Canadian Underwriter

Combined ratio down 4.6 points at Axis Capital

July 28, 2017   by Canadian Underwriter

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Axis Capital Holdings Ltd. reported Wednesday a 4.6-point improvement in its Q2 combined ratio, from 102.2% in the second quarter of 2016 to 97.6% in the latest quarter.

Pembroke, Bermuda-based Axis Capital writes both reinsurance and commercial primary insurance worldwide and has a Toronto office. Axis Capital reported July 26 that it had net premiums written of $956 million during the three months ending June 30, down 5.1% from $1 billion during the same period in 2016.

All figures are in United States dollars.

In the insurance segment, Axis Capital reported “gross premiums written of $796 million in the second quarter of 2017, an increase of $12 million, or 2% (3% on a constant currency basis), compared to gross premiums written of $784 million in the second quarter of 2016,” the company stated.

That increase was attributable to its liability lines, “driven by new business,” as well as its aviation lines “associated with” the acquisition announced in November, 2016 of Brussels-based Aviabel NV/SA.

In addition to aviation, Axis Capital also writes commercial insurance in terrorism, property, marine, political risk, directors’ and officers’ liability, errors and omissions and employment practices liability, among others.

“Our insurance segment reported an underwriting loss of $0.5 million for the current quarter, compared to an underwriting loss of $11 million in the second quarter of 2016,” Axis Capital stated. “The current quarter’s underwriting results reflected a combined ratio of 100.2%, compared to 102.5% in the same period in 2016.”

During the latest quarter, Axis Capital said it “incurred pre-tax catastrophe and weather-related losses of $41 million, or 8.4 points, primarily attributable to U.S. weather-related events, compared to $49 million, or 11.1 points, of catastrophe and weather-related losses reported during the same period in 2016.” Axis Capital also reported a “decrease in mid-size loss experience” in its marine lines.

In reinsurance, Axis Capital reported underwriting income of $57 million in Q2 2017 and a combined ratio of 88.6%, compared to underwriting income of $21 million and a combined ratio of 95.7% in Q2 2016.

“During the second quarter of 2017, we incurred pre-tax catastrophe and weather-related losses of $9 million, or 1.8 points, primarily attributable to U.S. weather-related events, compared to $61 million, or 12.2 points, of catastrophe and weather-related losses reported during the same period in 2016,” Axis Capital stated.

During the latest quarter, Axis Capital reported gross written premiums of $1.36 billion, of which 58.4% was in insurance and of which 41.6% was in reinsurance.

Net income dropped from $129.4 million in Q2 2016 to $95.7 million in the latest quarter, when Axis Capital reported foreign exchange losses of $36.1 million. During Q2 2016, the foreign exchange gain was $56.6 million.

In January, 2015, Axis announced its board of directors voted unanimously in favour of merging with PartnerRe Ltd., which is also based in Bermuda and writes reinsurance and commercial primary insurance. Initially PartnerRe’s board was recommending shareholders vote for a merger but in the end, PartnerRe got bought by EXOR NV, an Italian investment firm which effectively controls Fiat-Chrysler Automobile.

“Although the Axis Capital deal originally was accepted by PartnerRe management, Exor SpA made several increasingly lucrative hostile offers eclipsing the monetary value of the Axis Capital offer,” A.M. Best Company Inc. said in a report – Return of the Mega Deal During First Half of 2015 – released in 2015. “The final offer from Exor was ultimately accepted after a proxy advisory company recommended shareholders vote in favor of the Exor offer.”

In January, 2015, Axis Capital said if it were to merge with PartnerRe, the combined firm would have formed a global top 5 reinsurer.

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