Le Lézard
Classified in: Business, Covid-19 virus
Subjects: EARNINGS, Conference Call, Webcast

AXIS Capital Reports Third Quarter Net Income Available to Common Shareholders of $181 Million, or $2.10 Per Diluted Common Share and Operating Income of $202 Million, or $2.34 Per Diluted Common Share


AXIS Capital Holdings Limited ("AXIS Capital" or "AXIS" or "the Company") (NYSE: AXS) today announced financial results for the third quarter ended September 30, 2023.

Commenting on the third quarter 2023 financial results, Vince Tizzio, President and CEO of AXIS Capital said:

"AXIS delivered another strong quarter as we produced excellent results across multiple measures. The quarter was highlighted by record operating earnings per share on both a third quarter and year-to-date basis. The continued positive momentum in our performance reflects the progress we've made in enhancing our integrated underwriting strategy to drive outstanding cycle management, deliver consistent profitable results and generate increased book value per share.

"During the quarter, we continued to grow in our chosen markets across both our insurance and reinsurance businesses, while capitalizing on favorable market conditions across nearly all our lines. This included achieving our highest-ever third quarter production on record for our specialty insurance business, coupled with an 88.2% combined ratio in the quarter. The repositioning of AXIS Re as a more focused and less volatile specialist continues to take hold as evidenced by a 92.7% combined ratio and solid new business growth in our key areas.

"Through our ?How We Work' initiative we've continued to enhance our operating model to increase our agility and efficiency. We're energized for the future and see exciting upside potential for our business as we lean further into our markets to unlock new revenue opportunities, maximize our strong distribution relationships, and fully leverage our global platform to deliver value to our customers."

Third Quarter Consolidated Results*

* Amounts may not reconcile due to rounding differences.

1 Operating income (loss) and operating income (loss) per diluted common share are non-GAAP financial measures as defined in SEC Regulation G. The reconciliations to the most comparable GAAP financial measures, net income (loss) available (attributable) to common shareholders and earnings (loss) per diluted common share, respectively, and a discussion of the rationale for the presentation of these items are provided later in this press release.

Third Quarter Consolidated Underwriting Highlights2

 

Three months ended September 30,

KEY RATIOS

2023

 

2022

 

Change

Current accident year loss ratio, excluding catastrophe and weather-related losses3

56.3

%

 

57.1

%

 

(0.8 pts)

Catastrophe and weather-related losses ratio

3.2

%

 

16.6

%

 

(13.4 pts)

Current accident year loss ratio

59.5

%

 

73.7

%

 

(14.2 pts)

Prior year reserve development ratio

(0.2

%)

 

(0.4

%)

 

0.2 pts

Net losses and loss expenses ratio

59.3

%

 

73.3

%

 

(14.0 pts)

Acquisition cost ratio

19.9

%

 

18.7

%

 

1.2 pts

General and administrative expense ratio

13.5

%

 

12.3

%

 

1.2 pts

Combined ratio

92.7

%

 

104.3

%

 

(11.6 pts)

 

 

 

 

 

 

Current accident year combined ratio, excluding catastrophe and weather-related losses

89.7

%

 

88.1

%

 

1.6 pts

2 All comparisons are with the same period of the prior year, unless otherwise stated.

3 The current accident year loss ratio, excluding catastrophe and weather-related losses is calculated by dividing the current accident year losses less pre-tax catastrophe and weather-related losses, net of reinsurance, by net premiums earned less reinstatement premiums.

Year to Date Consolidated Underwriting Highlights

 

Nine months ended September 30,

KEY RATIOS

2023

 

2022

 

Change

Current accident year loss ratio, excluding catastrophe and weather-related losses

56.1

%

 

55.5

%

 

0.6 pts

Catastrophe and weather-related losses ratio

2.9

%

 

8.9

%

 

(6.0 pts)

Current accident year loss ratio

59.0

%

 

64.4

%

 

(5.4 pts)

Prior year reserve development ratio

(0.3

%)

 

(0.4

%)

 

0.1 pts

Net losses and loss expenses ratio

58.7

%

 

64.0

%

 

(5.3 pts)

Acquisition cost ratio

19.6

%

 

19.5

%

 

0.1 pts

General and administrative expense ratio

13.4

%

 

12.9

%

 

0.5 pts

Combined ratio

91.7

%

 

96.4

%

 

(4.7 pts)

 

 

 

 

 

 

Current accident year combined ratio, excluding catastrophe and weather-related losses

89.1

%

 

87.9

%

 

1.2 pts

4 Amounts presented on a constant currency basis are non-GAAP financial measures as defined in SEC Regulation G. The constant currency basis is calculated by applying the average foreign exchange rate from the current year to prior year amounts. The reconciliations to the most comparable GAAP financial measures is provided above and a discussion of the rationale for the presentation of these items is provided later in this press release.

Segment Highlights

Insurance Segment

 

Three months ended September 30,

($ in thousands)

 

2023

 

 

2022

 

Change

Gross premiums written

$

1,457,624

 

 

$

1,317,890

 

 

10.6

%

Net premiums written

 

885,252

 

 

 

777,789

 

 

13.8

%

Net premiums earned

 

885,714

 

 

 

782,101

 

 

13.2

%

Underwriting income

 

104,610

 

 

 

15,738

 

 

nm

 

 

 

 

 

 

 

 

Underwriting ratios:

 

 

 

 

 

 

Current accident year loss ratio, excluding catastrophe and weather-related losses

 

51.5

%

 

 

52.6

%

 

(1.1 pts)

Catastrophe and weather-related losses ratio

 

4.2

%

 

 

14.1

%

 

(9.9 pts)

Current accident year loss ratio

 

55.7

%

 

 

66.7

%

 

(11.0 pts)

Prior year reserve development ratio

 

(0.2

%)

 

 

(0.3

%)

 

0.1 pts

Net losses and loss expenses ratio

 

55.5

%

 

 

66.4

%

 

(10.9 pts)

