AXIS Capital Holdings Limited’s (AXS) compelling and diversified product portfolio, underwriting excellence, digital capabilities, solid capital position and favorable growth estimates make it worth adding to one’s portfolio.Zacks Rank & Price PerformanceAXIS Capital currently carries a Zacks Rank #2 (Buy). The stock has gained 15.8% over the past year compared with the industry’s growth of 30.6%.Image Source: Zacks Investment ResearchEarnings Surprise HistoryThis specialty insurer has a solid record of bea ...

Industry Overview - The Zacks Property and Casualty (P&C) Insurance industry has experienced a 32.3% increase over the past year, outperforming the S&P 500 Composite's 28.6% and the Finance sector's 24.3% growth [1] - Key drivers for growth include higher retention, streamlined operations, global presence, better pricing, solid underwriting, and a strong capital position [1] Company Profiles - Palomar Holdings, Inc. has a market capitalization of $2 billion and offers personal and commercial specialty property insurance products in the U.S. [2] - Axis Capital Holdings Limited has a market capitalization of $5.3 billion and provides various specialty insurance and reinsurance products globally [2] - Both companies currently hold a Zacks Rank 1 (Strong Buy) [2] Pricing and Premium Growth - Global commercial insurance prices have risen for 25 consecutive quarters [2] - Gross premiums are projected to increase six-fold to $722 billion by 2030, with a 5.5% growth expected in 2024 [2] Economic Losses and Underwriting - Total economic losses in 2023 were $380 billion, with insured losses at $118 million [3] - The total net underwriting loss reached $38 billion, a 10-year high, primarily due to weather-related losses and high inflation [3] - The combined ratio was 103.7, with catastrophe losses contributing 780 basis points [3] Interest Rates and Capital Position - The Federal Reserve raised interest rates four times in 2023, benefiting insurers, especially long-tail insurers [4] - A solid capital level allows insurers to pursue strategic mergers and acquisitions, expand operations, and increase dividends [4] Technological Advancements - The use of real-time data and increased automation is expected to enhance premium calculation and operational efficiency [5] Performance Metrics - Palomar Holdings has gained 50.7% in the past year, outperforming Axis Capital's 15.5% increase [6] - Return on Equity (ROE) for Palomar Holdings is 19.3%, slightly higher than Axis Capital's 19.2% and significantly above the industry average of 7.3% [7] - Palomar Holdings has a price-to-book (P/B) ratio of 4.39, while Axis Capital's is 1.15, with the industry average at 1.53 [8] - Axis Capital's debt-to-capital ratio is 21.3, higher than the industry average of 18.8 and Palomar Holdings's 10 [9] Growth Projections - The Zacks Consensus Estimate for 2024 earnings indicates a 3% growth for Axis Capital and a 16.3% increase for Palomar Holdings [10] - Revenue estimates for Palomar Holdings and Axis Capital imply year-over-year increases of 24.5% and 3.6%, respectively [12] Combined Ratio - Axis Capital's combined ratio was 99.9% in 2023, while Palomar Holdings reported a significantly better ratio of 76.6% [11] Conclusion - Comparative analysis indicates that Palomar Holdings is better positioned than Axis Capital in terms of price, return on equity, leverage, growth projection, combined ratio, and revenue estimates [13]

Industry Overview - The Zacks Property and Casualty Insurance (P&C) industry is expected to benefit from improved pricing, prudent underwriting, and exposure growth despite rising catastrophic activities [1] - The industry comprises companies providing commercial and personal property insurance, casualty insurance products, and services, with premiums being the primary revenue source [3] - The Federal Reserve's interest rate hikes in 2023 are favorable for insurers, particularly long-tail insurers [3] Pricing and Performance Trends - Although premium pricing is increasing, the rate of increase has slowed over the last 12 quarters [2] - Global commercial insurance prices have risen for 25 consecutive quarters, which is expected to help insurers manage claims effectively [4] - Analysts predict a 5.5% growth in premiums for 2024, with gross premiums estimated to reach $722 billion by 2030 [4] Catastrophe Impact - The P&C insurance industry is vulnerable to catastrophe events, which negatively impact underwriting profits [5] - In 2023, total economic losses were $380 billion, with insured losses at $118 million, leading to a net underwriting loss of $38 billion, the highest in a decade [5] - The combined