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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Axis Capital Holdings Ltd | NYSE:AXS | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 71.48 | 0 | 09:05:37 |
For the first quarter of 2024, the Company reports:
AXIS Capital Holdings Limited ("AXIS Capital" or "AXIS" or "the Company") (NYSE: AXS) today announced financial results for the first quarter ended March 31, 2024.
Commenting on the first quarter 2024 financial results, Vince Tizzio, President and CEO of AXIS Capital said:
"The results of the first quarter once again evidence that AXIS is elevating its financial performance, producing consistent returns and strong metrics. Reflecting the increased resiliency and consistency of our portfolio, AXIS delivered 18.2% annualized operating ROE and a combined ratio of 91.1%. We continued to capitalize on generally favorable market conditions, growing gross premiums written by 11% over the prior year period.
"Our specialty insurance business continues to perform very strongly, achieving a combined ratio of 86.6% and record first quarter premium production of $1.6 billion, fueled by double digit premium growth across both our North America and London-based Global Markets divisions. During the quarter, both our insurance and reinsurance businesses leaned into our targeted markets while exhibiting strong cycle management and underwriting discipline.
"We also further invested in our global underwriting platform, tapping into new revenue channels including expanding our specialty product set in North America while launching the first-ever dedicated Global Energy Transition syndicate at Lloyd’s. In addition, we continued to strengthen our operational capabilities through our 'How We Work' program to build a more efficient, connected, and data-driven AXIS."
First Quarter Consolidated Results*
* Amounts may not reconcile due to rounding differences.
1 Operating income (loss) and operating income (loss) per diluted common share are non-GAAP financial measures as defined in SEC Regulation G. The reconciliations to the most comparable GAAP financial measures, net income (loss) available (attributable) to common shareholders and earnings (loss) per diluted common share, respectively, and a discussion of the rationale for the presentation of these items are provided later in this press release.
First Quarter Consolidated Underwriting Highlights2
Three months ended March 31,
KEY RATIOS
2024
2023
Change
Current accident year loss ratio, excluding catastrophe and weather-related losses(4)
56.4
%
55.8
%
0.6 pts
Catastrophe and weather-related losses ratio
1.5
%
3.1
%
(1.6 pts)
Current accident year loss ratio
57.9
%
58.9
%
(1.0 pts)
Prior year reserve development ratio
—
%
(0.3
%)
0.3 pts
Net losses and loss expenses ratio
57.9
%
58.6
%
(0.7 pts)
Acquisition cost ratio
20.2
%
18.7
%
1.5 pts
General and administrative expense ratio
13.0
%
13.6
%
(0.6 pts)
Combined ratio
91.1
%
90.9
%
0.2 pts
Current accident year combined ratio
91.1
%
91.2
%
(0.1 pts)
Current accident year combined ratio, excluding catastrophe and weather-related losses
89.6
%
88.1
%
1.5 pts
2 All comparisons are with the same period of the prior year, unless otherwise stated.
3 Amounts presented on a constant currency basis are non-GAAP financial measures as defined in SEC Regulation G. The constant currency basis is calculated by applying the average foreign exchange rate from the current year to prior year amounts. The reconciliations to the most comparable GAAP financial measures is provided above and a discussion of the rationale for the presentation of these items is provided later in this press release.
4 The current accident year loss ratio, excluding catastrophe and weather-related losses is calculated by dividing the current accident year losses less pre-tax catastrophe and weather-related losses, net of reinsurance, by net premiums earned less reinstatement premiums.