Acquisition cost ratio

 

19.1

%

 

 

17.8

%

 

1.3 pts

Underwriting-related general and administrative expense ratio

 

13.6

%

 

 

13.8

%

 

(0.2 pts)

Combined ratio

 

88.2

%

 

 

98.0

%

 

(9.8 pts)

 

 

 

 

 

 

 

Current accident year combined ratio, excluding catastrophe and weather-related losses

 

84.2

%

 

 

84.2

%

 

? pts

nm - not meaningful is defined as a variance greater than +/- 100%

 

Nine months ended September 30,

($ in thousands)

 

2023

 

 

2022

 

Change

Gross premiums written

$

4,557,386

 

 

$

4,114,776

 

 

10.8

%

Net premiums written

 

2,788,849

 

 

 

2,491,120

 

 

12.0

%

Net premiums earned

 

2,544,920

 

 

 

2,303,640

 

 

10.5

%

Underwriting income

 

322,617

 

 

 

203,948

 

 

58.2

%

 

 

 

 

 

 

Underwriting ratios:

 

 

 

 

 

Current accident year loss ratio, excluding catastrophe and weather-related losses

 

51.7

%

 

 

51.6

%

 

0.1 pts

Catastrophe and weather-related losses ratio

 

3.5

%

 

 

7.4

%

 

(3.9 pts)

Current accident year loss ratio

 

55.2

%

 

 

59.0

%

 

(3.8 pts)

Prior year reserve development ratio

 

(0.2

%)

 

 

(0.5

%)

 

0.3 pts

Net losses and loss expenses ratio

 

55.0

%

 

 

58.5

%

 

(3.5 pts)

Acquisition cost ratio

 

18.6

%

 

 

18.4

%

 

0.2 pts

Underwriting-related general and administrative expense ratio

 

13.7

%

 

 

14.3

%

 

(0.6 pts)

Combined ratio

 

87.3

%

 

 

91.2

%

 

(3.9 pts)

 

 

 

 

 

 

Current accident year combined ratio, excluding catastrophe and weather-related losses

 

84.0

%

 

 

84.3

%

 

(0.3 pts)

Reinsurance Segment

 

Three months ended September 30,

($ in thousands)

 

2023

 

 

2022

 

Change

Gross premiums written

$

448,254

 

 

$

389,918

 

 

15.0

%

Net premiums written

 

90,105

 

 

 

258,995

 

 

(65.2

%)

Net premiums earned

 

436,850

 

 

 

502,765

 

 

(13.1

%)

Underwriting income (loss)

 

42,368

 

 

 

(44,772

)

 

nm

 

 

 

 

 

 

 

 

Underwriting ratios:

 

 

 

 

 

 

Current accident year loss ratio, excluding catastrophe and weather-related losses

 

66.2

%

 

 

64.2

%

 

2.0 pts

Catastrophe and weather-related losses ratio

 

1.0

%

 

 

20.3

%

 

(19.3 pts)

Current accident year loss ratio

 

67.2

%

 

 

84.5

%

 

(17.3 pts)

Prior year reserve development ratio

 

(0.2

%)

 

 

(0.4

%)

 

0.2 pts

Net losses and loss expenses ratio

 

67.0

%

 

 

84.1

%

 

(17.1 pts)

Acquisition cost ratio

 

21.5

%

 

 

20.1

%

 

1.4 pts

Underwriting-related general and administrative expense ratio

 

4.2

%

 

 

4.9

%

 

(0.7 pts)

Combined ratio

 

92.7

%

 

 

109.1

%

 

(16.4 pts)

 

 

 

 

 

 

 

Current accident year combined ratio, excluding catastrophe and weather-related losses

 

91.9

%

 

 

89.2

%

 

2.7 pts

nm - not meaningful

 

Nine months ended September 30,

($ in thousands)

 

2023

 

 

2022

 

Change

Gross premiums written

$

2,014,846

 

 

$

2,341,123

 

 

(13.9

%)

Net premiums written

 

1,241,221

 

 

 

1,675,382

 

 

(25.9

%)

Net premiums earned

 

1,273,588

 

 

 

1,516,523

 

 

(16.0

%)

Underwriting income

 

112,217

 

 

 

22,505

 

 

nm

 

 

 

 

 

 

 

 

Underwriting ratios:

 

 

 

 

 

 

Current accident year loss ratio, excluding catastrophe and weather-related losses

 

64.9

%

 

 

61.6

%

 

3.3 pts

Catastrophe and weather-related losses ratio

 

1.8

%

 

 

11.1

%

 

(9.3 pts)

Current accident year loss ratio

 

66.7

%

 

 

72.7

%

 

(6.0 pts)

Prior year reserve development ratio

 

(0.6

%)

 

 

(0.3

%)

 

(0.3 pts)

Net losses and loss expenses ratio

 

66.1

%

 

 

72.4

%

 

(6.3 pts)

Acquisition cost ratio

 

21.5

%

 

 

21.3

%

 

0.2 pts

Underwriting-related general and administrative expense ratio

 

4.9

%

 

 

5.4

%

 

(0.5 pts)

Combined ratio

 

92.5

%

 

 

99.1

%

 

(6.6 pts)

 

 

 

 

 

 

 

Current accident year combined ratio, excluding catastrophe and weather-related losses

 

91.3

%

 

 

88.3

%

 

3.0 pts

nm - not meaningful

Investments

 

Three months ended September 30,

 

Nine months ended September 30,

($ in thousands)

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

 

 

 

 

 

 

 

Net investment income

$

154,201

 

 

$

88,177

 

 

$

424,802

 

 

$

271,744

 

Net investments losses

 

(53,114

)

 

 

(146,458

)

 

 

(97,671

)

 

 

(414,231

)

Change in net unrealized gains (losses) on fixed

maturities(5)

 

(157,943

)

 

 

(296,487

)

 

 

(17,909

)

 

 

(1,142,423

)

Interest in income (loss) of equity method investments

 

2,940

 

 

 

(7,560

)

 

 

2,835

 

 

 

5,040

 

Total

$

(53,916

)

 

$

(362,328

)

 

$

312,057

 

 

$

(1,279,870

)

 

 

 

 

 

 

 

 

Average cash and investments(6)

$

16,281,540

 

 

$

15,824,697

 

 

$

16,057,260

 

 

$

16,003,712

 

 

 

 

 

 

 

 

 

Total return on average cash and investments, pre-tax:

 

 

 

 

 

 

 

Including investment related foreign exchange movements

 

(0.3

%)

 

 

(2.3

%)

 

 

1.9

%

 

 

(8.0

%)

Excluding investment related foreign exchange movements(7)

 

?

