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AXIS Capital(AXS) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a net income available to common shareholders of $173 million or $2.04 per diluted common share, resulting in an annualized ROE of 13% [33] - Book value per diluted common share increased to $64.65 at quarter end, reflecting a nearly 20% year-to-date growth [33] - Operating income was $230 million or $2.71 per diluted common share, leading to an annualized operating ROE of 17.3% [33] - The combined ratio for the quarter was 93.1%, despite the impact of Hurricanes Helene and Beryl [34] - The current accident year loss ratio ex-CAT and weather was 55.7% [34] Business Line Data and Key Metrics Changes - The insurance segment achieved gross premiums written of $1.5 billion, a 4.7% increase compared to the prior year [42] - The combined ratio for the insurance segment was 90.4%, including 7% of CAT and weather-related losses, resulting in $99 million of underwriting income [46] - In the reinsurance segment, gross premiums decreased by 8.7% in the quarter, but year-to-date growth was up 5% [47][48] - The reinsurance combined ratio was 91.4%, with an ex-CAT and weather loss ratio of 66% [49] Market Data and Key Metrics Changes - The company reported a 5.8% group-level catastrophe ratio against an estimated $40 billion in industry losses [8] - The North American strategic initiatives are gaining traction, with the U.S. lower middle market units producing 17% growth over the prior year quarter [15] - The company noted increased competition in the marine, aviation, and property lines within global markets [16] Company Strategy and Development Direction - The company continues to focus on premium adequate short tail lines that align with underwriting capabilities and broker needs [11] - The strategic principles shared at the investor day are gaining traction, emphasizing profitable growth and expense management [7] - The company is investing in technology and talent, including partnerships with AI-driven platforms to enhance submission and underwriting processes [29][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to generate profitable growth despite a dynamic market environment [28] - The company is optimistic about leveraging its diverse product set and distribution channels [20] - Management highlighted the importance of maintaining a disciplined approach in competitive markets, particularly in property and casualty lines [22][23] Other Important Information - The company returned $77 million to shareholders through dividends and share repurchases [54] - The effective tax rate for the quarter was 21%, higher than the historical rate due to strong profitability in higher tax geographies [53] Q&A Session Summary Question: Concerns about reserving and long tail casualty lines - Management conveyed confidence based on the first nine months of reported results and actions taken in 2023 [56][57] - A full reserve review will be conducted at year-end 2024, with a focus on the underlying lines of business [58][60] Question: Confidence in property market growth - Management cited portfolio construction, geographic spread, and premium adequacy as factors supporting continued growth in the property business [62] Question: Core loss ratio in insurance - The increase in the core loss ratio was attributed to prudence rather than negative trends [66] Question: Cyber insurance growth outlook - Management acknowledged a short-term hit on written premiums but expressed confidence in long-term growth opportunities [70] Question: Expectations for premium growth in 2025 - Management emphasized a focus on profitability over premium growth, with confidence in the ability to grow the business in attractive markets [80]