Segment Highlights
Insurance Segment
Three months ended March 31,
($ in thousands)
2024
2023
Change
Gross premiums written
$
1,574,505
$
1,415,612
11.2
%
Net premiums written
1,022,354
882,576
15.8
%
Net premiums earned
917,946
816,456
12.4
%
Underwriting income
122,987
103,355
19.0
%
Underwriting ratios:
Current accident year loss ratio, excluding catastrophe and weather-related losses
52.0
%
52.2
%
(0.2 pts)
Catastrophe and weather-related losses ratio
2.1
%
3.0
%
(0.9 pts)
Current accident year loss ratio
54.1
%
55.2
%
(1.1 pts)
Prior year reserve development ratio
—
%
(0.1
%)
0.1 pts
Net losses and loss expenses ratio
54.1
%
55.1
%
(1.0 pts)
Acquisition cost ratio
19.2
%
18.0
%
1.2 pts
Underwriting-related general and administrative expense ratio
13.3
%
14.2
%
(0.9 pts)
Combined ratio
86.6
%
87.3
%
(0.7 pts)
Current accident year combined ratio
86.6
%
87.4
%
(0.8 pts)
Current accident year combined ratio, excluding catastrophe and weather-related losses
84.5
%
84.4
%
0.1 pts
Reinsurance Segment
Three months ended March 31,
($ in thousands)
2024
2023
Change
Gross premiums written
$
1,079,922
$
966,364
11.8
%
Net premiums written
699,719
725,780
(3.6
%)
Net premiums earned
340,095
413,743
(17.8
%)
Underwriting income
22,676
36,011
(37.0
%)
Underwriting ratios:
Current accident year loss ratio, excluding catastrophe and weather-related losses
68.0
%
63.0
%
5.0 pts
Catastrophe and weather-related losses ratio
0.2
%
3.3
%
(3.1 pts)
Current accident year loss ratio
68.2
%
66.3
%
1.9 pts
Prior year reserve development ratio
—
%
(0.8
%)
0.8 pts
Net losses and loss expenses ratio
68.2
%
65.5
%
2.7 pts
Acquisition cost ratio
23.0
%
20.1
%
2.9 pts
Underwriting-related general and administrative expense ratio
4.6
%
5.8
%
(1.2 pts)
Combined ratio
95.8
%
91.4
%
4.4 pts
Current accident year combined ratio
95.8
%
92.2
%
3.6 pts
Current accident year combined ratio, excluding catastrophe and weather-related losses
95.6
%
88.9
%
6.7 pts
Investments
Three months ended March 31,
($ in thousands)
2024
2023
Net investment income
$
167,383
$
133,771
Net investment gains (losses)
(9,207
)
(20,190
)
Change in net unrealized gains (losses) on fixed maturities(5)
(51,963
)
212,922
Interest in income (loss) of equity method investments
1,169
(2,205
)
Total
$
107,382
$
324,298
Average cash and investments(6)
$
16,822,621
$
15,832,861
Total return on average cash and investments, pre-tax:
Including investment related foreign exchange movements
0.6
%
2.0
%
Excluding investment related foreign exchange movements(7)
0.8
%
1.9
%
5 Change in net unrealized gains (losses) on fixed maturities is calculated by taking net unrealized gains (losses) at period end less net unrealized gains (losses) at the prior period end.
6 The average cash and investments balance is calculated by taking the average of the monthly fair value balances.
7 Pre-tax total return on cash and investments excluding foreign exchange movements is a non-GAAP financial measure as defined in SEC Regulation G. The reconciliation to pre-tax total return on cash and investments, the most comparable GAAP financial measure, also included foreign exchange (losses) gains of $(25) million and $19 million for the three months ended March 31, 2024 and 2023, respectively.
Capitalization / Shareholders’ Equity
March 31,
December 31,
($ in thousands)
2024
2023
Change
Total capital(8)
$
6,819,229
$
6,576,910
$
242,319
Book Value per diluted common share
March 31,
December 31,
March 31,
2024
2023
2023
Book value per diluted common share(9)
$
57.13
$
54.06
$
50.31
Three months ended,
Twelve months ended,
March 31, 2024
March 31, 2024
Change
% Change
Change
% Change
Book value per diluted common share
$
3.07
5.7
%
$
6.82
13.6
%
Book value per diluted common share - adjusted for dividends declared
$
3.51
6.5
%
$
8.58
17.1
%
8 Total capital represents the sum of total shareholders' equity and debt.
9 Calculated using the treasury stock method.
Conference Call
We will host a conference call on Thursday, May 2, 2024 at 9:30 a.m. (EDT) to discuss the first quarter financial results and related matters. The teleconference can be accessed by dialing 1-877-883-0383 (U.S. callers), or 1-412-902-6506 (international callers), and entering the passcode 8824838 approximately ten minutes in advance of the call. A live, listen-only webcast of the call will also be available via the Investor Information section of our website at www.axiscapital.com. A replay of the teleconference will be available for two weeks by dialing 1-877-344-7529 (U.S. callers), or 1-412-317-0088 (international callers), and entering the passcode 1291489. The webcast will be archived in the Investor Information section of our website.
