Axis posts $130mn in Q4 UW profit as cat losses jump to $81mn; GPW grows 11% to $1.98bn

By James Thaler

Jan 29 - Axis Capital recorded $130mn in Q4 underwriting profits, driven by 9 percent net earned premium growth and a turn to favourable reserve development, which more than offset cat losses in its insurance unit that spiked to $80mn.

The Bermuda-based (re)insurer reported $2.97 in operating income per share after markets closed on Wednesday, breezing past analysts’ $2.57 consensus estimate and a turnaround from the $1.25 operating loss the company reported for the fourth quarter in 2023.

A year ago Axis recorded a $425mn reserve charge with its fourth-quarter earnings – a common strategy employed by new CEOs to set out a clean slate – months after Axis CEO Vince Tizzio took the helm of the company.

The insurance segment delivered a $90.5mn underwriting gain in the fourth quarter of 2024 versus a $61.7mn underwriting loss in the same period of 2023, and a $39.1mn gain in reinsurance compared with a $212.4mn loss in Q4 2023.

With its results Wednesday, Axis disclosed that its fourth-quarter consolidated reported combined ratio improved to 94.2 percent from 124.6 percent in Q4 2023, when the firm’s results were heavily dominated by the reserve charge.

On an underlying basis, Axis’s consolidated current accident year combined ratio excluding cat losses rose by 60 basis points to 89.5 percent from 88.9 percent, with the same figure for insurance essentially flat at 84.6 percent versus 84.4 percent in the prior-year period.

The underlying reinsurance combined ratio improved to 91.8 percent from 92.2 percent. Axis’s consolidated core loss ratio rose by 30bps to 55.7 percent from 55.4 percent, driven in part by a 20bp increase in the insurance core loss ratio to 52.2 percent from 52.0 percent.

The firm’s reinsurance core loss ratio rose by 150bps to 66.0 percent from 64.5 percent.

Company-wide, catastrophe losses cost Axis $81mn in Q4 2024 versus $26.6mn in Q4 2023, with all but $1mn of those claims falling on the insurance segment. Around $53mn of the cat losses were driven by Hurricane Milton.

Axis did not disclose its anticipated losses tied to the ongoing Los Angeles-area wildfires that are expected to put a major dent in (re)insurance firms’ results, after Chubb and RenRe reported on Tuesday that they expect $1.5bn and $750mn in Q1 loss from the events, respectively.

Axis had $16.5mn in prior-year loss reserve releases in Q4 2024, with $12.3mn coming from insurance and $4.2mn in reinsurance.

For the full year in 2024, Axis’s underwriting profits grew by more than threefold to $571.5mn from $160.7mn in 2023, with a 64 percent improvement in the full-year insurance underwriting gain to $427.9mn from $260.9mn.

Axis Re generated a $143.6mn gain in 2024 after reporting a $100.2mn loss in 2023. The firm’s consolidated reported combined ratio improved to 92.3 percent for the full year in 2024, down from 99.9 percent in 2023.

For the fourth quarter, Axis’s consolidated gross premiums written (GPW) grew by 10.7 percent to $1.98bn from $1.78bn, driven by 7.4 percent insurance GPW growth to $1.70bn from $1.58bn, while reinsurance GPW increased by 36.9 percent to $275.0mn from $200.9mn.

Axis said the growth in insurance came from increases in property, accident and health, and credit and political risk lines driven by new business, partially offset by a decrease in cyber lines principally due to a lower level of premiums associated with program business.

The reinsurance growth came primarily from accident and health lines driven by new business.

For the quarter, Axis generated 20.7 percent return on average common equity and an 18.2 percent operating return on equity.

At its investor day back in May, Axis’s management team laid out an ambition to deliver annual book value per share growth of 15 percent.

Axis CEO Tizzio calls ’24 “excellent year for Axis”

In a statement, president and CEO Vince Tizzio called 2024 “an excellent year for Axis”.

“We delivered on the financial and operational guideposts that we shared at our investor day this past May, highlighted by an operating return-on-equity of 18.6 percent and 20.7 percent growth in diluted book value per share,” Tizzio commented.

The Axis CEO said that “as a global leader in specialty underwriting”, the company continued to find “attractive opportunities” for growth.

“In our insurance business, profitability was highlighted by an 89.1 percent combined ratio for the full year and we grew 7.7 percent, to reach $6.6bn in premiums,” Tizzio noted.

“Our reinsurance business is producing strong, consistent profits with a 91.8 percent combined ratio for the full year while growing 7.9 percent to $2.4bn in premiums,” he continued.

The CEO also called out the progress Axis has made in improving its expense structure, with the firm-wide expense ratio improving by 40bps for the year to 32.8 percent from 33.2 percent.

Tizzio said enhancements to Axis’s operating model included building new capabilities, investing in technology and data, and “adding strong talent to complement our existing team”.

“As we progress into 2025, we believe Axis is poised to build on its positive momentum, while leveraging our specialty expertise to help our customers navigate an increasingly dynamic risk landscape," he concluded.