%

 

 

(1.8

%)

 

 

2.0

%

 

 

(6.8

%)

5 Change in net unrealized gains (losses) on fixed maturities is calculated by taking net unrealized gains (losses) at period end less net unrealized gains (losses) at the prior period end.

6 The average cash and investments balance is calculated by taking the average of the period end fair value balances.

7 Pre-tax total return on cash and investments excluding foreign exchange movements is a non-GAAP financial measure as defined in SEC Regulation G. The reconciliation to pre-tax total return on cash and investments, the most comparable GAAP financial measure, also included foreign exchange (losses) gains of $(49) million and $(83) million for the three months ended September 30, 2023 and 2022, respectively and foreign exchange (losses) gains of $(9) million and $(189) million for the nine months ended September 30, 2023 and 2022, respectively.

Capitalization / Shareholders' Equity

 

September 30,

 

December 31,

 

 

($ in thousands)

2023

 

2022

 

Change

Total capital8

$

6,346,566

 

$

5,952,224

 

$

394,342

Book Value per diluted common share

 

September 30,

 

June 30,

 

September 30,

 

2023

 

2023

 

2022

Book value per diluted common share9

$

51.17

 

$

50.98

 

$

43.50

 

Three months ended,

 

Twelve months ended,

 

September 30, 2023

 

September 30, 2023

 

Change

 

% Change

 

Change

 

% Change

Book value per diluted common share

$

0.19

 

0.4

%

 

$

7.67

 

17.6

%

Book value per diluted common share - adjusted for dividends declared

$

0.63

 

1.2

%

 

$

9.43

 

21.7

%

8 Total capital represents the sum of total shareholders' equity and debt.

9 Calculated using the treasury stock method.

Conference Call

We will host a conference call on Thursday, November 2, 2023 at 9:30 a.m. (ET) to discuss the third quarter financial results and related matters. The teleconference can be accessed by dialing 1-877-883-0383 (U.S. callers), or 1-412-902-6506 (international callers), and entering the passcode 6504226 approximately ten minutes in advance of the call. A live, listen-only webcast of the call will also be available via the Investor Information section of our website at www.axiscapital.com. A replay of the teleconference will be available for two weeks by dialing 1-877-344-7529 (U.S. callers), or 1-412-317-0088 (international callers), and entering the passcode 6757410. The webcast will be archived in the Investor Information section of our website.

In addition, an investor financial supplement for the quarter ended September 30, 2023 is available in the Investor Information section of our website.

About AXIS Capital

AXIS Capital, through its operating subsidiaries, is a global specialty underwriter and provider of insurance and reinsurance solutions. The Company has shareholders' equity of $5.0 billion at September 30, 2023, and locations in Bermuda, the United States, Europe, Singapore and Canada. Its operating subsidiaries have been assigned a financial strength rating of "A+" ("Strong") by Standard & Poor's and "A" ("Excellent") by A.M. Best. For more information about AXIS Capital, visit our website at www.axiscapital.com.

Website and Social Media Disclosure

We use our website (www.axiscapital.com) and our corporate LinkedIn (AXIS Capital) and X Corp. (@AXIS_Capital) accounts as channels of distribution of Company information. The information we post through these channels may be deemed material. Accordingly, investors should monitor these channels, in addition to following our press releases, SEC filings and public conference calls and webcasts. In addition, e-mail alerts and other information about AXIS Capital may be received by those enrolled in our "E-mail Alerts" program which can be found in the Investor Information section of our website (www.axiscapital.com). The contents of our website and social media channels are not part of this press release.

Follow AXIS Capital on LinkedIn and X Corp.

LinkedIn: http://bit.ly/2kRYbZ5

AXIS CAPITAL HOLDINGS LIMITED

CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 2023 (UNAUDITED) AND DECEMBER 31, 2022

 

 

 

 

 

 

2023

 

 

 

2022

 

 

 

 

 

 

(in thousands)

Assets

 

Investments:

 

Fixed maturities, available for sale, at fair value

$

11,723,368

 

 

$

11,326,894

 

Fixed maturities, held to maturity, at amortized cost

 

712,840

 

 

 

698,351

 

Equity securities, at fair value

 

556,262

 

 

 

485,253

 

Mortgage loans, held for investment, at fair value

 

610,277

 

 

 

627,437

 

Other investments, at fair value

 

954,571

 

 

 

996,751

 

Equity method investments

 

162,412

 

 

 

148,288

 

Short-term investments, at fair value

 

115,959

 

 

 

70,310

 

Total investments

 

14,835,689

 

 

 

14,353,284

 

Cash and cash equivalents

 

889,574

 

 

 

751,415

 

Restricted cash and cash equivalents

 

377,741

 

 

 

423,238

 

Accrued interest receivable

 

99,978

 

 

 

94,418

 

Insurance and reinsurance premium balances receivable

 

3,207,444

 

 

 

2,733,464

 

Reinsurance recoverable on unpaid losses and loss expenses

 

6,031,527

 

 

 

5,831,172

 

Reinsurance recoverable on paid losses and loss expenses

 

594,375

 

 

 

539,676

 

Deferred acquisition costs

 

503,617

 

 

 

473,569

 

Prepaid reinsurance premiums

 

1,973,378

 

 

 

1,550,370

 

Receivable for investments sold

 

