AXIS Capital (AXS) 2025 Conference September 03, 2025 11:35 AM ET Company ParticipantsMeyer Shields - Managing DirectorVincent Tizzio - President, CEO & DirectorPeter Vogt - CFOMeyer ShieldsI mean, I can complain about it, but it's not going to change. We are going to move along. Our next session has Vince Tivio, CEO of Axis and Pete Vogt, the CFO. And I'm going to gloss over the implicit awkwardness of this question and say, first of all, that I've been working with Pete for a long time, and I think he's d ...

Key Takeaways AXS focuses on growth areas like wholesale insurance, lower middle markets, and specialty reinsurance lines.AXS invests in digital capabilities and aims to reduce its G&A expense ratio to below 11% by 2026.AXS repositioned its business for specialty risk leadership, focusing on underwriting profitability.Shares of AXIS Capital Holdings Limited (AXS) have gained 23.5% in the past year, outperforming its industry, the Finance sector and the Zacks S&P 500 composite’s growth of 3.5%, 15.9% and 15. ...

It has been about a month since the last earnings report for Axis Capital (AXS) . Shares have added about 5% in that time frame, outperforming the S&P 500.But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Axis Capital due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the latest earnings report in order to get a better handle on the important drivers.AXIS Capital Q2 Ea ...

Core Viewpoint - Investors should closely monitor Axis Capital Holdings Limited (AXS) due to significant movements in the options market, particularly the high implied volatility of the Sept 19, 2025 $65.00 Call option [1] Company Analysis - Axis Capital is currently rated as Zacks Rank 3 (Hold) in the Insurance - Property and Casualty Industry, which ranks in the top 23% of the Zacks Industry Rank [3] - Over the past 60 days, there have been no upward or downward revisions in analyst estimates for the current quarter, resulting in a decrease in the Zacks Consensus Estimate from $2.60 per share to $2.52 per share [3] Options Market Insights - The high implied volatility suggests that options traders are anticipating a significant price movement for Axis Capital shares, indicating potential upcoming events that could lead to a major rally or sell-off [2][4] - Seasoned options traders often seek out options with high implied volatility to sell premium, aiming to benefit from the decay of the option's value if the underlying stock does not move as much as expected [4]

Analyst's Disclosure:I/we have a beneficial long position in the shares of AXS.PR.E either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether an ...

Core Insights - AXIS Capital Holdings Limited (AXS) reported second-quarter 2025 operating income of $3.29 per share, exceeding the Zacks Consensus Estimate by 14.2% and reflecting a year-over-year increase of 12.2% [1][8] - The company's total operating revenues reached $1.6 billion, which was 3.2% below the Zacks Consensus Estimate but showed a year-over-year growth of 5.6% [2] - The underwriting income for AXIS Capital increased by 17.4% year over year to $189.2 million, with an improved combined ratio of 88.9% [5][8] Quarterly Operational Update - Total operating revenues were $1.6 billion, missing estimates by 3.2% but rising 5.6% year over year due to higher other insurance-related income and net premiums earned [2] - Net premiums written increased by 4% to $1.6 billion, driven by an 8.1% rise in the Insurance segment, while the Reinsurance segment saw a 9.1% decline [2] Investment Income - Net investment income decreased by 2% year over year to $187 million, primarily due to lower income from fixed maturities, partially offset by higher returns on alternative investments [3] Expense Analysis - Total expenses rose by 12.2% year over year to $1.3 billion, attributed to higher net losses, acquisition costs, and general administrative expenses [4] - Pre-tax catastrophe and weather-related losses amounted to $86 million, up from $47 million in the previous year, mainly due to California Wildfires [4] Segment Results - In the Insurance segment, gross premiums written improved by 6.5% year over year to $1.9 billion, with net premiums written increasing by 8.1% to $1.3 billion and underwriting income rising by 31.1% to $151.6 million [6] - The Reinsurance segment experienced a 6.8% decline in gross premiums written to $583.5 million, with underwriting income increasing by 17.5% to $37.5 million despite a deterioration in the combined ratio by 270 basis points to 92 [7][9] Financial Update - AXIS Capital ended the second quarter with cash and cash equivalents of $852 million, a 60% decrease from the end of 2024 [10] - Debts stood at $1.3 billion, reflecting a slight increase of 0.05% from the previous year [10] - Book value per share increased by 18.6% year over year to $70.34 as of June 30, 2025 [10] Capital Deployment - As of June 30, 2025, AXIS Capital had $110 million remaining under the board-authorized share repurchase program for common share repurchases [11]

