Bermuda-based AXIS Capital Holdings Limited has reported a net loss of $17 million for the third quarter of 2022 on the back of previously announced catastrophe losses primarily driven by Hurricane Ian.
The Q3 net loss compares with net income of $47 million a year earlier, as pre-tax catastrophe and weather-related losses, net of reinsurance and reinstatement premiums, totalled $212 million, split $113 million insurance and $99 million reinsurance.
Additionally, AXIS’ Q3 result included $5 million of net favourable prior year reserve development, compared to $11 million in the Q3 2021.
Operating income for the quarter increased from $1 million in 2021 to $3 million in 2022.
Across the business, gross premiums written (GPW) increased by $61 million, or 4% to $1.7 billion in Q3 2022, driven 12% growth in the insurance segment, partially offset by a decline of 17% in the reinsurance segment.
Similarly, net premiums written (NPW) increased by 4% to $1 billion in Q3 2022, as growth of 10% in the insurance unit more than offset a reduction of 10% in the reinsurance segment.
Within reinsurance, premiums fell on the back of decreases in property catastrophe lines due to the firm’s exit from these classes of business in June 2022.
All in all, AXIS has reported a combined ratio of 104.3% for the third quarter, which is an improvement of 3.1 percentage points on the comparable prior year period, as the insurance segment’s underwriting gain was offset by an underwriting loss in reinsurance.
Starting with the reinsurance division, AXIS has reported an underwriting loss of $44.7 million for Q3, which is actually an improvement of more than 35%, year-on-year. The reinsurance combined ratio improved by 5.3 percentage points, but remains in unprofitable territory at 109.1%.
In its insurance business, AXIS saw underwriting income grow by almost 52% to $15.7 million in Q3 2022, as the combined rate improved by 0.5 percentage points to 98%.
On the investment side of the balance sheet, AXIS has announced net investment income of $88 million for Q3 2022 compared with $107 million a year earlier, primarily attributable to losses from other investments.
A look at the insurer and reinsurer’s 9M 2022 performance tells a similar story, with GPW up across the business by 5% to $333 million, as growth of 16% in insurance more than offset a decline of 9% in reinsurance.
NPW increased by 5% to $187 million for 9M 2022 when compared with the prior year, driven by a 17% increase in insurance premiums, somewhat offset by a decline of 9% in the reinsurance segment.
The group-wide combined ratio for 9M 2022 stands at 96.4%, which is an improvement of 2.7 percentage points, year-on-year.
Year-to-date pre-tax catastrophe and weather-related losses, net of reinsurance and restatement premiums, were $339 million, split $174 million insurance and $166 million reinsurance, driven mostly by Hurricane Ian, the war in Ukraine, June European convective storms, Eastern Australia floods, South Africa floods, and other events.
Net favourable prior year reserve development for 9M 2022 was $18 million, compared with $23 million a year earlier.
For 9M 2022, net income totalled $152 million, and operating income amounted to $331 million.
“Our first thoughts are with the communities affected by Hurricane Ian and other catastrophic events this quarter. It is at times like these that our industry has an opportunity to fulfill its social purpose, and our team at AXIS is committed to doing our part to support the recovery and rebuilding efforts,” said Albert Benchimol, President and Chief Executive Officer (CEO).
“For AXIS, the third quarter provides further validation of our strategic evolution to focus our portfolio on specialty, as well as reduce our exposure to catastrophes and strengthen our underlying operations. For the year to date, our industry has suffered in excess of $100 billion of catastrophe losses, yet AXIS grew underwriting income by 75% and operating income by 30%.
“Our specialty insurance business continues to perform strongly with higher underwriting profits for both the quarter and nine-month period, and our reinsurance business has demonstrated the benefits of its lower property cat exposure with a manageable loss for the quarter and an improved underwriting result for the nine-month period.
“Stepping back, conditions and uncertainties in the market are likely to result in a favorable pricing environment into 2023 and beyond, as well as heightened demand for specialty coverages – where AXIS is very well-positioned. Our business has great momentum – we’re improving our profitability, reducing volatility, and growing where we want to. We’re focused on increasing the value that we provide to our customers and shareholders as we advance our strategy of becoming a leader in specialty,” he added.