AXIS Q4’22 conference call

AXIS Capital hosted its Q4 2022 earnings call on Jan 26, 2023. The highlights:

• Grew specialty insurance gross written premiums by 15%, net earned premiums by 18% and underwriting income by 46%, and produced an all-in combined ratio of 89.6%
• Lost less than ~$10 million of desired renewals due to exits from property and property cat reinsurance
• ~90% retention ratio, 12.5% rate increases and 7% new business with more than half of the new business coming from targeted credit and surety, cyber and A&H lines
• Achieved mid-single-digit growth
• After 11 years as President and CEO of AXIS, Albert A. Benchimol will transition responsibilities to Vince Tizzio on May 4
• Generated net income available to common shareholders of $41 million and an annualized ROE of 4.2%
• Operating income was $167 million with an annualized operating ROE of 16.9%
• Suffered $9 million of losses due to the Russia-Ukraine war – losses were in the insurance segment with approximately 2/3 associated with political risk and 1/3 associated with marine war
• Cyber is now a separate line of business – it was previously reported within professional lines
• Property and terrorism lines of business have been combined – the new line of business will be referred to as property as AXIS terrorism business mainly covers physical damage and business interruption following an act of terrorism
• Combined Marine and Aviation into a single line of business
• Underwriting-related G&A expense ratio decreased by 3 points in the fourth quarter mainly driven by an increase in net premiums earned and a decrease in performance-related compensation costs and personnel costs.
• Fourth quarter is the smallest quarter for gross premiums written for reinsurance (FYI)
• Saw firming conditions in many lines such as property, liability, credit and political risk, all of which achieved rate increases in the fourth quarter that were higher than their annual averages
• Saw deceleration and in some instances, flat to negative rate change, in the public D&O and financial institution markets
• Saw moderation in cyber rate achievement, though pricing increases still remain at double digits
• The average rate increases in AXIS’ insurance book was ~6% for the quarter and close to 9% for the year, marking 21 straight quarters of positive rate change and bringing the cumulative rate change for its insurance book to almost 60% since the beginning of 2018
• International produced rate increases – 8% for the quarter and nearly 10% for the year
• North America rate increases 0 4% for the quarter and nearly 8% for the year