AXIS Capital Reports Fourth Quarter 2023 Results

For the fourth quarter of 2023, the Company reports:

• Net loss attributable to common shareholders of $(150) million, or $(1.76) per diluted common share, and operating loss of $(107) million, or $(1.25) per diluted common share
• As previously announced, net adverse prior year reserve development of $425 million, pre-tax, or 33.6 points, and underlying operating income of $254 million, or $2.94 per diluted common share
• Improvement of 3.7 points in the current accident year combined ratio to 91.0%

For the year ended 2023, the Company reports:

• Net income available to common shareholders of $346 million, or $4.02 per diluted common share, and operating income of $486 million, or $5.65 per diluted common share
• As previously announced, net adverse prior year reserve development of $412 million, pre-tax, or 8.1 points, and underlying operating income of $847 million, or $9.85 per diluted common share
• Improvement of 4.5 points in the current accident year combined ratio to 91.8%
• Return on average common equity ("ROACE") of 7.9% and operating ROACE of 11.0%
• Book value per diluted common share of $54.06, an increase of $7.11, or 15.1%, compared to December 31, 2022

AXIS Capital Holdings Limited ("AXIS Capital" or "AXIS" or "the Company") (NYSE: AXS) today announced financial results for the fourth quarter ended December 31, 2023.

Commenting on the fourth quarter 2023 financial results, Vince Tizzio, President and CEO of AXIS Capital, said:

"This was a transformative year for AXIS, one where we further elevated all aspects of how we operate and go to market, and we believe the Company is on a clear path to becoming a specialty underwriting leader. We’re capitalizing on favorable conditions in our chosen specialty markets while exhibiting underwriting discipline and strong cycle management. This was evidenced by our operating income of $486 million and a 4.5 point year-over-year improvement in the current accident year combined ratio to 91.8%.

"We’re energized by the continued profitable growth within our core specialty insurance business, highlighted by year-over-year increases in premium generation of 10% including new business premiums of 18%, and an excellent current accident year combined ratio of 87.4%. In parallel, we further solidified our repositioning of AXIS Re as a focused specialist reinsurer with increased profitability and reduced volatility.

"In 2023, through our 'How We Work' program, we made significant improvements to our operational infrastructure, while investing in talent, and becoming a more efficient and consistent company. We look ahead to 2024 with excitement. We have a robust global platform, strong and deep relationships with our customers, a great team and culture – and we’re relentlessly committed to taking this Company to the next level."

Consolidated Highlights*

• Net income available to common shareholders for the year ended December 31, 2023 was $346 million, or $4.02 per diluted common share, compared to net income available to common shareholders of $193 million, or $2.25 per diluted common share, for the same period in 2022.
• Operating income(1) for the year ended December 31, 2023 was $486 million, or $5.65 per diluted common share, compared to operating income of $498 million, or $5.81 per diluted common share, for the same period in 2022.
• Underlying operating income(2) for the year ended December 31, 2023 was $847 million, or $9.85 per diluted common share.
• Book value per diluted common share was $54.06 at December 31, 2023, an increase of $2.89, or 5.6%, compared to September 30, 2023, driven by net unrealized investment gains reported in accumulated other comprehensive income (loss), partially offset by net loss for the period, and common share dividends declared.
• Book value per diluted common share increased by $7.11, or 15.1%, over the past twelve months, driven by net income, and net unrealized investment gains reported in accumulated other comprehensive income (loss), partially offset by common share dividends declared.
• Adjusted for dividends declared, book value per diluted common share increased by $8.87, or 18.9%, over the past twelve months.
• Book yield of fixed maturities was 4.2% at December 31, 2023, compared to 3.5% at December 31, 2022. The market yield was 5.4% at December 31, 2023.
• Net investment income for the fourth quarter of 2023 was $187 million, compared to $147 million, for the fourth quarter of 2022, attributable to an increase in income from our fixed maturities portfolio due to increased yields.

* 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.


2 Underlying operating income (loss) and underlying 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.

Fourth Quarter Consolidated Underwriting Highlights3

• Gross premiums written increased by $26 million, or 1%, to $1.8 billion with an increase of $113 million, or 8% in the insurance segment, partially offset by a decrease of $87 million, or 30% in the reinsurance segment.
• Net premiums written decreased by $24 million, or 2%, ($30 million, or 3%, on a constant currency basis(4)), to $1.1 billion with an increase of $83 million, or 9% in the insurance segment, offset by a decrease of $107 million, or 51% in the reinsurance segment.

 

Quarters ended December 31,

KEY RATIOS

2023

 

2022

 

Change

Current accident year loss ratio, excluding catastrophe and weather-related losses(5)

55.4

%

 

55.5

%

 

(0.1 pts)

Catastrophe and weather-related losses ratio

2.1

%

 

4.7

%

 

(2.6 pts)

Current accident year loss ratio

57.5

%

 

60.2

%

 

(2.7 pts)

Prior year reserve development ratio

33.6

%

 

(0.6

%)

 

34.2 pts

Net losses and loss expenses ratio

91.1

%

 

59.6

%

 

31.5 pts

Acquisition cost ratio

20.1

%

 

20.6

%

 

(0.5 pts)

General and administrative expense ratio

13.4

%

 

13.9

%

 

(0.5 pts)

Combined ratio

124.6

%

 

94.1

%

 

30.5 pts

 

 

 

 

 

 

Current accident year combined ratio

91.0

%

 

94.7

%

 

(3.7 pts)

 

 

 

 

 

 

Current accident year combined ratio, excluding catastrophe and weather-related losses

88.9

%

 

90.0

%

 

(1.1 pts)

• Pre-tax catastrophe and weather-related losses, net of reinsurance, were $26 million ($21 million, after-tax), (Insurance: $23 million; Reinsurance: $3 million), or 2.1 points.
• Net (adverse) favorable prior year reserve development was $(425) million (Insurance: $(182) million; Reinsurance: $(243) million).