17,306

 

 

 

16,052

 

Goodwill

 

100,801

 

 

 

100,801

 

Intangible assets

 

189,612

 

 

 

197,800

 

Operating lease right-of-use assets

 

104,240

 

 

 

92,214

 

Other assets

 

547,242

 

 

 

438,338

 

Total assets

$

29,472,524

 

 

$

27,595,811

 

 

 

 

 

Liabilities

 

 

 

Reserve for losses and loss expenses

$

15,555,256

 

 

$

15,168,863

 

Unearned premiums

 

4,995,785

 

 

 

4,361,447

 

Insurance and reinsurance balances payable

 

1,900,188

 

 

 

1,522,764

 

Debt

 

1,313,358

 

 

 

1,312,314

 

Federal Home Loan Bank advances

 

85,790

 

 

 

81,388

 

Payable for investments purchased

 

87,992

 

 

 

19,693

 

Operating lease liabilities

 

116,547

 

 

 

102,577

 

Other liabilities

 

384,400

 

 

 

386,855

 

Total liabilities

 

24,439,316

 

 

 

22,955,901

 

 

 

 

 

Shareholders' equity

 

 

 

Preferred shares

 

550,000

 

 

 

550,000

 

Common shares

 

2,206

 

 

 

2,206

 

Additional paid-in capital

 

2,375,678

 

 

 

2,366,253

 

Accumulated other comprehensive income (loss)

 

(775,439

)

 

 

(760,300

)

Retained earnings

 

6,628,179

 

 

 

6,247,022

 

Treasury shares, at cost

 

(3,747,416

)

 

 

(3,765,271

)

Total shareholders' equity

 

5,033,208

 

 

 

4,639,910

 

Total liabilities and shareholders' equity

$

29,472,524

 

 

$

27,595,811

 

 

AXIS CAPITAL HOLDINGS LIMITED

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

 

 

 

 

 

 

 

 

 

Three months ended

 

Nine months ended

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

 

 

 

 

 

 

 

 

(in thousands, except per share amounts)

Revenues

 

 

 

 

 

 

 

Net premiums earned

$

1,322,564

 

 

$

1,284,866

 

 

$

3,818,508

 

 

$

3,820,163

 

Net investment income

 

154,201

 

 

 

88,177

 

 

 

424,802

 

 

 

271,744

 

Net investment gains (losses)

 

(53,114

)

 

 

(146,458

)

 

 

(97,671

)

 

 

(414,231

)

Other insurance related income

 

10,344

 

 

 

1,092

 

 

 

16,444

 

 

 

9,998

 

Total revenues

 

1,433,995

 

 

 

1,227,677

 

 

 

4,162,083

 

 

 

3,687,674

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

Net losses and loss expenses

 

783,940

 

 

 

941,911

 

 

 

2,240,840

 

 

 

2,444,196

 

Acquisition costs

 

263,389

 

 

 

240,511

 

 

 

747,027

 

 

 

746,443

 

General and administrative expenses

 

179,283

 

 

 

158,245

 

 

 

514,596

 

 

 

492,872

 

Foreign exchange gains

 

(50,570

)

 

 

(135,660

)

 

 

(11,755

)

 

 

(236,934

)

Interest expense and financing costs

 

16,445

 

 

 

15,915

 

 

 

50,077

 

 

 

46,720

 

Reorganization expenses

 

28,997

 

 

 

6,213

 

 

 

28,997

 

 

 

21,941

 

Amortization of intangible assets

 

2,729

 

 

 

2,729

 

 

 

8,188

 

 

 

8,188

 

Total expenses

 

1,224,213

 

 

 

1,229,864

 

 

 

3,577,970

 

 

 

3,523,426

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes and interest in income (loss) of equity method investments

 

209,782

 

 

 

(2,187

)

 

 

584,113

 

 

 

164,248

 

Income tax (expense) benefit

 

(24,624

)

 

 

363

 

 

 

(68,078

)

 

 

5,304

 

Interest in income (loss) of equity method investments

 

2,940

 

 

 

(7,560

)

 

 

2,835

 

 

 

5,040

 

Net income (loss)

 

188,098

 

 

 

(9,384

)

 

 

518,870

 

 

 

174,592

 

Preferred share dividends

 

7,563

 

 

 

7,563

 

 

 

22,688

 

 

 

22,688

 

Net income (loss) available (attributable) to common shareholders

$

180,535

 

 

$

(16,947

)

 

$

496,182

 

 

$

151,904

 

 

 

 

 

 

 

 

 

Per share data

 

 

 

 

 

 

 

Earnings (loss) per common share:

 

 

 

 

 

 

 

Earnings (loss) per common share

$

2.12

 

 

$

(0.20

)

 

$

5.83

 

 

$

1.79

 

Earnings (loss) per diluted common share

$

2.10

 

 

$

(0.20

)

 

$

5.77

 

 

$

1.77

 

Weighted average common shares outstanding

 

85,223

 

 

 

84,660

 

 

 

85,099

 

 

 

84,930

 

Weighted average diluted common shares outstanding

 

86,108

 

 

 

84,660

 

 

 

85,927

 

 

 

85,674

 

Cash dividends declared per common share

$

0.44

 

 

$

0.43

 

 

$

1.32

 

 

$

1.29

 

 

AXIS CAPITAL HOLDINGS LIMITED

CONSOLIDATED SEGMENTAL DATA (UNAUDITED)

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

2023

 

2022

 

Insurance

 

Reinsurance

 

Total

 

Insurance

 

Reinsurance

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

Gross premiums written

$

1,457,624

 

 

$

448,254

 

 

$

1,905,878

 

 

$

1,317,890

 

 

$

389,918

 

 

$

1,707,808

 

Net premiums written

 

885,252

 

 

 

90,105

 

 

 

975,357

 

 

 

777,789

 

 

 

258,995

 

 

 

1,036,784

 

Net premiums earned

 

885,714

 

 

 

436,850

 

 

 

1,322,564

 