ratio for the industry was 103.7, with catastrophe losses contributing significantly to this figure [5] Mergers and Acquisitions - The industry is likely to see continued consolidation as companies seek to diversify operations and gain market share [6] - Deloitte anticipates more mergers and acquisitions in the reinsurance space in 2024 [6] Technology Adoption - Increased adoption of technology, including blockchain, AI, and advanced analytics, is transforming the industry and improving operational efficiency [6][7] - The emergence of insurtech is creating competition for traditional insurers, necessitating significant investment in technology [7] Industry Performance and Valuation - The Zacks Property and Casualty Insurance industry ranks 34, placing it in the top 13% of over 250 Zacks industries, indicating positive earnings outlook [8] - The industry has outperformed the S&P 500 and Finance sector over the past year, with a collective stock increase of 26.6% [9] - The current price-to-book (P/B) ratio for the industry is 1.44X, significantly lower than the S&P 500's 6.25X [11] Company Highlights - **The Progressive Corporation**: Expected earnings growth of 50.7% and 14.1% for 2024 and 2025, respectively, with a strong market position [13] - **AXIS Capital Holdings**: Anticipated earnings growth of 3.1% and 10.1% for 2024 and 2025, with a high dividend yield [15] - **Berkshire Hathaway**: Expected earnings growth of 7.7% and 15.3% for 2024 and 2025, benefiting from its diversified operations [16] - **The Travelers Companies**: Projected earnings growth of 34.7% and 13.8% for 2024 and 2025, with a strong capital position [17] - **Chubb**: Expected earnings growth of 10.5% for 2025, with a focus on middle-market businesses [18]

The Property and Casualty (P&C) insurance industry is set to benefit from better pricing, prudent underwriting, increased exposure, an improving rate environment and a solid capital position. With the ongoing economic expansion, insurers remain well-poised for growth.Price hikes, operational strength, higher retention, strong renewal and the appointment of retail agents should help write higher premiums. Per Deloitte Insights, gross premiums are estimated to increase sixfold to $722 billion by 2030.Per Fitc ...

Core Viewpoint - Axis Capital (AXS) has shown strong performance, with a 5.2% increase in stock price over the past month and a 13.1% gain since the beginning of the year, outperforming the Zacks Finance sector and the Zacks Insurance - Property and Casualty industry [1] Financial Performance - Axis Capital reported an EPS of $2.94 in its last earnings report, significantly beating the consensus estimate of $-1.25, and also exceeded the revenue estimate by 2.67% [2] - For the current fiscal year, Axis Capital is projected to achieve earnings of $10.15 per share on revenues of $5.92 billion, reflecting a 3.05% increase in EPS and a 3.61% increase in revenues [2] - The next fiscal year forecasts earnings of $11.17 per share on $6.37 billion in revenues, indicating a year-over-year growth of 10.05% in EPS and 7.44% in revenues [2] Valuation Metrics - Axis Capital's current trading metrics show a P/E ratio of 6.2X for the current fiscal year EPS estimates, compared to the peer industry average of 13.5X [4] - The stock trades at a trailing cash flow basis of 5.9X, while the peer group's average is 16.1X, and it has a PEG ratio of 1.23 [4] Zacks Rank - Axis Capital holds a Zacks Rank of 1 (Strong Buy), supported by favorable earnings estimate revisions from analysts [5] - The stock meets the criteria for selection, as it has a Zacks Rank of 1 or 2 and Style Scores of A or B, suggesting potential for further price appreciation [5] Industry Comparison - The Progressive Corporation (PGR), a peer in the industry, also shows strong performance with a Zacks Rank of 1 (Strong Buy) and is expected to post earnings of $8.90 per share on revenues of $71.42 billion for the current fiscal year [6] - The Insurance - Property and Casualty industry is performing well, ranking in the top 15% of all industries, providing favorable conditions for both Axis Capital and its peers [6]

PEMBROKE, Bermuda--(BUSINESS WIRE)--AXIS Capital Holdings Limited ("AXIS Capital") (NYSE: AXS) today announced that W. Marston (Marty) Becker will succeed Henry B. Smith as non-executive Chair of its Board of Directors. Mr. Smith, who has served as Chair since May of 2020, has decided to transition from the Chair role and will continue to maintain a seat on the Board. The transition will take place in May of 2024, timed to the Company’s Annual General Meeting. “There is no better individual to succeed me ...

