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AXIS reports improved underwriting performance as CR strengthens

28th July 2021 - Author: Luke Gallin

Bermuda-based insurer and reinsurer, AXIS Capital Holdings Limited, has announced a rise in net income for the second-quarter and first-half of 2021, to $228 million and $344 million, respectively.

axis-capital-logoSupporting this growth in net income, the carrier has reported an improved underwriting performance across both its insurance and reinsurance operations for the second-quarter of 2021, when compared with the same period last year.

Within reinsurance, Q2 2021 gross premiums written (GPW) fell by nearly 1% to $672.7 million, while net premiums written (NPW) jumped by more than 8% to $490.9 million, and net premiums earned (NPE) declined slightly to $525.3 million.

For the second-quarter of 2021, the reinsurance segment produced an underwriting gain of $54.7 million and a combined ratio of 90.6%, against underwriting income of $53 million and a combined ratio of 90.2% a year earlier.

The Q2 2021 combined ratio is comprised of a 63.6% net loss and loss expense ratio, a 21.3% acquisition cost ratio, and an underwriting-related general and administrative expense ratio of 5.7%.

RMS

Pre-tax catastrophe and weather related losses, net of reinsurance, totalled $17 million in Q2 2021, which is down on the $20 million reported for Q2 2020.

In its insurance business, AXIS has reported GPW growth of 22.3% to $1.3 billion, NPW growth of more than 18% to $712.9 million, and NPE growth of 9.5% to $631.7 million.

The insurance segment’s underwriting income improved from $34.4 million in Q2 2020 to $93.5 million this year. The unit’s combined ratio strengthened, year-on-year, by 8.9 percentage points to 85.3%, and is comprised of a 52.6% net loss and loss expense ratio, a 16.9% acquisition cost ratio, and an underwriting-related general and administrative expense ratio of 15.8%.

Pre-tax catastrophe and weather related losses, net of reinsurance, amounted to $11 million in AXIS’ insurance segment in Q2 2021, compared with $16 million a year earlier.

Overall, AXIS has reported GPW growth of 13% across its business for the second-quarter of 2021 to $1.9 billion, while NPW increased by 14% to $1.2 billion.

For the second-quarter, AXIS has produced a combined ratio of 90.6%, which is a 4.1 percentage point improvement on the 94.7% posted a year earlier. The Q2 2021 combined ratio is comprised of a 57.6% net loss and loss expense ratio, an 18.9% acquisition cost ratio, and an underwriting-related general and administrative expense ratio of 14.1%.

Pre-tax cat and weather losses, net of reinsurance, totalled $29 million in Q2 2021, compared with $36 million a year earlier.

Additionally, AXIS says there is no change to its net loss estimate of $360 million for the COVID-19 pandemic in 2020.

Net favourable prior year reserve development also improved for the carrier in Q2 2021, reaching $7 million against just $3 million in Q2 2020.

For the first-half of the year, the re/insurer’s GPW jumped by 8% to $4.5 billion, driven by a 20% increase in its insurance segment, somewhat offset by a 3% reduction in reinsurance premiums. Overall, NPW increased by 9% to $3 billion for H1 2021, driven by 20% in the insurance segment and an increase of 1% in the reinsurance segment.

For H1 2021, AXIS has reported a combined ratio of 94.7%, which represents an improvement of 12.4 percentage points on the 107.1% combined ratio reported for H1 2020.

Pre-tax catastrophe and weather-related losses, net of reinsurance and reinstatement premiums, were $139 million for the first half of 2021, driven mostly by Winter Storms Uri and Viola.

Albert Benchimol, President and Chief Executive Officer (CEO) of AXIS, commented: “We are pleased to report record operating earnings per share for the quarter and first half of the year, along with excellent production and robust underwriting and investment performance.

“Our core underwriting results were strong, as evidenced by this quarter’s current year ex-cat combined ratio of 88.7%. Our continued progress in underwriting performance provides tangible proof that our efforts to reposition our portfolio are delivering meaningful improvements.

“Our insurance business is well positioned in the markets experiencing the strongest conditions, leading to 22% growth in gross premiums written to achieve a record level of premium production. Our reinsurance business demonstrated agility and discipline, growing in attractive classes, but also holding the line where terms were not deemed sufficiently attractive, and continuing to manage down catastrophe volatility.

“During the quarter, we recorded average rate increases of 14% across our insurance book, which is higher than the previous quarter and on par with the prior year period – and we remain confident that pricing will remain at or above loss cost trends well into 2022 and likely beyond, providing a tailwind to ongoing improvements in underwriting profitability.”

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