 

 

782,101

 

 

 

502,765

 

 

 

1,284,866

 

Other insurance related income (loss)

 

(22

)

 

 

10,366

 

 

 

10,344

 

 

 

151

 

 

 

941

 

 

 

1,092

 

Net losses and loss expenses

 

(491,368

)

 

 

(292,572

)

 

 

(783,940

)

 

 

(519,006

)

 

 

(422,905

)

 

 

(941,911

)

Acquisition costs

 

(169,384

)

 

 

(94,005

)

 

 

(263,389

)

 

 

(139,436

)

 

 

(101,075

)

 

 

(240,511

)

Underwriting-related general and

 

 

 

 

 

 

 

 

 

 

 

administrative expenses(10)

 

(120,330

)

 

 

(18,271

)

 

 

(138,601

)

 

 

(108,072

)

 

 

(24,498

)

 

 

(132,570

)

Underwriting income (loss)(11)

$

104,610

 

 

$

42,368

 

 

 

146,978

 

 

$

15,738

 

 

$

(44,772

)

 

 

(29,034

)

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

 

 

 

154,201

 

 

 

 

 

 

 

88,177

 

Net investment gains (losses)

 

 

 

 

 

(53,114

)

 

 

 

 

 

 

(146,458

)

Corporate expenses(10)

 

 

 

 

 

(40,682

)

 

 

 

 

 

 

(25,675

)

Foreign exchange gains

 

 

 

 

 

50,570

 

 

 

 

 

 

 

135,660

 

Interest expense and financing costs

 

 

 

 

 

(16,445

)

 

 

 

 

 

 

(15,915

)

Reorganization expenses

 

 

 

 

 

(28,997

)

 

 

 

 

 

 

(6,213

)

Amortization of intangible assets

 

 

 

 

 

(2,729

)

 

 

 

 

 

 

(2,729

)

Income (loss) before income taxes and

 

interest in income (loss) of equity

 

method investments

 

 

 

 

 

209,782

 

 

 

 

 

 

 

(2,187

)

Income tax (expense) benefit

 

 

 

 

 

(24,624

)

 

 

 

 

 

 

363

 

Interest in income (loss) of equity method investments

 

 

 

 

 

2,940

 

 

 

 

 

 

 

(7,560

)

Net income (loss)

 

 

 

 

 

188,098

 

 

 

 

 

 

 

(9,384

)

Preferred share dividends

 

 

 

 

 

7,563

 

 

 

 

 

 

 

7,563

Net income (loss) available

 

(attributable) to common shareholders

 

 

 

 

$

180,535

 

 

 

 

 

 

$

(16,947

)

 

 

 

 

 

 

 

 

 

 

 

 

Net losses and loss expenses ratio

 

55.5

%

 

 

67.0

%

 

 

59.3

%

 

 

66.4

%

 

 

84.1

%

 

 

73.3

%

Acquisition cost ratio

 

19.1

%

 

 

21.5

%

 

 

19.9

%

 

 

17.8

%

 

 

20.1

%

 

 

18.7

%

General and administrative expense ratio

 

13.6

%

 

 

4.2

%

 

 

13.5

%

 

 

13.8

%

 

 

4.9

%

 

 

12.3

%

Combined ratio

 

88.2

%

 

 

92.7

%

 

 

92.7

%

 

 

98.0

%

 

 

109.1

%

 

 

104.3

%

10 Underwriting-related general and administrative expenses is a non-GAAP financial measure as defined in SEC Regulation G. The reconciliation to general and administrative expenses, the most comparable GAAP financial measure, also included corporate expenses of $41 million and $26 million for the three months ended September 30, 2023 and 2022, respectively. Underwriting-related general and administrative expenses and corporate expenses are included in the general and administrative expense ratio.

11 Consolidated underwriting income (loss) is a non-GAAP financial measure as defined in SEC Regulation G. The reconciliation to net income (loss), the most comparable GAAP financial measure, is presented above.

AXIS CAPITAL HOLDINGS LIMITED

CONSOLIDATED SEGMENTAL DATA (UNAUDITED)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

2023

 

2022

 

Insurance

 

Reinsurance

 

Total

 

Insurance

 

Reinsurance

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

Gross premiums written

$

4,557,386

 

 

$

2,014,846

 

 

$

6,572,232

 

 

$

4,114,776

 

 

$

2,341,123

 

 

$

6,455,899

 

Net premiums written

 

2,788,849

 

 

 

1,241,221

 

 

 

4,030,070

 

 

 

2,491,120

 

 

 

1,675,382

 

 

 

4,166,502

 

Net premiums earned

 

2,544,920

 

 

 

1,273,588

 

 

 

3,818,508

 

 

 

2,303,640

 

 

 

1,516,523

 

 

 

3,820,163

 

Other insurance related income

 

90

 

 

 

16,354

 

 

 

16,444

 

 

 

470

 

 

 

9,528

 

 

 

9,998

 

Net losses and loss expenses

 

(1,398,486

)

 

 

(842,354

)

 

 

(2,240,840

)

 

 

(1,346,585

)

 

 

(1,097,611

)

 

 

(2,444,196

)

Acquisition costs

 

(473,413

)

 

 

(273,614

)

 

 

(747,027

)

 

 

(422,979

)

 

 

(323,464

)

 

 

(746,443

)

Underwriting-related general and

 

 

 

 

 

 

 

 

 

 

 

administrative expenses(12)

 

(350,494

)

 

 

(61,757

)

 

 

(412,251

)

 

 

(330,598

)

 

 

(82,471

)

 

 

(413,069

)

Underwriting income(13)

$

322,617

 

 

$

112,217

 

 

 

434,834

 

 

$

203,948

 

 

$

22,505

 

 

 

226,453

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

 

 

 

424,802

 

 

 

 

 

 

 

271,744

 

Net investment gains (losses)

 

 

 

 

 

(97,671

)

 

 

 

 

 

 

(414,231

)

Corporate expenses(12)

 