Core Insights - AXIS Capital Holdings Limited has appointed Stephen Lord as Global Chief Information Officer and Robert Barriero as Global Head of Strategic Sourcing and Corporate Real Estate, reflecting the company's commitment to enhancing operations through its "How We Work" program introduced in 2023 [1][2][3]. Group 1: Leadership Appointments - Stephen Lord will report directly to President and CEO Vince Tizzio and serve on the Executive Committee, bringing extensive experience from The Hartford and previous roles at AXIS [2]. - Robert Barriero will oversee Vendor Management and Facilities teams, reporting to Chief Administrative and Legal Officer Conrad Brooks, and has a strong background from Morgan Stanley and other leading firms [3][4]. Group 2: Company Overview - AXIS Capital is a global specialty underwriter with shareholders' equity of $5.3 billion as of December 31, 2023, and operates in multiple regions including Bermuda, the United States, Europe, Singapore, and Canada [5]. - The company's operating subsidiaries have received strong financial strength ratings of "A+" from Standard & Poor's and "A" from A.M. Best [5].

AXIS Capital Holdings Limited’s (AXS) compelling and diversified product portfolio, underwriting excellence, digital capabilities, solid capital position and favorable growth estimates make it worth retaining in one’s portfolio. Year to date, the stock has gained 12% compared with the industry’s increase of 15.8%.This Zacks Rank #1 (Strong Buy) specialty insurer has a solid record of delivering an earnings surprise in the last four quarters. Earnings have grown 82.7% in the past five years, better than the ...

PART I [Business](index=6&type=section&id=Item%201.%20Business) AXIS Capital is a global specialty underwriter managing diversified risks across insurance and reinsurance, subject to extensive regulation - AXIS is a global specialty underwriter with two main underwriting platforms: AXIS Insurance and AXIS Re, operating in Bermuda, the U.S., Europe, Singapore, and Canada[35](index=35&type=chunk) - The company's strategy involves offering a diversified range of products, managing a balanced portfolio of risks, modulating risk appetite across the underwriting cycle, and maintaining strong relationships with clients and distribution partners[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk) - Key financial performance metrics for the company include operating return on average common equity (operating ROACE) and relative total shareholder return (TSR) over the long-term[44](index=44&type=chunk) [Segment Information](index=8&type=section&id=Segment%20Information) Gross Premiums Written by Segment (in thousands) | Segment | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Insurance | $6,140,764 | $5,585,581 | $4,863,232 | | Reinsurance | $2,215,761 | $2,629,014 | $2,822,752 | | **Total** | **$8,356,525** | **$8,214,595** | **$7,685,984** | - The Insurance segment offers specialty products including Professional Lines, Property, Liability, Cyber, Marine and Aviation, Accident and Health, and Credit and Political Risk, with AmWINS Group, Aon plc, and Marsh & McLennan Companies each accounting for **10% or more of gross premiums written in 2023**[48](index=48&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk) - The Reinsurance segment provides treaty reinsurance globally, having exited Catastrophe, Property, and Aviation reinsurance lines, with Aon plc and Marsh & McLennan Companies as its largest brokers[52](index=52&type=chunk)[54](index=54&type=chunk)[55](index=55&type=chunk) [Cash and Investments](index=11&type=section&id=Cash%20and%20Investments) - The company's investment strategy balances increasing book value with generating stable investment income and ensuring sufficient liquidity for claims, primarily through investment-grade fixed maturities[58](index=58&type=chunk) - To diversify risk and optimize growth, the portfolio includes other asset classes such as equity securities, high-yield securities, and alternative investments like private equity funds[59](index=59&type=chunk) - Investment management is primarily handled by third-party managers under guidelines and objectives approved by the Company's Board of Directors' Finance Committee[60](index=60&type=chunk) [Regulation](index=12&type=section&id=Regulation) - The