Bermudian insurer and reinsurer, AXIS Capital Holdings Limited has reported net income of $28 million and an operating loss of $33 million for the third-quarter of 2019, as catastrophe, credit and aviation line losses pushed the firm’s combined ratio to 109.4%.
The re/insurer’s Q3 2019 results include pre-tax weather-related losses, net of reinsurance and reinstatement premiums of $160 million, mostly driven by the impacts of Hurricane Dorian, typhoons in Japan, and other weather-related events in the period.
When compared with the same period in 2018, the firm’s catastrophe and weather-related losses ratio increased by almost 7% to 14.1%, while the current accident year loss ratio increased to 75.8%, and the net losses and loss adjustment expense ratio jumped to 73.5%, compared with 64.9% in Q3 2018. The acquisition cost ratio also increased in the quarter to 22.5%, as did the general administrative expense ratio, to 13.4%.
As a result, AXIS Capital’s combined ratio weakened from 97.9% in Q3 2018 to 109.4% in Q3 2019.
At $28 million, net income declined in the period from $43 million posted a year earlier, while an operating loss of $33 million compares with operating income of $79 million in the prior year quarter.
Albert Benchimol, President and Chief Executive Officer (CEO) of AXIS Capital, commented: “This was a disappointing quarter, where our performance was marred by catastrophes that impacted our industry, coupled with mid-size losses in our credit and aviation lines.
“These losses obscure positive underlying trends that reflect our progress in building an organization that will consistently deliver strong results. Specifically, even with higher mid-size loss experience, within our Insurance segment, the current year ex-cat loss ratio is down more than a point this quarter versus the prior year. In our Reinsurance segment, while the ex-cat loss ratio is higher this quarter, this same ratio is down over a point year-to-date, reflecting the continued execution of our strategy to improve risk adjusted returns.”
Driven by an 8% decline in the insurance segment and somewhat offset by a 13% increase in the reinsurance segment, the re/insurer’s gross written premiums declined by $17 million, or 1% in the third-quarter. Net premiums written also decreased in Q3 2019 by 7%, again driven by a decline in the insurance segment, somewhat offset by a 7% increase in reinsurance.
The firm also benefited less from net favourable prior year reserve development, which totalled $27 million in Q3 2019 compared with $46 million a year earlier.
By segment, and the company’s insurance division recorded an underwriting loss of $17.9 million in Q3 2019, compared with an underwriting loss of $11.7 million in Q3 2019. The insurance segment posted a combined ratio of 103.5% in the period.
In reinsurance, the underwriting loss improved to $60.8 million compared with $70.7 million a year earlier, while the combined ratio weakened significantly from 89.5% in Q3 2018 to 109.9% in Q3 2019, driven by higher loss ratios as a result of catastrophe and weather-related events in the period.
Discussing its underwriting loss in the period, and AXIS notes that as in Q3 2018, this included the recognition of premiums attributable to Novae’s balance sheet at October 2, 2017, without the recognition of the associated acquisition costs, which were written off at the closing date.
AXIS Capital’s net investment income reached $116 million in the quarter, which is an increase of $1 million on the same period in 2018.
For the first nine months of the year, AXIS has reported net income of $292 million and operating income of $209 million. The firm’s combined ratio for the first nine month of the year weakened to 99.2%, compared with 93.7% a year earlier.
For the nine month period, AXIS Capital’s underwriting income fell from $114.2 million to $14.3 million.
“We remain focused on continuing our progress and are confident that these positive underlying trends can be sustained. AXIS has leading positions in the markets that are experiencing the most significant pricing improvements which, combined with our underwriting actions and investments in digital capabilities, put us on a strong pathway toward long-term profitable growth,” said Benchimol.
