines.
“The special items that impacted our operating income for the quarter include the impact of the Ogden rate change in the UK, executive severance and retirement costs, and an impairment of an equity-method investment,” said Albert Benchimol, president and CEO of AXIS Capital. “In addition, we experienced high catastrophe and weather-related losses for the quarter, which were in line with higher industry losses.”
During the first quarter of 2017, Axis incurred pre-tax catastrophe and weather-related losses of $15 million, or 3.1 points, primarily attributable to US weather-related events and Cyclone Debbie, compared to $4 million, or 0.9 points of catastrophe and weather-related losses reported during the same period in 2016. After adjusting for the catastrophe and weather-related losses, the segment’s current accident year loss ratio increased by 4.7 points, compared to the same period in 2016.
Axis’ insurance segment reported underwriting income of $13 million for the current quarter, compared to $17 million in the first quarter of 2016.
Overall, gross written premiums for the first three months of 2017 totalled $1.91 billion, a slight fall on the $1.96 billion that the company wrote in the first quarter of 2016.
Net investment income for the quarter came to $99 million, a rise of $50 million from the first quarter of 2016, and a $3 million increase from the fourth quarter of 2016, primarily due to changes in the fair value of AXIS Capital’s alternative investments. These investments generated a gain of $19 million in the current quarter, compared to a loss of $27 million in the first quarter of 2016, and a gain of $17 million in the fourth quarter of 2016.
Benchimol added: “Even against the backdrop of a challenging global P&C marketplace, we continue to demonstrate improvements in our insurance accident year loss ratio excluding catastrophe and weather, and benefits from our strategic capital partnering activities which allow us to do more for clients, lower our cost of capital, and attractively rebalance the risk-reward equation for our shareholders. Our underlying underwriting results demonstrate the strength of our various underwriting and risk management initiatives, good progress in our targeted growth initiatives and continued positive momentum in our strategic capital partnering activities.”
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Axis Capital, First quarter 2017 results, Albert Benchimol, Bermuda
