Bermuda-based re/insurer AXIS Capital has reported a lower net income of $41 million for the fourth quarter of 2022 and a decline to $193 million for the full-year, while the combined ratio hit 94.1% and 95.8% for the respective periods.
For the fourth quarter, net income fell from $197 million reported a year earlier, as operating income declined from $182 million to $167 million.
Gross written premiums (GWP) rose by 13% to $1.8 billion, driven by 12% growth in the insurance segment and 16% growth in the reinsurance segment. Net premiums written (NPW) spiked by 16% across the business in Q4 2022, with 16% growth in both the insurance and reinsurance segment.
Pre-tax catastrophe and weather-related losses, net of reinsurance and reinstatement premiums, totalled $64 million, and were split $33 million insurance, and $30 million reinsurance. This includes natural catastrophe and weather-related losses of $32 million, mostly related to Winter Storm Elliot.
The remaining losses included $23 million attributable to the COVID-19 pandemic, and $9 million to the war in Ukraine.
At the same time, net favourable prior year reserve development was $8 million in Q4 2022.
Across the business, the combined ratio weakened slightly to 94.1% compared with 93.1% a year earlier.
For the full-year 2022, AXIS Capital has reported a decline in net income from the $588 million seen in 2021, while operating income for the period increased from $436 million to $498 million.
The result includes a net financial impact of $11 million related to loss portfolio transfer reinsurance agreements including adverse prior year reserve development of $5 million and acquisition costs of $6 million.
For 2022, AXIS has announced GPW growth of 7% to $8.2 billion, with 15% growth in insurance partially offset by a decline of 7% in reinsurance. NPW grew by 7% to $5.3 billion for the year, with 17% growth in insurance and a decline of 7% in the reinsurance segment.
Pre-tax catastrophe and weather-related losses, net of reinsurance and reinstatement premiums, reached $403 million in 2022, split $207 million insurance and $196 million reinsurance. This includes natural catastrophe and weather-related losses of $338 million, attributable to Hurricane Ian, Winter Storm Elliot, June European Convective Storms, and other weather-related events.
The remaining losses include $23 million for the COVID-19 pandemic, and $43 million for Russia’s ongoing invasion of Ukraine.
Net favourable prior year reserve development was $26 million for 2022.
The combined ratio strengthened from 97.5% in 2021 to 95.8% in 2022, reports the re/insurer.
A look at the results by segment reveals an insurance underwriting income of more than $123 million for the fourth-quarter with a combined ratio of 85.2%. For 2022, the insurance segment’s underwriting income increased to $327 million, while the combined ratio strengthened to 89.6% from the prior year’s 91.6%.
In the reinsurance segment, underwriting income fell by almost 84% to $8.9 million for the fourth quarter of 2022, as the combined ratio rose to 98.8%. For 2022, the reinsurance segment produced underwriting income of $31 million with a combined ratio of 99.1%, compared with 99% a year earlier.
On the asset side of the balance sheet, AXIS has reported a rise in net investment income to $147 million for Q4 2022, driven mostly by an increase in income from fixed maturities due to increased yields.
Albert Benchimol, President and Chief Executive Officer (CEO) of AXIS Capital, commented: “This was a strong quarter to cap a milestone year for AXIS, one in which we emerged as a leading specialty underwriter that is well-positioned to drive consistent, profitable growth in our chosen markets. This was evidenced in our fourth quarter and full year results which speak to the work that we’ve done in prior years to transform our business, enabling us to grow in profitable specialty markets, reduce our exposure to catastrophes, and create a more agile and responsive operating infrastructure.
“During a year where the industry was again negatively impacted by heavy catastrophe activity, the Russia-Ukraine War, and financial and social inflation, we improved our combined ratio by 1.7 points to 95.8%, continuing a multi-year improvement in our core performance. Moreover, during the year, we continued to advance the positive momentum in our results, generating record premium production, a lower expense ratio, and increased underwriting income.
“Our specialty insurance business continued to deliver stellar performance, producing improvement across virtually all metrics in the quarter and the year, and we advanced our leadership position in specialty markets that are expected to remain attractive in 2023 and beyond. In addition, during the year and quarter, we took critical steps forward to focus AXIS Re as a specialist reinsurer and had a good 1.1 renewal period which speaks to the strength of our customer relationships and the value that we bring to the market. Stepping back, as we look to the future, we believe AXIS is exceedingly well-positioned to compete in a market where there is consistent and rising demand for specialty coverage.
“Finally, I would like to extend a heartfelt thank you to our colleagues, customers, shareholders, analysts, and our board of directors. In a few short months, after having served as President and CEO of AXIS for eleven years, I will transition the role to Vince Tizzio. I couldn’t be more proud of what our team has accomplished nor more excited for the path that we’re on. Moreover, in Vince, we have an excellent leader with a strong vision for the future and the dynamism and tenacity to make it happen. We look to the year ahead with confidence as we begin an exciting new chapter for AXIS.”