In addition, an investor financial supplement for the quarter ended March 31, 2024 is available in the Investor Information section of our website.
About AXIS Capital
AXIS Capital, through its operating subsidiaries, is a global specialty underwriter and provider of insurance and reinsurance solutions. The Company has shareholders' equity of $5.5 billion at March 31, 2024, and locations in Bermuda, the United States, Europe, Singapore and Canada. Its operating subsidiaries have been assigned a financial strength rating of "A+" ("Strong") by Standard & Poor's and "A" ("Excellent") by A.M. Best. For more information about AXIS Capital, visit our website at www.axiscapital.com.
Website and Social Media Disclosure
We use our website (www.axiscapital.com) and our corporate LinkedIn (AXIS Capital) and X Corp. (@AXIS_Capital) accounts as channels of distribution of Company information. The information we post through these channels may be deemed material. Accordingly, investors should monitor these channels, in addition to following our press releases, SEC filings and public conference calls and webcasts. In addition, e-mail alerts and other information about AXIS Capital may be received by those enrolled in our "E-mail Alerts" program which can be found in the Investor Information section of our website (www.axiscapital.com). The contents of our website and social media channels are not part of this press release.
Follow AXIS Capital on LinkedIn and X Corp.
LinkedIn: http://bit.ly/2kRYbZ5
AXIS CAPITAL HOLDINGS LIMITED
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2024 (UNAUDITED) AND DECEMBER 31, 2023
2024
2023
(in thousands)
Assets
Investments:
Fixed maturities, available for sale, at fair value
$
12,269,310
$
12,234,742
Fixed maturities, held to maturity, at amortized cost
693,042
686,296
Equity securities, at fair value
582,178
588,511
Mortgage loans, held for investment, at fair value
609,704
610,148
Other investments, at fair value
934,724
949,413
Equity method investments
182,594
174,634
Short-term investments, at fair value
75,879
17,216
Total investments
15,347,431
15,260,960
Cash and cash equivalents
1,143,951
953,476
Restricted cash and cash equivalents
697,623
430,509
Accrued interest receivable
107,131
106,055
Insurance and reinsurance premium balances receivable
3,517,242
3,067,554
Reinsurance recoverable on unpaid losses and loss expenses
6,503,188
6,323,083
Reinsurance recoverable on paid losses and loss expenses
472,660
575,847
Deferred acquisition costs
543,343
450,950
Prepaid reinsurance premiums
2,060,717
1,916,087
Receivable for investments sold
5,686
8,767
Goodwill
100,801
100,801
Intangible assets
184,155
186,883
Operating lease right-of-use assets
104,162
108,093
Loan advances made
345,065
305,222
Other assets
625,535
456,385
Total assets
$
31,758,690
$
30,250,672
Liabilities
Reserve for losses and loss expenses
$
16,630,897
$
16,434,018
Unearned premiums
5,353,827
4,747,602
Insurance and reinsurance balances payable
1,909,309
1,792,719
Debt
1,314,074
1,313,714
Federal Home Loan Bank advances
85,790
85,790
Payable for investments purchased
493,582
26,093
Operating lease liabilities
119,124
123,101
Other liabilities
346,932
464,439
Total liabilities
26,253,535
24,987,476
Shareholders' equity
Preferred shares
550,000
550,000
Common shares
2,206
2,206
Additional paid-in capital
2,368,144
2,383,030
Accumulated other comprehensive income (loss)
(411,849
)
(365,836
)
Retained earnings
6,790,558
6,440,528
Treasury shares, at cost
(3,793,904
)
(3,746,732
)
Total shareholders' equity
5,505,155
5,263,196
Total liabilities and shareholders' equity
$
31,758,690
$
30,250,672
AXIS CAPITAL HOLDINGS LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023
Three months ended March 31,
2024
2023
