Bermuda-based re/insurer AXIS Capital has reported an improvement in its combined ratio to 92.7% for Q3 2023, supported by a better underwriting result in both its insurance and reinsurance segments.
Group-wide, the third quarter combined ratio improved 11.6 percentage points from 104.3% in 2022, as the net losses and loss expense ratio fell 14 pts to 59.3% on the back of lower catastrophe losses.
Pre-tax catastrophe and weather-related losses, net of reinsurance, were $42 million for Q3 2023, driven by Maui wildfires, Hurricane Idalia, and other weather-related events. This compares with cat losses of $212 million in Q3 2022.
This quarter, the insurance segment took $37 million of the cat loss total and the reinsurance segment $5 million.
Across both insurance and reinsurance, gross premiums written (GPW) for the quarter increased by $198 million, or 12% to $1.9 billion, with growth of 11% in insurance and growth of 15% in reinsurance.
However, net premiums written decreased by $61 million, or 6% to $1 billion, driven by a decrease of $169 million, or 65% in the reinsurance segment, partially offset by an increase of $107 million, or 14% in the insurance segment.
Within reinsurance, AXIS returned to underwriting profit in the quarter, with a gain of $42.4 million, compared with a loss of $44.8 million a year earlier. The segment’s combined ratio strengthened 16.4 pts year-on-year to 92.7%, as the loss ratio fell from 84.1% to 67%.
The 15% growth in reinsurance GPW to $448 million is mostly attributable to increases in liability, and credit and surety lines due to new business and increased line sizes, and professional lines largely driven by new business.
Net premiums written (NPW), however, decreased by $169 million, or 65% to $90.1 million in the reinsurance business in the quarter, which the firm attributes to the increase in premiums ceded in liability, professional lines, credit and surety, accident and health, and motor lines associated with the quota share retrocession agreement entered into with Monarch Point Re.
For the company’s insurance segment, Q3 2023 GPW increased by $140 million, or 11% to $1.5 billion, primarily attributable to increases in property, liability, and marine and aviation lines due to favourable rate changes and new business, and accident and health lines mainly due to new business. Insurance NPW for the quarter increased 14% year-on-year to $885 million.
The underwriting result also improved in the insurance segment, from $15.7 million in Q3 2022 to $105 million in Q3 2023, as the combined ratio strengthened by 9.8 pts to 88.2%, again on a lower loss ratio of 55.5%.
Group-wide, AXIS has reported net income available to common shareholders for Q3 2023 of $181 million, compared to a net loss attributable to common shareholders of $17 million for Q3 2022.
Operating income for Q3 2023 was $202 million, so a big improvement on the $3 million reported a year earlier.
Net investment income for Q3 2023 was $154 million, compared to $88 million for Q3 2022, attributable to an increase in income from fixed maturities portfolio due to increased yields.
Vince Tizzio, President and CEO of AXIS Capital, commented on the results: “AXIS delivered another strong quarter as we produced excellent results across multiple measures. The quarter was highlighted by record operating earnings per share on both a third-quarter and year-to-date basis. The continued positive momentum in our performance reflects the progress we’ve made in enhancing our integrated underwriting strategy to drive outstanding cycle management, deliver consistent profitable results and generate increased book value per share.
“During the quarter, we continued to grow in our chosen markets across both our insurance and reinsurance businesses, while capitalizing on favourable market conditions across nearly all our lines. This included achieving our highest-ever third-quarter production on record for our specialty insurance business, coupled with an 88.2% combined ratio in the quarter. The repositioning of AXIS Re as a more focused and less volatile specialist continues to take hold as evidenced by a 92.7% combined ratio and solid new business growth in our key areas.
“Through our ‘How We Work’ initiative we’ve continued to enhance our operating model to increase our agility and efficiency. We’re energized for the future and see exciting upside potential for our business as we lean further into our markets to unlock new revenue opportunities, maximize our strong distribution relationships, and fully leverage our global platform to deliver value to our customers.”
