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Gross written premiums up 16% at Axis Capital


April 27, 2016   by Canadian Underwriter


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Axis Capital Holdings Ltd. reported Wednesday a 91% year-over-year increase in first-quarter gross written premiums in aviation insurance and a 19.7% drop in marine premiums, while its combined ratio improved 1.8 points.

Pembroke, Bermuda-based Axis Capital released its financial results for the three months ending March 31.

Company-wide, gross written premiums increased 16%, from $1.68 billion in Q1 2015 to $1.96 billion in the latest quarter. All figures are in United States dollars.

Axis Capital has a Toronto office. Coverages in Canada include commercial specialty and reinsurance.

The firm ranked 16th in 2015, on a list compiled by A.M. Best Company Inc., of global reinsurance groups. In a segment review released Sept. 2, 2015, A.M. Best ranked groups by unaffiliated gross written premiums , in both life and non-life reinsurance, in 2014.

Axis Capital ranked behind Reinsurance Group of America Inc. and Winnipeg-based Great West Lifeco Inc. neither of which wrote non-life reinsurance in 2014. Axis Capital also ranked behind Mapfre Re (though Axis Capital recorded more non-life gross written premiums than Mapfre in 2014) and the Lloyd’s market, which A.M. Best counted as one reinsurance group. Axis ranked ahead of both XL Group plc and Catlin Group Ltd. for gross written premiums in reinsurance in 2014, but in May, 2015 XL closed its acquisition of Catlin.

Company-wide, Axis Capital had a combined ratio of 91.9% in the most recent quarter, down 1.8 points from 93.7% in Q1 2015.

In a filing with the U.S. Securities and Exchange Commission, Axis stated its gross written premiums were $653.349 million in commercial primary insurance in the most recent quarter, up from $602.7 million in Q1 2015.

“Increased premiums written were reported in our accident and health, property and aviation lines, primarily driven by new business and timing differences,” Axis stated in a press release. “These increases were partially offset by a decrease in the marine lines, which were impacted by reduced new business opportunities, lower rates and timing differences, as well as the impact of exiting certain lines of business announced during 2015, which reduced premiums written primarily in our Australian professional lines.”

Gross written premiums, in primary insurance in Q1 2016, were:

  • $146.6 million in property;
  • $73.53 million in marine (down 19.7% from $91.59 million in Q1 2015);
  • $7 million in terrorism;
  • $19.1 million aviation (up 91% from $10 million in Q1 2015);
  • $8.9 million in political risk;
  • $145.4 million in professional lines;
  • $83.9 million in liability; and
  • $168.8 million in accident and health.

Gross written premiums in reinsurance in Q1 2016 were $1.305 billion, up $230 million, or 21%, from $1.076 billion in Q1 2015. The increase in reinsurance premiums, from Q1 2015 to the latest quarter, was 26% on a constant currency basis.

“The increase was impacted by the increase in the level of premiums written on a multi-year basis during the first quarter of 2016 compared to 2015, most notably in our credit and surety and liability lines,” Axis Capital stated. “Partially offsetting this increase was the impact of foreign exchange movements as the strength of the U.S. dollar drove comparative premium decreases in treaties denominated in foreign currencies. After adjusting for the impact of these multi-year contracts and foreign exchange movements, our gross premiums written increased by $192 million. The growth was primarily driven by an increase in proportional business in the marine and other, liability and motor lines.”

Gross written premiums in reinsurance in Q1 2016 were:

  • $146.8 million in catastrophe;
  • $176 million in property;
  • $258.1 million in professional lines;
  • $321 million in motor;
  • $62.6 million in liability;
  • $62.7 million in agriculture;
  • $34.7 million in engineering; and
  • $67 million in marine and other.

Axis Capital’s combined ratio in insurance was 96.1% in the latest quarter, down 1.89 points from 97.9% in Q1 2015. The combined ratio in reinsurance was 82.3% in the most recent quarter, up 0.6 points from 81.7% in Q1 2015.

A merger agreement between Axis Capital and PartnerRe Ltd. was terminated by PartnerRe in August, 2015. That tentative agreement was originally made public Jan. 25, 2015, when the boards of both PartnerRe and Axis were recommending their shareholders approve a merger.

But PartnerRe ended up being acquired by Turin, Italy-based investment firm EXOR S.p.A.

EXOR – whose other holdings include significant minority stakes in Fiat-Chrysler Automobile and CNH Industrial N.V. (which makes the Case and New Holland farm and construction equipment) – completed its acquisition of PartnerRe March 18  2016.

In January, 2015, Axis Capital CEO Albert A. Benchimol stated that a merger between Axis Capital and PartnerRe would form “a top-five global reinsurer, a $2.5 billion specialty insurance underwriting business, and a highly successful and growing life, accident and health.”

A firm formed by combining the two would have “leading positions in a number of specialty lines, we will be strongly positioned to turn the challenges presented by the structural changes in the reinsurance market into opportunities,” Benchimol said at the time.

When EXOR first offered to acquire PartnerRe in April, 2015, the PartnerRe directors initially recommended shareholders instead vote to merge with Axis Capital. However, on terminating the merger agreement four months later, PartnerRe said an offer made in July by EXOR had a “significant improvement in the price and terms” compared to EXOR’s original offer.