(in thousands, except per share amounts)
Revenues
Net premiums earned
$
1,258,041
$
1,230,199
Net investment income
167,383
133,771
Net investment gains (losses)
(9,207
)
(20,190
)
Other insurance related income
8,340
577
Total revenues
1,424,557
1,344,357
Expenses
Net losses and loss expenses
728,671
720,642
Acquisition costs
254,254
230,373
General and administrative expenses
163,373
166,811
Foreign exchange losses (gains)
(23,552
)
8,710
Interest expense and financing costs
17,147
16,894
Reorganization expenses
12,299
—
Amortization of intangible assets
2,729
2,729
Total expenses
1,154,921
1,146,159
Income before income taxes and interest in income (loss) of equity method investments
269,636
198,198
Income tax (expense) benefit
124,654
(15,896
)
Interest in income (loss) of equity method investments
1,169
(2,205
)
Net income
395,459
180,097
Preferred share dividends
7,563
7,563
Net income available to common shareholders
$
387,896
$
172,534
Per share data
Earnings per common share:
Earnings per common share
$
4.57
$
2.03
Earnings per diluted common share
$
4.53
$
2.01
Weighted average common shares outstanding
84,879
84,864
Weighted average diluted common shares outstanding
85,693
85,853
Cash dividends declared per common share
$
0.44
$
0.44
AXIS CAPITAL HOLDINGS LIMITED
CONSOLIDATED SEGMENTAL DATA (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023
2024
2023
Insurance
Reinsurance
Total
Insurance
Reinsurance
Total
(in thousands)
Gross premiums written
$
1,574,505
$
1,079,922
$
2,654,427
$
1,415,612
$
966,364
$
2,381,976
Net premiums written
1,022,354
699,719
1,722,073
882,576
725,780
1,608,356
Net premiums earned
917,946
340,095
1,258,041
816,456
413,743
1,230,199
Other insurance related income
21
8,319
8,340
54
523
577
Net losses and loss expenses
(496,864
)
(231,807
)
(728,671
)
(449,467
)
(271,175
)
(720,642
)
Acquisition costs
(176,029
)
(78,225
)
(254,254
)
(147,058
)
(83,315
)
(230,373
)
Underwriting-related general and
administrative expenses(10)
(122,087
)
(15,706
)
(137,793
)
(116,630
)
(23,765
)
(140,395
)
Underwriting income(11)
$
122,987
$
22,676
145,663
$
103,355
$
36,011
139,366
Net investment income
167,383
133,771
Net investment gains (losses)
(9,207
)
(20,190
)
Corporate expenses(10)
(25,580
)
(26,416
)
Foreign exchange (losses) gains
23,552
(8,710
)
Interest expense and financing costs
(17,147
)
(16,894
)
Reorganization expenses
(12,299
)
—
Amortization of intangible assets
(2,729
)
(2,729
)
Income before income taxes and interest in income (loss) of equity method investments
269,636
198,198
Income tax (expense) benefit
124,654
(15,896
)
Interest in income (loss) of equity method investments
1,169
(2,205
)
Net income
395,459
180,097
Preferred share dividends
7,563
7,563
Net income available to common shareholders
$
387,896
$
172,534
Net losses and loss expenses ratio
54.1
%
68.2
%
57.9
%
55.1
%
65.5
%
58.6
%
Acquisition cost ratio
19.2
%
23.0
%
20.2
%
18.0
%
20.1
%
18.7
%
General and administrative expense ratio
13.3
%
4.6
%
13.0
%
14.2
%
5.8
%
13.6
%
Combined ratio
86.6
%
95.8
%
91.1
%
87.3
%
91.4
%
90.9
%
10 Underwriting-related general and administrative expenses is a non-GAAP financial measure as defined in SEC Regulation G. The reconciliation to general and administrative expenses, the most comparable GAAP financial measure, also included corporate expenses of $26 million for the three months ended March 31, 2024 and 2023, respectively. Underwriting-related general and administrative expenses and corporate expenses are included in the general and administrative expense ratio.
11 Consolidated underwriting income (loss) is a non-GAAP financial measure as defined in SEC Regulation G. The reconciliation to net income (loss), the most comparable GAAP financial measure, is presented above.
