Axis improves Q1 UW gain by 12% to $163 million and shaves 90 bps off reported combined ratio

By James Thaler

April 30 - (The Insurer) - Axis Capital grew its Q1 underwriting gain by 12% to $163 million driven by improved results in both insurance and reinsurance, while the company's reported combined ratio fell by 90 basis points to 90.2% and its gross written premiums expanded by 5% to $2.8 billion.

After markets closed on Wednesday, the Vince Tizzio-led firm reported $3.17 in operating income per share, well ahead of analysts’ $2.67 consensus estimate and a 23% improvement from the $2.57 per share the company reported in last year’s first quarter.

The insurance segment’s underwriting gain grew by 9.4% to $134.54 million from $122.99 million a year ago and by 27.5% in reinsurance to $28.91 million from $22.68 million.

Insurance gross written premiums grew by 5.2% to $1.66 billion, which the company said was the highest-ever first-quarter production in its history, while reinsurance GWP increased by 5.4% to $1.14 billion.

The growth in insurance was attributable to all lines of business with the exception of cyber, which decreased in the quarter, principally due to a lower level of premium associated with program business.

In reinsurance, growth was primarily attributable to new business in professional lines and credit and surety. It was also supported by the timing of renewals in its professional and liability segments, together with the restructuring of a significant contract in liability. The growth was partially offset by decreased line sizes in accident and health, along with decreased line sizes and nonrenewals in motor.

The insurance segment’s reported combined ratio inched up by 10 bps to 86.7%, while in reinsurance it improved by 350 bps to 92.3%.

Axis’ consolidated core loss ratio improved by 10 bps to 56.3%. The insurance loss ratio deteriorated by 30 bps to 52.3% and increased in reinsurance by 40 bps to 68.4%. The firm’s consolidated expense ratio improved by 160 bps to 31.6% from 33.2%.

Pre-tax catastrophe losses in the quarter net of reinsurance totalled $49 million, with $47.5 million falling on the insurance division and $1.5 million coming from reinsurance. The January California wildfires contributed $32 million to the company’s first quarter cat loss total.

The company had $18 million in reserve releases in the quarter, including $14 million from insurance and $4 million from reinsurance after having no reserve development in last year’s first quarter.

"Axis delivered another strong quarter of consistent, profitable performance as we continued to lean into our specialty underwriting value proposition, while helping our customers navigate a rapidly changing risk landscape,” the firm’s president and CEO Vince Tizzio said in a statement.

Tizzio said that Axis “remain(s) focused on driving bottom-line results” as the chief executive highlighted his firm having delivered annualized operating return-on-equity of 19.2% and “achieved record-level” book value per diluted common share of $66.48 at March 31.

“We're shaping a resilient portfolio that generates strong performance throughout the cycle, as reflected by our 90.2% combined ratio during an active quarter for natural catastrophes including wildfires,” Tizzio commented.

“Within our business segments, we’re continuing to drive targeted growth in attractive specialty markets,” the CEO added.

“Underpinning our progress, we’re further enhancing our operations backbone including how we leverage data, technology and AI, reflecting a broader commitment to continuous improvement,” Tizzio continued.

“Our disciplined efforts across all areas of our business has Axis on the front foot, and we are excited for what the future holds,” he concluded.