Bermuda domiciled AXIS Capital Holdings Limited has returned to underwriting profit in the fourth quarter of 2021 and for the full-year, driven by an improved result in both its insurance and reinsurance business.
Across the business, AXIS has reported a combined ratio of 93.1% for Q4 and 97.5% for the full-year 2021, compared with 109.6% for both prior year periods.
In both periods, catastrophe and weather-related losses had a far lesser impact in 2021 than in the prior year.
In Q4, pre-tax losses from catastrophes, net of reinsurance, amounted to $54 million, primarily attributable to Quad-state tornadoes, the December Convective Storms, and other weather-related events. Of this total, the insurance segment assumed $23 million of losses and the reinsurance segment $32 million. All in all, cat events had 4.3 percentage point impact on the combined ratio, compared with 18.4% a year earlier.
At the same time, AXIS has reported no changes to its loss estimate of $360 million established in 2020 for the COVID-19 pandemic.
Additionally, net favourable prior year reserve development increased by $2 million, year-on-year, to $9 million in Q4 2021.
Gross premiums written (GWP) spiked by 16% to $1.6 billion, driven mostly by the insurance segment, while net premiums written (NPW) increased by 21% to $947 million, driven by both the insurance and reinsurance segment.
For the fourth quarter of 2021, AXIS Capital has announced net income of $197 million, compared to a net loss of $5 million for Q4 2020. The operating result also improved to a positive return of $182 million for the quarter, against a loss of $16 million a year earlier.
During the quarter, AXIS produced an improved underwriting result in both insurance and reinsurance. In its primary business, underwriting income hit $81.6 million against a loss of $66 million a year earlier, as the combined ratio improved by 22.6 percentage points to 88.7%.
In the reinsurance business, underwriting income totalled $54.3 million in Q4 2021 compared with a loss of $14.8 million in the prior year, as the combined ratio strengthened by 11.5 percentage points to 90.8%.
Turning to the re/insurer’s full-year 2021 performance, and GWP increased by 13% to $7.7 billion, mostly attributable to primary insurance growth. NPW also increased year-on-year, by 14% to $4.9 billion, again driven mostly by the insurance segment.
In 2021, AXIS recorded pre-tax catastrophe and weather-related losses, net of reinsurance and reinstatement premiums, of $443 million. Of this, $268 million is attributable to reinsurance and $175 million to insurance.
AXIS attributes the losses to Hurricane Ida, Winter Storms Uri and Viola, which principally impacted the state of Texas, July European floods, and other weather-related events. For the full-year, catastrophe events had a 9.5 percentage point impact on the combined ratio, combined with 17.7 percentage points a year earlier.
For the full-year 2021, AXIS has reported a stronger combined ratio of 97.5%, compared with 109.6% in 2020.
Both the insurance and reinsurance segment performed better in 2021 than in the previous year. In reinsurance, AXIS has reported a full-year underwriting gain of $41.3 million and a combined ratio of 99%, compared with an underwriting loss and a combined ratio of 103.8% in 2020.
The insurance segment produced underwriting income of $224.3 million in 2021 and a combined ratio of 91.6%, compared with an underwriting loss of more than $235 million and a combined ratio of 110.4% in 2020.
The Bermuda-based firm has announced net income of $588 million for the full-year 2021 compared with a net loss of $151 million a year earlier.
Albert Benchimol, President and Chief Executive Officer (CEO), commented: “This was a strong fourth quarter highlighted by an annualized operating ROE of 15%, a good finish to a year of meaningful progress. Our results provide further evidence that our work in recent years to reposition our portfolio is delivering its intended outcome, and we’re committed to sustaining this momentum and producing consistent profitable growth.
“In addition to driving significant improvement to our combined ratio, we continued to optimize balance and volatility in our portfolio as we drive PMLs lower across the entire curve. Further, we continued to capitalize on favorable market conditions to build upon our well-established positions in some of the best performing specialty insurance markets.
“Within our Insurance segment, we delivered both record new business growth and total premium, as we produced the largest and most diversified insurance portfolio in the Company’s history. Our insurance business produced a combined ratio of 91.6% for the full year, and we’re focused on delivering performance in-line with the top ranks of the specialty insurance sector. Within our Reinsurance segment, which reported a full year combined ratio of 99%, we took substantial portfolio actions during the year and into the 1/1 renewals to improve the quality and reduce the volatility of the book, and we will continue to do so in 2022.
“I’m proud of the commitment and agility demonstrated by our team, as we continued to navigate through a dynamic environment while producing the high level of service that our customers have come to expect from AXIS. We’re excited for the future and focused on building on our progress and further increasing the value that we deliver to all of our stakeholders.”