AXIS CAPITAL HOLDINGS LIMITED
NON-GAAP FINANCIAL MEASURES RECONCILIATION (UNAUDITED)
OPERATING INCOME AND OPERATING RETURN ON AVERAGE COMMON EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023
Three months ended March 31,
2024
2023
(in thousands, except per share amounts)
Net income available to common shareholders
$
387,896
$
172,534
Net investment (gains) losses
9,207
20,190
Foreign exchange losses (gains)
(23,552
)
8,710
Reorganization expenses
12,299
—
Interest in (income) loss of equity method investments
(1,169
)
2,205
Bermuda net deferred tax asset(12)
(162,705
)
—
Income tax benefit(13)
(1,814
)
(3,585
)
Operating income
$
220,162
$
200,054
Earnings per diluted common share
$
4.53
$
2.01
Net investment (gains) losses
0.11
0.24
Foreign exchange losses (gains)
(0.27
)
0.10
Reorganization expenses
0.14
—
Interest in (income) loss of equity method investments
(0.01
)
0.03
Bermuda net deferred tax asset
(1.90
)
—
Income tax benefit
(0.03
)
(0.05
)
Operating income per diluted common share
$
2.57
$
2.33
Weighted average diluted common shares outstanding
85,693
85,853
Average common shareholders' equity
$
4,834,176
$
4,250,070
Annualized return on average common equity
32.1
%
16.2
%
Annualized operating return on average common equity(14)
18.2
%
18.8
%
12 Net deferred tax benefit due to the recognition of deferred tax assets net of deferred tax liabilities related to a future Bermuda corporate income tax rate of 15%, pursuant to the Corporate Income Tax Act 2023.
13 Tax expense (benefit) associated with the adjustments to net income (loss) available (attributable) to common shareholders. Tax impact is estimated by applying the statutory rates of applicable jurisdictions.
14 Annualized operating return on average common equity ("operating ROACE") is a non-GAAP financial measure as defined in SEC Regulation G. The reconciliation to annualized ROACE, the most comparable GAAP financial measure is presented in the table above, and a discussion of the rationale for its presentation is provided later in this press release.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of section 27A of the Securities Act of 1933 and section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts included in this press release, including statements regarding our estimates, beliefs, expectations, intentions, strategies or projections are forward-looking statements. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in the United States federal securities laws. In some cases, these statements can be identified by the use of forward-looking words such as "may", "should", "could", "anticipate", "estimate", "expect", "plan", "believe", "predict", "potential", "intend" or similar expressions. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections, and various assumptions, many of which, by their nature, are inherently uncertain and beyond management's control.
Forward-looking statements contained in this press release may include, but are not limited to, information regarding our estimates for losses and loss expenses, measurements of potential losses in the fair value of our investment portfolio and derivative contracts, our expectations regarding the performance of our business, our financial results, our liquidity and capital resources, the outcome of our strategic initiatives, our expectations regarding pricing and other market and economic conditions including the liquidity of financial markets, developments in the commercial real estate market, inflation, our growth prospects, and valuations of the potential impact of movements in interest rates, credit spreads, equity securities' prices, and foreign currency exchange rates.
Forward-looking statements only reflect our expectations and are not guarantees of performance. These statements involve risks, uncertainties, and assumptions. Accordingly, there are or will be important factors that could cause actual events or results to differ materially from those indicated in such statements. We believe that these factors include, but are not limited to, the following:
Insurance Risk
Strategic Risk
Credit and Market Risk
Liquidity Risk
Operational Risk
Regulatory Risk
Risks Related to Taxation
Readers should carefully consider the risks noted above together with other factors including but not limited to those described under Item 1A, 'Risk Factors' in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC"), as those factors may be updated from time to time in our periodic and other filings with the SEC, which are accessible on the SEC's website at www.sec.gov.
We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.
Rationale for the Use of Non-GAAP Financial Measures
We present our results of operations in a way we believe will be meaningful and useful to investors, analysts, rating agencies and others who use our financial information to evaluate our performance. Some of the measurements we use are considered non-GAAP financial measures under SEC rules and regulations. In this press release, we present underwriting-related general and administrative expenses, consolidated underwriting income (loss), operating income (loss) (in total and on a per share basis), annualized operating return on average common equity ("operating ROACE"), amounts presented on a constant currency basis and pre-tax total return on cash and investments excluding foreign exchange movements which are non-GAAP financial measures as defined in SEC Regulation G. We believe that these non-GAAP financial measures, which may be defined and calculated differently by other companies, help explain and enhance the understanding of our results of operations. However, these measures should not be viewed as a substitute for those determined in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP").