company's entities are regulated across various jurisdictions, including Bermuda (BMA), the United States (state-level insurance departments), Ireland (Solvency II), and the U.K. (PRA and FCA)[63](index=63&type=chunk) - In Bermuda, AXIS Capital is group supervised by the BMA, and its subsidiary AXIS Specialty Bermuda is a Class 4 insurer subject to the Insurance Act, with Bermuda's commercial insurance sector granted full "equivalence" under Solvency II[64](index=64&type=chunk)[65](index=65&type=chunk)[66](index=66&type=chunk) - In the U.S., insurance subsidiaries are subject to state insurance holding company laws, requiring registration, financial information, and adherence to regulations covering policy forms, solvency standards, and dividend limitations[76](index=76&type=chunk)[78](index=78&type=chunk) - The company's Ireland-domiciled entities (AXIS Specialty Europe and AXIS Re SE) are subject to the Solvency II Directive, a harmonized risk-based solvency and reporting regime for the European insurance sector[87](index=87&type=chunk)[88](index=88&type=chunk)[93](index=93&type=chunk) - In the U.K., AXIS Managing Agency Ltd. is authorized by the PRA and regulated by the FCA to manage Syndicate 1686 in the Lloyd's of London market[97](index=97&type=chunk)[100](index=100&type=chunk)[101](index=101&type=chunk) [Human Capital Management](index=19&type=section&id=Human%20Capital%20Management) Employee Statistics (as of Dec 31, 2023) | Metric | Value | | :--- | :--- | | Total Employees | 2,048 | | Voluntary Turnover (2023) | 10.9% | | Employees in North America | 1,289 | | Employees in EMEA | 741 | | Global Gender Demographics | 46% Women, 53% Men | | U.S. Racial/Ethnic Demographics | 61% White, 16% Black, 11% Asian, 5% Hispanic/Latinx | - The company focuses on talent development, with **19% of employees experiencing career progression in 2023**, offering extensive online learning, professional development assistance, and career planning tools[115](index=115&type=chunk) - Diversity, Equity, and Inclusion (DEI) is a key pillar, with initiatives in internal education, inclusive recruitment, and career development for diverse employees, leading to inclusion in the Bloomberg Gender Equality Index for the third consecutive year[117](index=117&type=chunk)[118](index=118&type=chunk) [Risk and Capital Management](index=24&type=section&id=Risk%20and%20Capital%20Management) - The company employs a comprehensive Enterprise Risk Management (ERM) framework to identify, assess, manage, and report risks, aiming to protect its capital base and earnings by monitoring risks against a stated risk appetite[129](index=129&type=chunk) - An internal capital model is used to provide a holistic view of capital at risk, allocate capital efficiently, support portfolio monitoring, and guide reinsurance purchasing decisions[132](index=132&type=chunk)[133](index=133&type=chunk) Estimated Net Natural Catastrophe Exposures (PML, Jan 1, 2024) | Territory | Peril | 100-Year Return Period | 250-Year Return Period | | :--- | :--- | :--- | :--- | | Southeast | U.S. Hurricane | $131 million | $149 million | | California | Earthquake | $137 million | $163 million | | Gulf of Mexico | U.S. Hurricane | $124 million | $143 million | | Japan | Earthquake | $67 million | $114 million | - The capital management strategy aims to optimize capital allocation within a Target Capital Range (TCR), which considers the internal model, regulatory requirements, and rating agency capital models[195](index=195&type=chunk) [Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) The company faces diverse risks including cyclicality, catastrophe losses, economic inflation, intense competition, market volatility, and evolving regulatory and tax environments - **Insurance Risk:** The business is cyclical, with exposure to unpredictable and substantial losses from natural and man-made disasters, including cybersecurity threats and climate change, which may increase event frequency and severity[199](index=199&type=chunk)[201](index=201&type=chunk)[211](index=211&type=chunk) - **Strategic Risk:** The highly competitive insurance/reinsurance industry has seen significant consolidation, and the company depends on a few major brokers, with Aon, Marsh & McLennan, and Arthur J. Gallagher providing **38% of gross premiums written in 2023**[230](index=230&type=chunk)[241](index=241&type=chunk) - **Market & Credit Risk:** Investment portfolios are exposed to capital markets risk from changes in interest rates, credit spreads, and equity prices, alongside credit risk from reinsurers' potential inability to pay claims[255](index=255&type=chunk)[265](index=265&type=chunk) - **Regulatory & Tax Risk:** The company is subject to extensive and varying regulation across multiple jurisdictions, and changes in tax laws, particularly the OECD's BEPS project and Bermuda's new Corporate Income Tax Act of 2023, could materially affect its future effective tax rate[284](index=284&type=chunk)[313](index=313&type=chunk)[316](index=316&type=chunk)[318](index=318&type=chunk) [Unresolved Staff Comments](index=58&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that it had no outstanding, unresolved comments from the SEC staff as of December 31, 2023 - At December 31, 2023, there were no outstanding, unresolved comments from the SEC staff[341](index=341&type=chunk) [Cybersecurity](index=58&type=section&id=Item%201C.%20Cybersecurity) The company has implemented an enterprise-wide information security program, guided by the NIST Cybersecurity Framework, with Board oversight, and has not experienced a material cybersecurity incident - The company's cybersecurity risk management program is designed based on the National Institute of Standards and Technology Cybersecurity Framework (NIST CSF)[342](index=342&type=chunk) - The Chief Information Security Officer (CISO), with over 30 years of experience, leads the cybersecurity program, which is overseen by the Board of Directors and its Risk and Audit Committees through regular updates[345](index=345&type=chunk) - The company has not experienced a material cybersecurity incident but acknowledges that risks such as ransomware or operational disruptions, if realized, could have a material impact[343](index=343&type=chunk) [Properties](index=59&type=section&id=Item%202.%20Properties) The company maintains leased office facilities globally, with its headquarters in Bermuda, and believes its current space is sufficient for future operations - The company's global headquarters is located at AXIS House, 92 Pitts Bay Road, Pembroke HM 08, Bermuda, and it maintains leased office facilities in its key operating regions[346](index=346&type=chunk) [Legal Proceedings](index=59&type=section&id=Item%203.%20Legal%20Proceedings) The company is subject to routine legal proceedings in the ordinary course of business, with estimated amounts included in loss reserves, and no material legal proceedings outside this scope - The company is not party to any material legal proceedings arising outside the ordinary course of business, with routine legal matters included in loss reserves[347](index=347&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=60&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common shares trade on the NYSE, it has a history of paying quarterly dividends, and a share repurchase program was authorized for 2023 and renewed for 2024 - The company's common shares trade on the NYSE under the symbol "AXS"[350](index=350&type=chunk) - A share repurchase program for up to **$100 million** was authorized for 2023 and renewed for 2024, with no shares repurchased under this program in Q4 2023[352](index=352&type=chunk) Shareholder Return Comparison (Value of $100 Invested on 12/31/2018) | Company/Index | 12/31/2023 | | :--- | :--- | | AXIS Capital Holdings Limited | $126.18 | | S&P 500 P&C Index | $211.53 | | S&P 500 Index | $207.21 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=62&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2023, AXIS Capital reported net income of **$346 million** and operating income of **$486 million**, with gross premiums written increasing slightly to **$8.4 billion** despite a higher combined ratio of **99.9%** due to adverse prior year reserve development 2023 Financial Highlights | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Net Income to Common Shareholders | $346 million | $193 million | | Operating Income | $486 million | $498 million | | Gross Premiums Written | $8.4 billion | $8.2 billion | | Combined Ratio | 99.9% | 95.8% | | Net Investment Income | $612 million | $419 million | | Book Value per Diluted Share | $54.06 | $46.95 | - The company entered into a significant retrocession agreement with Monarch Point Re, effective January 1, 2023, covering a diversified portfolio of casualty reinsurance business on both a prospective and retroactive basis[368](index=368&type=chunk) - The Bermuda government enacted a corporate income tax effective for accounting periods starting on or after January 1, 2025, which is expected to have a material impact on the company's future effective tax rate[370](index=370&type=chunk) [Consolidated Results of Operations](index=66&type=section&id=Consolidated%20Results%20of%20Operations) Consolidated Underwriting Results | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Net Premiums Earned | $5,083.8M | $5,160.3M | | Underwriting Income | $160.8M | $358.7M | | Net Losses and Loss Expenses Ratio | 66.7% | 62.8% | | Acquisition Cost Ratio | 19.7% | 19.8% | | General and Administrative Expense Ratio | 13.5% | 13.2% | | **Combined Ratio** | **99.9%** | **95.8%** | - The increase in the combined ratio to **99.9% in 2023** was primarily driven by an **8.1 percentage point impact from net adverse prior year reserve development**, partially offset by a decrease in the catastrophe and weather-related loss ratio[375](index=375&type=chunk) [Results by Segment](index=68&type=section&id=Results%20by%20Segment) - **Insurance Segment:** Gross premiums written grew **10% to $6.1 billion**, driven by property, marine & aviation, and liability lines, but underwriting income decreased to **$261 million** from **$327 million in 2022**, with the combined ratio increasing to **92.5%** from **89.6%** due to **$176 million of net adverse prior year reserve development**[378](index=378&type=chunk)[381](index=381&type=chunk) - **Reinsurance Segment:** Gross premiums written decreased **16% to $2.2 billion** due to the exit from catastrophe and property lines, resulting in an underwriting loss of **$100 million** (from **$31 million income in 2022**) and a combined ratio deterioration to **107.6%** from **99.1%**, driven by **$236 million of net adverse prior year reserve development**[392](index=392&type=chunk)[393](index=393&type=chunk) [Cash and Investments](index=82&type=section&id=Cash%20and%20Investments) Investment Portfolio Composition (Fair Value) | Asset Class | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Fixed maturities, available for sale | $12,234.7M | $11,326.9M | | Equity securities | $588.5M | $485.3M | | Other investments | $949.4M | $996.8M | | Cash and cash equivalents | $1,384.0M | $1,174.7M | | **Total Cash and Investments** | **$16,650.5M** | **$15,504.3M** | - The fixed maturities portfolio maintained a weighted average credit rating of **AA-** and an average duration of **3.0 years** at year-end 2023, consistent with the prior year[462](index=462&type=chunk) - Gross unrealized losses on the fixed maturities portfolio decreased significantly to **$481 million** at year-end 2023 from **$857 million** at year-end 2022, reflecting the impact of declining yields and tightening credit spreads[478](index=478&type=chunk) [Liquidity and Capital Resources](index=94&type=section&id=Liquidity%20and%20Capital%20Resources) Capital Structure (in millions) | Component | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Debt | $1,313.7 | $1,312.3 | | Preferred shares | $550.0 | $550.0 | | Common equity | $4,713.2 | $4,089.9 | | **Total capital** | **$6,576.9** | **$5,952.2** | | **Ratio of debt to total capital** | **20.0%** | **22.0%** | - Net cash provided by operating activities increased to **$1.26 billion in 2023** from **$798 million in 2022**, primarily due to higher interest and dividends received and an increase in premiums received[493](index=493&type=chunk)[494](index=494&type=chunk) - The company's principal operating subsidiaries maintain strong financial strength ratings, including **'A+' (Stable) from Standard & Poor's** and **'A' (Stable) from A.M. Best**[519](index=519&type=chunk)[520](index=520&type=chunk) [Critical Accounting Estimates](index=100&type=section&id=Critical%20Accounting%20Estimates) - The most significant accounting judgment is the estimate of reserves for losses and loss expenses, representing management's estimate of the ultimate liability for insured