Global specialty underwriter and provider of re/insurance, AXIS Capital Holdings Limited, has announced the strengthening of prior year reserves in Q4 2023 by $425 million, pre-tax, or $361 million, after-tax.
The company notes that the reserve strengthening is attributable to its insurance and reinsurance segments in liability lines and professional lines predominantly related to the 2019 and older accident years.
According to AXIS, this amount is equal to 4.5% of net loss reserves on September 30th, 2023.
Following the announcement from AXIS, analysts are saying this morning that with the legacy reserves now dealt with, this could position the firm to see share price improvement as they feel AXIS has previously been discounted against its peers.
Alongside the reserve update, AXIS has provided some preliminary full year 2023 financial results. This includes the expectation of an improved combined ratio of 91.8%, compared to 96.3% in 2022, and book value per diluted common share of $54.06, an increase of 15.1% over the past twelve months.
The re/insurer is also expecting to report net income available to common shareholders of $346 million, or $4.02 per diluted common share, and operating income of $486 million, or $5.65 per diluted common share. At the same time, the company is anticipating an increase in gross premiums written of $142 million, or 2%.
Vince Tizzio, President and Chief Executive Officer, AXIS Capital, commented: “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.
“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 U.S. 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.”