 

 

 

 

(102,345

)

 

 

 

 

 

 

(79,803

)

Foreign exchange gains

 

 

 

 

 

11,755

 

 

 

 

 

 

 

236,934

 

Interest expense and financing costs

 

 

 

 

 

(50,077

)

 

 

 

 

 

 

(46,720

)

Reorganization expenses

 

 

 

 

 

(28,997

)

 

 

 

 

 

 

(21,941

)

Amortization of intangible assets

 

 

 

 

 

(8,188

)

 

 

 

 

 

 

(8,188

)

Income before income taxes and

 

interest in income of equity method

 

investments

 

 

 

 

 

584,113

 

 

 

 

 

 

 

164,248

 

Income tax (expense) benefit

 

 

 

 

 

(68,078

)

 

 

 

 

 

 

5,304

 

Interest in income of equity method

 

investments

 

 

 

 

 

2,835

 

 

 

 

 

 

 

5,040

 

Net Income

 

 

 

 

 

518,870

 

 

 

 

 

 

 

174,592

 

Preferred share dividends

 

 

 

 

 

22,688

 

 

 

 

 

 

 

22,688

 

Net income available to common

 

shareholders

 

 

 

 

$

496,182

 

 

 

 

 

 

$

151,904

 

 

 

 

 

 

 

 

 

 

 

 

 

Net losses and loss expenses ratio

 

55.0

%

 

 

66.1

%

 

 

58.7

%

 

 

58.5

%

 

 

72.4

%

 

 

64.0

%

Acquisition cost ratio

 

18.6

%

 

 

21.5

%

 

 

19.6

%

 

 

18.4

%

 

 

21.3

%

 

 

19.5

%

General and administrative expense ratio

 

13.7

%

 

 

4.9

%

 

 

13.4

%

 

 

14.3

%

 

 

5.4

%

 

 

12.9

%

Combined ratio

 

87.3

%

 

 

92.5

%

 

 

91.7

%

 

 

91.2

%

 

 

99.1

%

 

 

96.4

%

12 Underwriting-related general and administrative expenses is a non-GAAP financial measure as defined in SEC Regulation G. The reconciliation to general and administrative expenses, the most comparable GAAP financial measure, also included corporate expenses of $102 million and $80 million for the nine months ended September 30, 2023 and 2022, respectively. Underwriting-related general and administrative expenses and corporate expenses are included in the general and administrative expense ratio.

13 Consolidated underwriting income (loss) is a non-GAAP financial measure as defined in SEC Regulation G. The reconciliation to net income (loss), the most comparable GAAP financial measure, is presented above.

AXIS CAPITAL HOLDINGS LIMITED

NON-GAAP FINANCIAL MEASURES RECONCILIATION (UNAUDITED)

OPERATING INCOME AND OPERATING RETURN ON AVERAGE COMMON EQUITY

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

 

 

 

 

 

 

 

 

 

Three months ended

 

Nine months ended

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

(in thousands, except per share amounts)

 

 

 

 

 

 

 

 

Net income (loss) available (attributable) to common shareholders

$

180,535

 

 

$

(16,947

)

 

$

496,182

 

 

$

151,904

 

Net investment (gains) losses(14)

 

53,114

 

 

 

146,458

 

 

 

97,671

 

 

 

414,231

 

Foreign exchange gains(15)

 

(50,570

)

 

 

(135,660

)

 

 

(11,755

)

 

 

(236,934

)

Reorganization expenses(16)

 

28,997

 

 

 

6,213

 

 

 

28,997

 

 

 

21,941

 

Interest in (income) loss of equity method investments(17)

 

(2,940

)

 

 

7,560

 

 

 

(2,835

)

 

 

(5,040

)

Income tax benefit

 

(7,245

)

 

 

(5,117

)

 

 

(15,138

)

 

 

(14,779

)

Operating income

$

201,891

 

 

$

2,507

 

 

$

593,122

 

 

$

331,323

 

 

 

 

 

 

 

 

 

Earnings (loss) per diluted common share

$

2.10

 

 

$

(0.20

)

 

$

5.77

 

 

$

1.77

 

Net investment (gains) losses

 

0.62

 

 

 

1.72

 

 

 

1.14

 

 

 

4.83

 

Foreign exchange gains

 

(0.59

)

 

 

(1.59

)

 

 

(0.14

)

 

 

(2.77

)

Reorganization expenses

 

0.34

 

 

 

0.07

 

 

 

0.34

 

 

 

0.26

 

Interest in (income) loss of equity method investments

 

(0.03

)

 

 

0.09

 

 

 

(0.03

)

 

 

(0.06

)

Income tax benefit

 

(0.10

)

 

 

(0.06

)

 

 

(0.18

)

 

 

(0.17

)

Operating income per diluted common share

$

2.34

 

 

$

0.03

 

 

$

6.90

 

 

$

3.86

 

 

 

 

 

 

 

 

 

Weighted average diluted common shares outstanding

 

86,108

 

 

 

85,376

 

 

 

85,927

 

 

 

85,674

 

 

 

 

 

 

 

 

 

Average common shareholders' equity

$

4,477,086

 

 

 

3,973,027

 

 

$

4,286,559

 

 

$

4,327,040

 

 

 

 

 

 

 

 

 

Annualized return on average common equity

 

16.1

%

 

 

(1.7

%)

 

 

15.4

%

 

 

4.7

%

 

 

 

 

 

 

 

 

Annualized operating return on average common equity(18)

 

18.0

%

 

 

0.3

%

 

 

18.4

%

 

 

10.2

%

14 Tax expense (benefit) of $(4,318) and $(608) for the three months ended September 30, 2023 and 2022, respectively, and $(8,198) and $(33,519) for the nine months ended September 30, 2023 and 2022, respectively. Tax impact is estimated by applying the statutory rates of applicable jurisdictions, after consideration of other relevant factors including the ability to utilize capital losses.