events, involving complex estimates for both reported and incurred but not reported (IBNR) claims[526](index=526&type=chunk) - The company uses multiple actuarial methods, including Expected Loss Ratio (ELR), Loss Development, and Bornhuetter-Ferguson (BF) methods, to estimate reserves, with key assumptions including expected loss ratios and loss development patterns[893](index=893&type=chunk)[894](index=894&type=chunk)[895](index=895&type=chunk) - A sensitivity analysis shows that a **10% higher expected loss ratio** in the Insurance Professional Lines business could increase gross loss reserves by approximately **$199 million**, while a **6-month shorter development pattern** could decrease them by a similar amount[552](index=552&type=chunk) [Quantitative and Qualitative Disclosure About Market Risk](index=113&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk) The company is exposed to market risks from interest rate, credit spread, equity price, and foreign currency fluctuations, which are managed through various strategies - A hypothetical **100 basis point increase in interest rates** would result in a potential pre-tax adverse change in the fair value of fixed maturities of **$382 million**, with an additional **$229 million adverse change** from a **100 basis point widening of credit spreads**[598](index=598&type=chunk) - A **20% decline** in the market prices of the company's equity exposures would result in a pre-tax impact of **$59 million** as of December 31, 2023[601](index=601&type=chunk) - The company's total net foreign currency exposure was **$(106.4) million**, or **(2.0)% of total shareholders' equity**, at December 31, 2023[603](index=603&type=chunk) [Financial Statements and Supplementary Data](index=116&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for 2023, including balance sheets, statements of operations, and cash flows, with the estimation of loss reserves identified as a critical audit matter Consolidated Balance Sheet Highlights (in millions) | Account | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Total Investments | $15,261.0 | $14,353.3 | | Total Assets | $30,250.7 | $27,683.0 | | Reserve for Losses and Loss Expenses | $16,434.0 | $15,168.9 | | Total Liabilities | $24,987.5 | $23,043.1 | | Total Shareholders' Equity | $5,263.2 | $4,639.9 | - The independent auditor, Deloitte Ltd., issued an unqualified opinion on the financial statements and the effectiveness of internal control over financial reporting, identifying the estimation of the reserve for losses and loss expenses as a critical audit matter[621](index=621&type=chunk)[622](index=622&type=chunk)[626](index=626&type=chunk) [Note 3 – Segment Information](index=137&type=section&id=Note%203%20%E2%80%93%20Segment%20Information) 2023 Underwriting Results by Segment (in thousands) | Metric | Insurance | Reinsurance | Total | | :--- | :--- | :--- | :--- | | Gross Premiums Written | $6,140,764 | $2,215,761 | $8,356,525 | | Net Premiums Earned | $3,461,700 | $1,622,081 | $5,083,781 | | Underwriting Income (Loss) | $260,944 | $(100,182) | $160,762 | | Combined Ratio | 92.5% | 107.6% | 99.9% | [Note 8 – Reserve for Losses and Loss Expenses](index=165&type=section&id=Note%208%20%E2%80%93%20Reserve%20for%20Losses%20and%20Loss%20Expenses) - The gross reserve for losses and loss expenses increased to **$16.4 billion** at year-end 2023 from **$15.2 billion in 2022**, while the net reserve increased to **$10.1 billion** from **$9.3 billion**[908](index=908&type=chunk)[912](index=912&type=chunk) - The company recorded **$412 million of net adverse prior year reserve development in 2023**, compared to **$26 million of net favorable development in 2022**, primarily driven by the Insurance Liability (**$235 million**) and Reinsurance Liability (**$262 million**) lines due to updated assumptions reflecting economic and social inflation trends in the U.S. casualty market[918](index=918&type=chunk)[919](index=919&type=chunk)[932](index=932&type=chunk) [Note 10 – Debt and Financing Arrangements](index=201&type=section&id=Note%2010%20%E2%80%93%20Debt%20and%20Financing%20Arrangements) Outstanding Debt (Principal) | Description | Maturity Date | Amount | | :--- | :--- | :--- | | 5.150% Senior Notes | April 1, 2045 | $250,000,000 | | 4.000% Senior Notes | December 6, 