Underwriting-Related General and Administrative Expenses
Underwriting-related general and administrative expenses include those general and administrative expenses that are incremental and/or directly attributable to our underwriting operations. While this measure is presented in the 'Segment Information' note to our Consolidated Financial Statements, it is considered a non-GAAP financial measure when presented elsewhere on a consolidated basis.
Corporate expenses include holding company costs necessary to support our worldwide insurance and reinsurance operations and costs associated with operating as a publicly-traded company. As these costs are not incremental and/or directly attributable to our underwriting operations, these costs are excluded from underwriting-related general and administrative expenses, and therefore, consolidated underwriting income (loss). General and administrative expenses, the most comparable GAAP financial measure to underwriting-related general and administrative expenses, also includes corporate expenses.
The reconciliation of underwriting-related general and administrative expenses to general and administrative expenses, the most comparable GAAP financial measure, is presented in the 'Consolidated Segmental Data' section of this press release.
Consolidated Underwriting Income (Loss)
Consolidated underwriting income (loss) is a pre-tax measure of underwriting profitability that takes into account net premiums earned and other insurance related income (loss) as revenues and net losses and loss expenses, acquisition costs and underwriting-related general and administrative expenses as expenses. While this measure is presented in the 'Segment Information' note to our Consolidated Financial Statements, it is considered a non-GAAP financial measure when presented elsewhere on a consolidated basis.
We evaluate our underwriting results separately from the performance of our investment portfolio. As a result, we believe it is appropriate to exclude net investment income and net investment gains (losses) from our underwriting profitability measure.
Foreign exchange losses (gains) in our consolidated statements of operations primarily relate to the impact of foreign exchange rate movements on our net insurance-related liabilities. However, we manage our investment portfolio in such a way that unrealized and realized foreign exchange losses (gains) on our investment portfolio, including unrealized foreign exchange losses (gains) on our equity securities, and foreign exchange losses (gains) realized on the sale of our available for sale investments and equity securities recognized in net investment gains (losses), and unrealized foreign exchange losses (gains) on our available for sale investments in other comprehensive income (loss), generally offset a large portion of the foreign exchange losses (gains) arising from our underwriting portfolio, thereby minimizing the impact of foreign exchange rate movements on total shareholders' equity. As a result, we believe that foreign exchange losses (gains) in our consolidated statements of operations in isolation are not a meaningful contributor to our underwriting performance. Therefore, foreign exchange losses (gains) are excluded from consolidated underwriting income (loss).
Interest expense and financing costs primarily relate to interest payable on our debt and Federal Home Loan Bank advances. As these expenses are not incremental and/or directly attributable to our underwriting operations, these expenses are excluded from underwriting-related general and administrative expenses, and therefore, consolidated underwriting income (loss).
Reorganization expenses in 2024 primarily relate to severance costs mainly attributable to our "How We Work" program which is focused on simplifying our operating structure. Reorganization expenses are primarily driven by business decisions, the nature and timing of which are not related to the underwriting process. Therefore, these expenses are excluded from consolidated underwriting income (loss).
Amortization of intangible assets arose from business decisions, the nature and timing of which are not related to the underwriting process. Therefore, these expenses are excluded from consolidated underwriting income (loss).
We believe that the presentation of underwriting-related general and administrative expenses and consolidated underwriting income (loss) provides investors with an enhanced understanding of our results of operations by highlighting the underlying pre-tax profitability of our underwriting activities. The reconciliation of consolidated underwriting income (loss) to net income (loss), the most comparable GAAP financial measure, is presented in the 'Consolidated Segmental Data' section of this press release.
Operating Income (Loss)
Operating income (loss) represents after-tax operational results exclusive of net investment gains (losses), foreign exchange losses (gains), reorganization expenses, interest in income (loss) of equity method investments and Bermuda net deferred tax asset.
Although the investment of premiums to generate income and investment gains (losses) is an integral part of our operations, the determination to realize investment gains (losses) is independent of the underwriting process and is heavily influenced by the availability of market opportunities. Furthermore, many users believe that the timing of the realization of investment gains (losses) is somewhat opportunistic for many companies.