15 Tax expense (benefit) of $2,318 and $(3,757) for the three months ended September 30, 2023 and 2022, respectively, and $(1,695) and $21,191 for the nine months ended September 30, 2023 and 2022, respectively. Tax impact is estimated by applying the statutory rates of applicable jurisdictions, after consideration of other relevant factors including the tax status of specific foreign exchange transactions.

16 Tax expense (benefit) of $(5,245) and $(752) for the three months ended September 30, 2023 and 2022, respectively, and $(5,245) and $(2,451) for the nine months ended September 30, 2023 and 2022, respectively. Tax impact is estimated by applying the statutory rates of applicable jurisdictions.

17 Tax expense (benefit) of $nil for the three and nine months ended September 30, 2023 and 2022, respectively. Tax impact is estimated by applying the statutory rates of applicable jurisdictions.

18 Annualized operating return on average common equity ("operating ROACE") is a non-GAAP financial measure as defined in SEC Regulation G. The reconciliation to annualized ROACE, the most comparable GAAP financial measure, is presented above, and a discussion of the rationale for its presentation is provided later in this press release.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of section 27A of the Securities Act of 1933 and section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts included in this press release, including statements regarding our estimates, beliefs, expectations, intentions, strategies or projections are forward-looking statements. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in the United States federal securities laws. In some cases, these statements can be identified by the use of forward-looking words such as "may", "should", "could", "anticipate", "estimate", "expect", "plan", "believe", "predict", "potential", "intend" or similar expressions. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections, and various assumptions, many of which, by their nature, are inherently uncertain and beyond management's control.

Forward-looking statements contained in this press release may include, but are not limited to, information regarding our estimates for catastrophes and other weather-related losses including losses related to the COVID-19 pandemic, measurements of potential losses in the fair market value of our investment portfolio and derivative contracts, our expectations regarding the performance of our business, our financial results, our liquidity and capital resources, the outcome of our strategic initiatives including our exit from catastrophe and property reinsurance lines of business, our expectations regarding pricing and other market and economic conditions including the liquidity of financial markets, developments in the commercial real estate market, inflation, our growth prospects, and valuations of the potential impact of movements in interest rates, credit spreads, equity securities' prices, and foreign currency exchange rates.

Forward-looking statements only reflect our expectations and are not guarantees of performance. These statements involve risks, uncertainties, and assumptions. Accordingly, there are or will be important factors that could cause actual events or results to differ materially from those indicated in such statements. We believe that these factors include, but are not limited to, the following:

Insurance Risk

Strategic Risk

Credit and Market Risk

Liquidity Risk

Operational Risk

Regulatory Risk

Risks Related to Taxation

Readers should carefully consider the risks noted above together with other factors including but not limited to those described under Item 1A, 'Risk Factors' in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC"), as those factors may be updated from time to time in our periodic and other filings with the SEC, which are accessible on the SEC's website at www.sec.gov.

We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.

Rationale for the Use of Non-GAAP Financial Measures

We present our results of operations in a way we believe will be meaningful and useful to investors, analysts, rating agencies and others who use our financial information to evaluate our performance. Some of the measurements we use are considered non-GAAP financial measures under SEC rules and regulations. In this press release, we present underwriting-related general and administrative expenses, consolidated underwriting income (loss), operating income (loss) (in total and on a per share basis), annualized operating return on average common equity ("operating ROACE"), amounts presented on a constant currency basis and pre-tax total return on cash and investments excluding foreign exchange movements which are non-GAAP financial measures as defined in SEC Regulation G. We believe that these non-GAAP financial measures, which may be defined and calculated differently by other companies, help explain and enhance the understanding of our results of operations. However, these measures should not be viewed as a substitute for those determined in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP").

Underwriting-Related General and Administrative Expenses

Underwriting-related general and administrative expenses include those general and administrative expenses that are incremental and/or directly attributable to our underwriting operations. While this measure is presented in the 'Segment Information' note to our Consolidated Financial Statements, it is considered a non-GAAP financial measure when presented elsewhere on a consolidated basis.

Corporate expenses include holding company costs necessary to support our worldwide insurance and reinsurance operations and costs associated with operating as a publicly-traded company. As these costs are not incremental and/or directly attributable to our underwriting operations, these costs are excluded from underwriting-related general and administrative expenses, and therefore, consolidated underwriting income (loss). General and administrative expenses, the most comparable GAAP financial measure to underwriting-related general and administrative expenses, also includes corporate expenses.

The reconciliation of underwriting-related general and administrative expenses to general and administrative expenses, the most comparable GAAP financial measure, is presented in the 'Consolidated Segmental Data' section of this press release.

Consolidated Underwriting Income (Loss)

Consolidated underwriting income (loss) is a pre-tax measure of underwriting profitability that takes into account net premiums earned and other insurance related income (loss) as revenues and net losses and loss expenses, acquisition costs and underwriting-related general and administrative expenses as expenses. While this measure is presented in the 'Segment Information' note to our Consolidated Financial Statements, it is considered a non-GAAP financial measure when presented elsewhere on a consolidated basis.

We evaluate our underwriting results separately from the performance of our investment portfolio. As a result, we believe it is appropriate to exclude net investment income and net investment gains (losses) from our underwriting profitability measure.

Foreign exchange losses (gains) in our consolidated statements of operations primarily relate to the impact of foreign exchange rate movements on our net insurance-related liabilities. However, we manage our investment portfolio in such a way that unrealized and realized foreign exchange losses (gains) on our investment portfolio, including unrealized foreign exchange losses (gains) on our equity securities, and foreign exchange losses (gains) realized on the sale of our available for sale investments and equity securities recognized in net investment gains (losses), and unrealized foreign exchange losses (gains) on our available for sale investments in other comprehensive income (loss), generally offset a large portion of the foreign exchange losses (gains) arising from our underwriting portfolio, thereby minimizing the impact of foreign exchange rate movements on total shareholders' equity. As a result, we believe that foreign exchange losses (gains) in our consolidated statements of operations in isolation are not a meaningful contributor to our underwriting performance. Therefore, foreign exchange losses (gains) are excluded from consolidated underwriting income (loss).