Financial Data and Key Metrics Changes - The company achieved a record diluted book value per common share of $70.34, an increase of 18.6% year over year [6][20] - Operating earnings per share reached an all-time high of $3.29, a 12% increase over the prior year quarter [6][20] - The annualized operating return on equity was 19% for the quarter [5][20] - The combined ratio was reported at 88.9%, indicating strong underwriting performance [6][21] Business Line Data and Key Metrics Changes - The Insurance segment produced record gross premiums written of $1,900,000,000, a 7% increase compared to the prior year quarter [23] - The Reinsurance segment experienced a decline in gross premiums by 6.8%, attributed to timing issues and underwriting discipline [28] - The combined ratio for the Reinsurance segment was 92%, with an ex-catastrophe accident year loss ratio of 67.9% [29] Market Data and Key Metrics Changes - In North America, premiums in the Insurance segment increased by 8% year over year, with submission flow up more than 22% [9] - Casualty rates increased by 12% in the quarter, while U.S. Primary casualty rates rose by 12.5% [11][12] - The property market showed flat to low single-digit growth, with an overall rate reduction of 11% [12] Company Strategy and Development Direction - The company is focused on maintaining premium adequacy across its portfolio while selectively pursuing growth in attractive business lines [10] - Investments in technology and AI are being made to modernize underwriting processes and improve efficiency [17][19] - The company aims to leverage its specialty capabilities to navigate a dynamic risk environment and achieve profitable growth [19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's positioning in a competitive market, despite uncertainties from trade disruptions and geopolitical tensions [7][19] - The company anticipates continued profitable growth, particularly in the Insurance segment, with expectations for the second half of the year to exceed the first half's growth rate [26][96] - Management remains cautious regarding the reinsurance market, emphasizing a selective approach to growth and reserving practices [39][62] Other Important Information - The company recorded a release of $20,000,000 from short-tailed lines, contributing to its strong financial results [22] - The effective tax rate for the quarter was 20.1%, reflecting the geographic mix of profits [31] - The company returned substantial capital to shareholders, completing $50,000,000 in share repurchases and declaring $35,000,000 in dividends [32] Q&A Session Summary Question: Thoughts on insurance segment growth and ceded premiums - Management indicated that the reinsurance strategy remains agile and flexible, with high confidence in the insurance segment's performance [35][37] Question: Loss ratio and reserving process in reinsurance - Management expects the loss ratio to remain around 68% for the rest of the year, maintaining a cautious stance on reserving [39][43] Question: Pricing trends in insurance and reinsurance - Management noted that liability casualty pricing is ahead of loss costs, while property pricing has faced pressures [46][47] Question: Approach to MGAs and appetite for growth - The company has adopted a selective and disciplined strategy regarding MGAs, focusing on bottom-line results rather than volume [59][61] Question: Investment in AI and technology compared to competitors - Management believes the company's investments in AI and technology are well-positioned to enhance efficiency and productivity, with ongoing improvements in underwriting processes [109][113]

