AXIS Capital(US:AXS)2024-07-31 16:39Financial Data and Key Metrics Changes - The annualized operating ROE was 20%, with operating earnings per share of $2.93, a 31.5% increase year-over-year, marking the highest quarterly operating EPS in the company's history [8][20] - The diluted book value per share increased to $59.29, reflecting a nearly 10% year-to-date increase and a nearly 20% increase over the past 12 months [20] - Overall premiums grew by 6.8% to $2.4 billion, driven by solid growth in both insurance and reinsurance [9][20] Business Line Data and Key Metrics Changes - The insurance segment generated a combined ratio of 87.9%, with premium production of $1.8 billion, representing a 17% net written premium growth [9][24] - The reinsurance segment achieved a combined ratio of 89.3%, generating $46 million in underwriting profit [12][29] - In the insurance business, property lines saw significant growth, while U.S. casualty was down about 5% due to reshaping efforts [25][27] Market Data and Key Metrics Changes - In North America, new business was up 18% year-over-year, with submissions in the wholesale channel increasing by 24% [10] - The company observed heightened competition in the property business but continued to see strong submission flow and premium growth [14] - The company reported a shift towards short-tail lines, which formed 52% of gross premiums written, up approximately 4% year-over-year [14] Company Strategy and Development Direction - The company aims to achieve specialty underwriting leadership and is focused on targeted specialty markets for profitable growth [7][17] - Investments are being made in enhancing operational efficiency, digitization, and automation initiatives to improve service quality and productivity [18][23] - The company is committed to maintaining a G&A ratio below 11% for the full year 2026 [23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of reserves and the adequacy of pricing across the portfolio, despite competitive pressures [14][36] - The outlook for the second half of the year remains optimistic, with expectations for continued strong performance [31][74] - Management noted that while the share price is attractive for buybacks, the primary focus remains on investing in the business [31][49] Other Important Information - The company experienced $47 million in catastrophe losses during the quarter, with natural catastrophes accounting for $38 million [21] - The G&A expense ratio improved to 11.4%, down from 13.3% a year ago, reflecting successful cost optimization efforts [22][23] - The company returned $76 million to shareholders through dividends and share repurchases during the quarter [31] Q&A Session Summary Question: Can you elaborate on the reserve actions taken in the fourth quarter? - Management conducted a full review of reserves and remains confident in the assumptions used, reinforcing the adequacy of reserves for accident years 2020 to 2023 [33][34] Question: Why were there no additional buybacks since the Investor Day? - The decision not to conduct buybacks was due to ongoing restructuring actions and the presence of material nonpublic information [37][40] Question: What is driving the consistency in the underlying loss ratios? - The consistency is attributed to a mix shift towards short-tail business, offset by higher loss picks in long-tail liabilities [52][54] Question: How does the company view the cyber market dynamics following the CrowdStrike event? - Management sees this as an opportunity for the market to reset, particularly regarding policy language and waiting periods [57] Question: What is the sustainability of the current loss ratios in the insurance and reinsurance segments? - Management expects the insurance loss ratio to remain sustainable within the current year, while the reinsurance loss ratio is projected to align with mid-60s targets [59][62]