Interest expense and financing costs primarily relate to interest payable on our debt and Federal Home Loan Bank advances. As these expenses are not incremental and/or directly attributable to our underwriting operations, these expenses are excluded from underwriting-related general and administrative expenses and, therefore, consolidated underwriting income (loss).

Reorganization expenses in 2023 include impairments of computer software assets and severance costs associated with the departures of certain employees mainly attributable to our "How We Work" program which focuses on simplifying our operating structure. Reorganization expenses in 2022 included severance costs and impairments of computer software assets mainly attributable to our exit from catastrophe and property reinsurance lines of business which was part of an overall approach to reduce our exposure to volatile catastrophe risk. Reorganization expenses are primarily driven by business decisions, the nature and timing of which are not related to the underwriting process. Therefore, these expenses are excluded from consolidated underwriting income (loss).

Amortization of intangible assets arose from business decisions, the nature and timing of which are not related to the underwriting process. Therefore, these expenses are excluded from consolidated underwriting income (loss).

We believe that the presentation of underwriting-related general and administrative expenses and consolidated underwriting income (loss) provides investors with an enhanced understanding of our results of operations by highlighting the underlying pre-tax profitability of our underwriting activities. The reconciliation of consolidated underwriting income (loss) to net income (loss), the most comparable GAAP financial measure, is presented in the 'Consolidated Segmental Data' section of this press release.

Operating Income (Loss)

Operating income (loss) represents after-tax operational results exclusive of net investment gains (losses), foreign exchange losses (gains), reorganization expenses and interest in income (loss) of equity method investments.

Although the investment of premiums to generate income and investment gains (losses) is an integral part of our operations, the determination to realize investment gains (losses) is independent of the underwriting process and is heavily influenced by the availability of market opportunities. Furthermore, many users believe that the timing of the realization of investment gains (losses) is somewhat opportunistic for many companies.

Foreign exchange losses (gains) in our consolidated statements of operations primarily relate to the impact of foreign exchange rate movements on net insurance-related liabilities. However, we manage our investment portfolio in such a way that unrealized and realized foreign exchange losses (gains) on our investment portfolio, including unrealized foreign exchange losses (gains) on our equity securities and foreign exchange losses (gains) realized on the sale of our available for sale investments and equity securities recognized in net investment gains (losses) and unrealized foreign exchange losses (gains) on our available for sale investments in other comprehensive income (loss), generally offset a large portion of the foreign exchange losses (gains) arising from our underwriting portfolio, thereby minimizing the impact of foreign exchange rate movements on total shareholders' equity. As a result, we believe that foreign exchange losses (gains) in our consolidated statements of operations in isolation are not a meaningful contributor to the performance of our business. Therefore, foreign exchange losses (gains) are excluded from operating income (loss).

Reorganization expenses in 2023 include impairments of computer software assets and severance costs associated with the departures of certain employees mainly attributable to our "How We Work" program which focuses on simplifying our operating structure. Reorganization expenses in 2022 included severance costs and impairments of computer software assets mainly attributable to our exit from catastrophe and property reinsurance lines of business which was part of an overall approach to reduce our exposure to volatile catastrophe risk. Reorganization expenses are primarily driven by business decisions, the nature and timing of which are not related to the underwriting process. Therefore, these expenses are excluded from consolidated operating income (loss).

Interest in income (loss) of equity method investments is primarily driven by business decisions, the nature and timing of which are not related to the underwriting process. Therefore, this income (loss) is excluded from operating income (loss).

Certain users of our financial statements evaluate performance exclusive of after-tax net investment gains (losses), foreign exchange losses (gains), reorganization expenses and interest in income (loss) of equity method investments in order to understand the profitability of recurring sources of income.

We believe that showing net income (loss) available (attributable) to common shareholders exclusive of after-tax net investment gains (losses), foreign exchange losses (gains), reorganization expenses and interest in income (loss) of equity method investments reflects the underlying fundamentals of our business. In addition, we believe that this presentation enables investors and other users of our financial information to analyze performance in a manner similar to how our management analyzes the underlying business performance. We also believe this measure follows industry practice and, therefore, facilitates comparison of our performance with our peer group. We believe that equity analysts and certain rating agencies that follow us, and the insurance industry as a whole, generally exclude these items from their analyses for the same reasons. The reconciliation of operating income (loss) to net income (loss) available (attributable) to common shareholders, the most comparable GAAP financial measure, is presented in the 'Non-GAAP Financial Measures Reconciliation' section of this press release.

We also present operating income (loss) per diluted common share and annualized operating ROACE, which are derived from the operating income (loss) measure and are reconciled to the most comparable GAAP financial measures, earnings (loss) per diluted common share and annualized return on average common equity ("ROACE"), respectively, in the 'Non-GAAP Financial Measures Reconciliation' section of this press release.

Constant Currency Basis

We present gross premiums written and net premiums written on a constant currency basis in this press release. The amounts presented on a constant currency basis are calculated by applying the average foreign exchange rate from the current year to the prior year amounts. We believe this presentation enables investors and other users of our financial information to analyze growth in gross premiums written and net premiums written on a constant basis. The reconciliation to gross premiums written and net premiums written on a GAAP basis is presented in the 'Insurance Segment' and 'Reinsurance Segment' sections of this press release.

Pre-Tax Total Return on Cash and Investments excluding Foreign Exchange Movements

Pre-tax total return on cash and investments excluding foreign exchange movements measures net investment income (loss), net investments gains (losses), interest in income (loss) of equity method investments, and change in unrealized gains (losses) generated by average cash and investment balances. We believe this presentation enables investors and other users of our financial information to analyze the performance of our investment portfolio. The reconciliation of pre-tax total return on cash and investments excluding foreign exchange movements to pre-tax total return on cash and investments, the most comparable GAAP financial measure, is presented in the 'Investments' section of this press release.


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