Financial Data and Key Metrics Changes - The company achieved an annualized operating return on equity of 19% in the quarter [5] - Record diluted book value per common share reached $70.34, an increase of 18.6% year over year [6] - Operating earnings per share hit an all-time high of $3.29, a 12% increase over the prior year quarter [6] - Generated record second quarter premiums of $2.5 billion, including $732 million in new business [6] - Combined ratio improved to 88.9%, with catastrophe events approximating an industry loss of $25 billion [6][20] Business Line Data and Key Metrics Changes - The Insurance segment reported gross premiums written of $1.9 billion, a record and a 7% increase compared to the prior year quarter [22] - Current accident year ex-cat combined ratio for Insurance was 83.2%, with an overall combined ratio of 85.3% [7][25] - Net written premium in Insurance grew 8.1% in the quarter, with underwriting income reaching $152 million, the highest on record [8] - In Reinsurance, gross premiums decreased by 6.8%, but the combined ratio remained stable at 92% [26] Market Data and Key Metrics Changes - In North America, premiums increased by 8% over the prior year quarter, with submission flow up more than 22% [8] - Casualty rates increased by 12% in the quarter, while U.S. Primary casualty rates rose by 12.5% [10][11] - Property segment experienced flat to low single-digit growth with an overall rate reduction of 11% [11] - The company observed competitive market conditions, particularly in property, while maintaining premium adequacy across its portfolio [9] Company Strategy and Development Direction - The company continues to focus on selective growth in competitive markets, particularly in casualty and professional lines [9][12] - Investments in technology and AI are being made to modernize underwriting platforms and improve operational efficiency [16][32] - The company aims to leverage its specialty capabilities to navigate a dynamic risk environment and achieve profitable growth [17] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing uncertainty due to trade disruptions, tariffs, and geopolitical tensions, which could impact inflation and growth [7] - The company remains optimistic about achieving profitable growth, with expectations for the second half of the year to exceed the 6% growth seen in the first half [94][96] - Management emphasized a disciplined approach to underwriting and reserving, particularly in light of evolving market conditions [38][41] Other Important Information - The company recorded a release of $20 million from short-tailed lines, with $15 million in insurance and $5 million in reinsurance [21] - The effective tax rate for the quarter was 20.1%, reflecting the geographic mix of profits [30] - The company returned substantial capital to shareholders, completing $50 million in share repurchases and declaring $35 million in common dividends [31] Q&A Session Summary Question: Thoughts on reinsurance sessions in the future - Management indicated that the reinsurance purchase strategy will remain agile and flexible, adapting to risk views and capital positions [34][35] Question: Concerns about the accident year loss ratio - Management expressed confidence in maintaining the loss ratio around 68% for the remainder of the year, emphasizing a cautious approach to reserving [37][41] Question: Pricing adequacy in insurance and reinsurance - Management noted that pricing in liability casualty is ahead of loss costs, while property pricing has seen deterioration [44][45] Question: Changes in MGA strategy - The company has adopted a selective and disciplined approach to MGAs, focusing on bottom-line results rather than volume [57][59] Question: Cedents enhancing underwriting and claims processes - Management observed that many companies are strengthening their claims processes, but emphasized the need for statistically repeatable evidence before increasing reinsurance liability growth [60][61] Question: Share buyback strategy - Management stated that share buybacks are opportunistic and will continue as deemed appropriate, with $110 million remaining on the repurchase authorization [81][84] Question: Growth in lower middle market business - The lower middle market business grew by $64 million in the quarter, with continued investment in underwriting modernization [87][89] Question: Impact of UK Russia aviation ruling - Management confirmed no adverse impact from the ruling, as the company does not operate in the contingent war market [105]

Core Insights - Axis Capital reported $1.59 billion in revenue for Q2 2025, a year-over-year increase of 5.7%, with an EPS of $3.29 compared to $2.93 a year ago [1] - The revenue fell short of the Zacks Consensus Estimate of $1.64 billion by 3.27%, while the EPS exceeded the consensus estimate of $2.88 by 14.24% [1] Financial Performance Metrics - The combined ratio for the total was reported at 88.9%, better than the estimated 91.9% [4] - The net loss and loss expense ratio for total was 57.5%, compared to the estimated 60.2% [4] - The general and administrative expense ratio for insurance was 12%, slightly better than the estimated 12.1% [4] - The combined ratio for reinsurance was 92%, significantly better than the estimated 101.1% [4] - The net investment income was $187.3 million, which is a decrease of 1.9% year-over-year, and below the average estimate of $193.87 million [4] - Net premiums earned totaled $1.39 billion, which is a year-over-year increase of 6.8%, but below the average estimate of $1.42 billion [4] - The net premiums earned in the insurance segment were $1.03 billion, a 7.8% year-over-year increase, but below the estimate of $1.05 billion [4] - The net premiums earned in the reinsurance segment were $360.47 million, a 4.1% year-over-year increase, exceeding the estimate of $351.17 million [4] Stock Performance - Axis Capital's shares have returned -7.3% over the past month, contrasting with the Zacks S&P 500 composite's +3.6% change [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Group 1: Earnings Performance - Axis Capital reported quarterly earnings of $3.29 per share, exceeding the Zacks Consensus Estimate of $2.88 per share, and up from $2.93 per share a year ago, representing an earnings surprise of +14.24% [1] - The company has surpassed consensus EPS estimates in all four of the last quarters [2] - The revenue for the quarter ended June 2025 was $1.59 billion, which missed the Zacks Consensus Estimate by 3.27%, compared to $1.5 billion in the same quarter last year [2] Group 2: Stock Performance and Outlook - Axis Capital shares have increased by approximately 8.6% since the beginning of the year, matching the S&P 500's gain of 8.6% [3] - The future stock price movement will largely depend on management's commentary during the earnings call and the earnings outlook [4][5] - The current consensus EPS estimate for the upcoming quarter is $2.59 on revenues of $1.67 billion, and for the current fiscal year, it is $11.50 on revenues of $6.54 billion [7] Group 3: Industry Context - The Zacks Industry Rank for Insurance - Property and Casualty is currently in the bottom 34% of over 250 Zacks industries, indicating potential underperformance compared to the top 50% of ranked industries [8] - The estimate revisions trend for Axis Capital was unfavorable prior to the earnings release, resulting in a Zacks Rank 4 (Sell) for the stock, suggesting expected underperformance in the near future [6]