2027 | $350,000,000 | | 3.900% Senior Notes | July 15, 2029 | $300,000,000 | | 4.900% Junior Subordinated Notes | January 15, 2040 | $425,000,000 | - At December 31, 2023, the company had a **$500 million secured letter of credit facility** with Citibank, with **$325 million outstanding**[1088](index=1088&type=chunk)[1091](index=1091&type=chunk) [Note 18 – Related Party Transactions](index=218&type=section&id=Note%2018%20%E2%80%93%20Related%20Party%20Transactions) - The company engages in transactions with entities affiliated with Stone Point Capital, LLC, where a board member is CEO, including asset management services and investments in various funds[1162](index=1162&type=chunk)[1163](index=1163&type=chunk)[1164](index=1164&type=chunk) - On September 22, 2023, the company entered into a retrocession agreement with Monarch Point Re, a reinsurer jointly sponsored by AXIS and Stone Point, ceding **$287 million in prospective premiums** and recognizing a **$76 million reinsurance recoverable** on unpaid losses from the retroactive portion for 2023[1170](index=1170&type=chunk)[1171](index=1171&type=chunk)[1172](index=1172&type=chunk) - The company cedes reinsurance to Harrington Re, an entity over which it has significant influence, with ceded premiums of **$298 million in 2023** and reinsurance recoverable on unpaid and paid losses of **$933 million** at year-end[1175](index=1175&type=chunk)[1177](index=1177&type=chunk) [Controls and Procedures](index=240&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2023, with no material changes identified - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2023[1223](index=1223&type=chunk) - Based on an assessment using the COSO framework, management concluded that the company's internal control over financial reporting was effective as of December 31, 2023, a conclusion concurred with by the independent registered public accounting firm[1224](index=1224&type=chunk)[1225](index=1225&type=chunk)[1229](index=1229&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=242&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the company's forthcoming definitive proxy statement - This section incorporates information by reference from the company's forthcoming definitive proxy statement[1237](index=1237&type=chunk) [Executive Compensation](index=242&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the company's forthcoming definitive proxy statement - This section incorporates information by reference from the company's forthcoming definitive proxy statement[1238](index=1238&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=243&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership and related matters is incorporated by reference from the company's forthcoming definitive proxy statement - This section incorporates information by reference from the company's forthcoming definitive proxy statement[1239](index=1239&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=243&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding related party transactions and director independence is incorporated by reference from the company's forthcoming definitive proxy statement - This section incorporates information by reference from the company's forthcoming definitive proxy statement[1240](index=1240&type=chunk) [Principal Accounting Fees and Services](index=243&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information regarding principal accounting fees and services is incorporated by reference from the company's forthcoming definitive proxy statement - This section incorporates information by reference from the company's forthcoming definitive proxy statement[1241](index=1241&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=243&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, and exhibits filed as part of the Form 10-K report, with many incorporated by reference - This item lists all financial statements, schedules, and exhibits included with or incorporated by reference into the Form 10-K[1242](index=1242&type=chunk) [Form 10-K Summary](index=248&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company indicates that there is no Form 10-K summary provided in this report - No Form 10-K summary is provided[1257](index=1257&type=chunk)

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