• Annualized ROE: 17.3% for the quarter.
• Book Value Per Share: $64.65, a 26% growth over the prior-year quarter.
• Operating Earnings Per Share: $2.71, a 16% increase over the prior year quarter.
• Combined Ratio: 93.1% for the quarter.
• Current Accident Year Loss Ratio: 61.5% for the quarter.
• Overall Premiums: $1.9 billion in the quarter.
• Net Investment Income: $205 million, a record for the company.
• Insurance Segment Combined Ratio: 90.4% for the quarter.
• Reinsurance Segment Combined Ratio: 91.4% for the quarter.
• Net Income Available to Common Shareholders: $173 million or $2.04 per diluted common share.
• Gross Premiums Written Growth: 1.6% to $1.9 billion.
• G&A Expense Ratio: 12.1%, down from 13.5% a year ago.
• Investment Income Growth: 33% increase from the prior year.
• Shareholder Returns: $77 million returned through dividends and share repurchases.

• Warning! GuruFocus has detected 6 Warning Signs with BSP:TRPL10.PFD.

Release Date: October 31, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Axis Capital Holdings Ltd (NYSE:AXS) reported a strong quarter with an annualized ROE of 17.3% and a 26% growth in book value per share over the prior-year quarter.
• The company achieved a combined ratio of 93.1% for the quarter, indicating strong underwriting profitability.
• Net investment income reached a record $205 million, driven by higher yields on a larger fixed income portfolio.
• The insurance segment saw a 4.7% increase in premium production, with significant growth in property and specialty lines.
• Axis Capital Holdings Ltd (NYSE:AXS) maintained a disciplined approach to expense management, reducing the G&A ratio to 12.1% from 13.5% in the prior year quarter.

Negative Points

• The reinsurance segment experienced an 8.7% decrease in gross premiums, attributed to increased competition and non-renewal of certain contracts.
• The company faces challenges in the reinsurance market, particularly in casualty lines, with a reduction in longer tail lines by approximately 17%.
• Axis Capital Holdings Ltd (NYSE:AXS) noted increased competition in the property insurance market, which could impact future growth.
• The company is navigating a dynamic risk environment with potential impacts from recent hurricanes, projecting losses between $50 million to $100 million from Hurricane Milton.
• Despite strong performance, the company remains cautious about growth, prioritizing profitability over premium growth, which may limit expansion in certain segments.

Q & A Highlights

Q: As we go into the fourth quarter, what might give us confidence that reserves are on track, particularly in the more recent accident years? A: Vincent Tizzio, President and CEO, explained that confidence is derived from the first nine months of reported results and the actions taken in the fourth quarter of 2023, including trend assumptions and loss ratio picks. Peter Vogt, CFO, added that significant actions were taken in 2023, particularly for years '20 to '22, and that the company conducts a full reserve review every quarter, reinforcing their confidence in the reserve position.

Q: What's giving you the confidence to continue growing your property business despite increased competition? A: Vincent Tizzio highlighted several factors, including portfolio construction, geographic risk spread, average net limits, and a significant portion of non-CAT written premium. He noted that the business is global, allowing AXIS to navigate different markets effectively, and emphasized the premium adequacy and risk-adjusted return expectations.

Q: The core loss ratio in insurance ticked up slightly. Is this due to an updated view of loss trends or additional conservatism? A: Vincent Tizzio attributed the slight increase to continued prudence, with no significant changes in the underlying factors. Peter Vogt added that the increase is consistent with the adjustments made at the end of 2023 and reflects a mix shift towards shorter tail lines.

Q: What needs to happen in the cyber insurance market for AXIS to return to growth and take a less defensive stance? A: Vincent Tizzio explained that AXIS has reshaped its delegated component and is focusing on larger concerns with strong technical acumen. The company is also leveraging partnerships, such as with Elpha Secure, to address specific market segments. Despite a short-term impact on growth, AXIS remains a long-term participant in the cyber insurance market.

Q: How do you expect premium growth to trend in both businesses in 2025? A: Vincent Tizzio stated that while the 2025 plan is not finalized, AXIS prioritizes profitability over growth. The company has shown willingness to sacrifice top-line growth in certain areas but sees opportunities for profitable growth, particularly through new and expanded initiatives. The focus remains on maintaining a premium adequate portfolio.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.