Foreign exchange losses (gains) in our consolidated statements of operations primarily relate to the impact of foreign exchange rate movements on net insurance-related liabilities. However, we manage our investment portfolio in such a way that unrealized and realized foreign exchange losses (gains) on our investment portfolio, including unrealized foreign exchange losses (gains) on our equity securities and foreign exchange losses (gains) realized on the sale of our available for sale investments and equity securities recognized in net investment gains (losses) and unrealized foreign exchange losses (gains) on our available for sale investments in other comprehensive income (loss), generally offset a large portion of the foreign exchange losses (gains) arising from our underwriting portfolio, thereby minimizing the impact of foreign exchange rate movements on total shareholders' equity. As a result, we believe that foreign exchange losses (gains) in our consolidated statements of operations in isolation are not a meaningful contributor to the performance of our business. Therefore, foreign exchange losses (gains) are excluded from operating income (loss).
Reorganization expenses in 2024 primarily relate to severance costs mainly attributable to our "How We Work" program which is focused on simplifying our operating structure. Reorganization expenses are primarily driven by business decisions, the nature and timing of which are not related to the underwriting process. Therefore, these expenses are excluded from operating income (loss).
Interest in income (loss) of equity method investments is primarily driven by business decisions, the nature and timing of which are not related to the underwriting process. Therefore, this income (loss) is excluded from operating income (loss).
Bermuda net deferred tax asset is due to the recognition of deferred tax assets net of deferred tax liabilities related to a future Bermuda corporate income tax rate of 15%, pursuant to the Corporate Income Tax Act 2023 effective for fiscal years beginning on or after January 1, 2025. The Bermuda net deferred tax asset is not related to the underwriting process. Therefore, this income is excluded from operating income (loss).
Certain users of our financial statements evaluate performance exclusive of after-tax net investment gains (losses), foreign exchange losses (gains), reorganization expenses, interest in income (loss) of equity method investments and Bermuda net deferred tax asset in order to understand the profitability of recurring sources of income.
We believe that showing net income (loss) available (attributable) to common shareholders exclusive of after-tax net investment gains (losses), foreign exchange losses (gains), reorganization expenses, interest in income (loss) of equity method investments and Bermuda net deferred tax asset reflects the underlying fundamentals of our business. In addition, we believe that this presentation enables investors and other users of our financial information to analyze performance in a manner similar to how our management analyzes the underlying business performance. We also believe this measure follows industry practice and, therefore, facilitates comparison of our performance with our peer group. We believe that equity analysts and certain rating agencies that follow us, and the insurance industry as a whole, generally exclude these items from their analyses for the same reasons. The reconciliation of operating income (loss) to net income (loss) available (attributable) to common shareholders, the most comparable GAAP financial measure, is presented in the 'Non-GAAP Financial Measures Reconciliation' section of this press release.
We also present operating income (loss) per diluted common share and annualized operating ROACE, which are derived from the operating income (loss) measure and are reconciled to the most comparable GAAP financial measures, earnings (loss) per diluted common share and annualized return on average common equity ("ROACE"), respectively, in the 'Non-GAAP Financial Measures Reconciliation' section of this press release.
Constant Currency Basis
We present gross premiums written and net premiums written on a constant currency basis in this press release. The amounts presented on a constant currency basis are calculated by applying the average foreign exchange rate from the current year to the prior year amounts. We believe this presentation enables investors and other users of our financial information to analyze growth in gross premiums written and net premiums written on a constant basis. The reconciliation to gross premiums written and net premiums written on a GAAP basis is presented in the 'Insurance Segment' and 'Reinsurance Segment' sections of this press release.
Pre-Tax Total Return on Cash and Investments excluding Foreign Exchange Movements
Pre-tax total return on cash and investments excluding foreign exchange movements measures net investment income (loss), net investments gains (losses), interest in income (loss) of equity method investments, and change in unrealized gains (losses) generated by average cash and investment balances. We believe this presentation enables investors and other users of our financial information to analyze the performance of our investment portfolio. The reconciliation of pre-tax total return on cash and investments excluding foreign exchange movements to pre-tax total return on cash and investments, the most comparable GAAP financial measure, is presented in the 'Investments' section of this press release.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240501841756/en/
Cliff Gallant (Investor Contact): (415) 262-6843; investorrelations@axiscapital.com Nichola Liboro (Media Contact): (917) 705-4579; nichola.liboro@axiscapital.com
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