AXIS Capital (AXS) 2025 Conference Summary Company Overview - **Company**: AXIS Capital (AXS) - **Date**: September 03, 2025 - **Speakers**: Vince Tivio (CEO), Pete Vogt (CFO) Key Points Leadership Transition - Matthew Kirk will succeed Pete Vogt as CFO starting November 2025, with Pete remaining in the role throughout 2025 and advising in 2026 [4][3][2] Reinsurance Business - AXIS's reinsurance segment contributes approximately 15% to 20% of total revenue, with a focus on specialty lines and cautious underwriting in liability [8][7] - The company has maintained a consistent underwriting performance, with a combined ratio in the low 90s [8][9] - The reinsurance business complements AXIS's insurance operations, providing access to specialty lines like agriculture and mortgage [9][10] Incentive Compensation - Incentive compensation is linked to growth in diluted book value per share, including reserve releases, which signal confidence in prior reserve strengthening [12][11] Talent Acquisition - AXIS acknowledges a competitive talent market and emphasizes a strong company culture to attract underwriters and insurance producers [13][14] - New teams have contributed approximately $250 million in premium to the insurance group in Q2 2025 [15][16] Distribution Strategy - AXIS has a dedicated wholesale-only business unit to enhance its distribution capabilities, focusing on innovation and product design [20][21] - The company aims to penetrate the underserved middle market, targeting businesses with $10 million to $100 million in receipts [29][30] Managing MGAs - AXIS has restructured its approach to managing Managing General Agents (MGAs) to ensure underwriting discipline and align financial interests [34][35] - Approximately 14% of AXIS's North American insurance business comes from MGAs, with a focus on substantial partnerships [36][37] Accident and Health Business - The accident and health segment primarily includes pet insurance and travel accident coverage, with growth ambitions supported by profitability in the pet business [43][44] Professional Lines Growth - Professional lines grew approximately 15% in Q2 2025, with contributions from various segments, including allied health and financial institutions [55][56] - Public Directors and Officers (D&O) insurance remains a small portion of the professional lines premium, with a cautious outlook on pricing stability [58][62] Data and Analytics Investments - AXIS is leveraging 20 years of data and third-party information to enhance underwriting decisions, with ongoing investments in data analytics and AI [72][73] - The company anticipates improved risk selection insights and operational efficiencies from these investments over the next few years [78][79] Capital Management - AXIS has shifted its focus towards being predominantly an insurance company, reducing exposure to property catastrophe reinsurance [88][89] - The company maintains a debt-to-capital ratio below 20%, with plans to evaluate capital strategies as opportunities arise [96][99] Inorganic Growth Opportunities - While AXIS is focused on organic growth, the company remains observant of external opportunities for inorganic growth, maintaining a high bar for any acquisitions [102][103] Additional Insights - AXIS is committed to maintaining a consistent earnings generation model while being prudent in its underwriting strategies, particularly in liability reinsurance [95][96] - The company is optimistic about its growth trajectory, supported by strong performance in its core business segments [102][103]

Core Insights - AXIS Capital Holdings Limited (AXS) has seen a 23.5% increase in share price over the past year, outperforming its industry and the broader market indices [1] - The stock closed at $98.64, close to its 52-week high of $107.19, indicating strong investor confidence [2] - AXIS Capital has a market capitalization of $7.71 billion and has consistently beaten earnings estimates over the last four quarters, averaging a 13.39% beat [2] Performance Metrics - AXS is trading above its 50-day and 200-day simple moving averages of $97.82 and $95.00, respectively, indicating solid upward momentum [3] - The company has a return on equity of 18.7%, significantly higher than the industry average of 7.6%, showcasing efficient use of shareholders' funds [13] Growth Strategy - AXIS Capital is focusing on growth areas such as wholesale insurance, lower middle markets, and specialty reinsurance lines [5][14] - The company aims to reduce its general and administrative expense ratio to below 11% by 2026 through investments in digital capabilities and operational efficiencies [5][16] Valuation and Analyst Sentiment - AXS shares are trading at a forward price-to-book value of 1.37X, lower than the industry average of 1.55X, indicating attractive valuation [7] - The Zacks Consensus Estimate for 2025 earnings per share indicates a 6.8% year-over-year increase, with revenues projected to grow by 5.6% [8] - Analyst sentiment is optimistic, with estimates for 2025 and 2026 earnings raised by 3.8% and 0.08%, respectively, in the past 30 days [9] Dividend and Financial Health - AXIS Capital has a strong dividend history, having increased its dividend for 18 consecutive years, currently yielding 1.7%, well above the industry average of 0.2% [18] - The company is well-positioned for long-term growth due to higher return on capital, favorable growth estimates, and attractive valuations [20]

Core Viewpoint - Axis Capital's Q2 2025 earnings report showed strong operating income and premium growth, but total revenues missed estimates, indicating mixed performance ahead of the next earnings release [2][3][15]. Financial Performance - Operating income for Q2 2025 was $3.29 per share, exceeding estimates by 14.2% and increasing 12.2% year over year [2]. - Total operating revenues reached $1.6 billion, falling short of estimates by 3.2% but rising 5.6% year over year [3]. - Net investment income decreased 2% year over year to $187 million, primarily due to lower income from fixed maturities [4]. - Total expenses increased 12.2% year over year to $1.3 billion, driven by higher losses and administrative costs [5]. Underwriting Performance - Underwriting income rose 17.4% year over year to $189.2 million, with a combined ratio improving by 150 basis points to 88.9% [6]. - In the Insurance segment, gross premiums written increased 6.5% year over year to $1.9 billion, while net premiums written rose 8.1% to $1.3 billion [7]. - The Reinsurance segment saw gross premiums written decrease 6.8% year over year to $583.5 million, with net premiums written down 9.1% to $344.9 million [8][9]. Financial Position - Cash and cash equivalents at the end of Q2 were $852 million, a 60% decrease from the end of 2024 [11]. - Debts stood at $1.3 billion, a slight increase of 0.05% from the end of 2024 [11]. - Book value per share increased 18.6% year over year to $70.34 as of June 30, 2025 [11]. Capital Management - As of June 30, 2025, Axis Capital had $110 million remaining under its share repurchase program [12]. Market Outlook - Estimates for Axis Capital have trended downward recently, indicating a potential shift in market sentiment [13][15]. - The company holds a Zacks Rank 3 (Hold), suggesting an expectation of in-line returns in the coming months [15].

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]

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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]