3 All comparisons are with the same period of the prior year, unless otherwise stated.


4 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.


5 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.

Full Year Consolidated Underwriting Highlights

• Gross premiums written increased by $142 million, or 2%, to $8.4 billion with an increase of $555 million, or 10% in the insurance segment, partially offset by a decrease of $413 million, or 16% in the reinsurance segment.
• Net premiums written decreased by $161 million, or 3% ($101 million, or 2%, on a constant currency basis), to $5.1 billion with an increase of $381 million, or 11% in the insurance segment, offset by a decrease of $542 million, or 29% in the reinsurance segment.

 

Years ended December 31,

KEY RATIOS

2023

 

2022

 

Change

Current accident year loss ratio, excluding catastrophe and weather-related losses

55.9

%

 

55.5

%

 

0.4 pts

Catastrophe and weather-related losses ratio

2.7

%

 

7.8

%

 

(5.1 pts)

Current accident year loss ratio

58.6

%

 

63.3

%

 

(4.7 pts)

Prior year reserve development ratio

8.1

%

 

(0.5

%)

 

8.6 pts

Net losses and loss expenses ratio

66.7

%

 

62.8

%

 

3.9 pts

Acquisition cost ratio

19.7

%

 

19.8

%

 

(0.1 pts)

General and administrative expense ratio

13.5

%

 

13.2

%

 

0.3 pts

Combined ratio

99.9

%

 

95.8

%

 

4.1 pts

 

 

 

 

 

 

Current accident year combined ratio

91.8

%

 

96.3

%

 

(4.5 pts)

 

 

 

 

 

 

Current accident year combined ratio, excluding catastrophe and weather-related losses

89.1

%

 

88.5

%

 

0.6 pts

• Pre-tax catastrophe and weather-related losses, net of reinsurance, were $138 million ($116 million, after-tax), (Insurance: $111 million; Reinsurance: $27 million), or 2.7 points.
• Net (adverse) favorable prior year reserve development was $(412) million (Insurance: $(176) million; Reinsurance: $(236) million).

Segment Highlights

Insurance Segment

 

Quarters ended December 31,

($ in thousands)

 

2023

 

 

 

2022

 

 

Change

Gross premiums written

$

    1,583,378

 

 

$

    1,470,805

 

 

7.7

%   

Net premiums written

 

         969,871

 

 

 

         886,786

 

 

9.4

%   

Net premiums earned

 

         916,779

 

 

 

         830,514

 

 

10.4

%   

Underwriting income (loss)

 

          (61,675

)   

 

 

         123,370

 

 

nm

 

 

 

 

 

 

Underwriting ratios:

 

 

 

 

 

Current accident year loss ratio, excluding catastrophe and weather-related losses

 

52.0

%

 

 

49.3

%

 

2.7 pts

Catastrophe and weather-related losses ratio

 

2.5

%

 

 

4.1

%

 

(1.6 pts)

Current accident year loss ratio

 

54.5

%

 

 

53.4

%

 

1.1 pts

Prior year reserve development ratio

 

19.8

%

 

 

(0.5

%)

 

20.3 pts

Net losses and loss expenses ratio

 

74.3

%

 

 

52.9

%

 

21.4 pts

Acquisition cost ratio

 

19.1

%

 

 

18.6

%

 

0.5 pts

Underwriting-related general and administrative expense ratio

 

13.3

%

 

 

13.7

%

 

(0.4 pts)

Combined ratio

 

106.7

%

 

 

85.2

%

 

21.5 pts

 

 

 

 

 

 

Current accident year combined ratio

 

86.9

%

 

 

85.7

%

 

1.2 pts

 

 

 

 

 

 

Current accident year combined ratio, excluding catastrophe and weather-related losses

 

84.4

%

 

 

81.6

%

 

2.8 pts

nm - not meaningful is defined as a variance greater than +/- 100%

• Gross premiums written increased by $113 million, or 8% ($102 million, or 7%, on a constant currency basis), attributable to increases in all lines of business with the exception of professional lines which decreased in the quarter, principally due to the unattractive pricing environment for U.S. public D&O business.
• Net premiums written increased by $83 million, or 9% ($74 million, or 8%, on a constant currency basis), reflecting the increase in gross premiums written in the quarter, together with a decrease in premiums ceded in professional lines.
• The current accident year loss ratio, excluding catastrophe and weather-related losses is consistent with recent quarters whereas the ratio in the prior year quarter was particularly favorable.
• The acquisition cost ratio increased by 0.5 points, primarily related to an increase in profit commissions.
• The underwriting-related general and administrative expense ratio decreased by 0.4 points, mainly driven by an increase in net premiums earned, partially offset by an increase in personnel costs.

 

Years ended December 31,

($ in thousands)

 

2023

 

 

 

2022

 

 

Change

Gross premiums written

$

6,140,764

 

 

$

5,585,581

 

 

9.9

%

Net premiums written

 

3,758,720

 

 

 

3,377,906

 

 

11.3

%

Net premiums earned

 

3,461,700

 

 

 

3,134,155

 

 

10.5

%

Underwriting income

 

260,944

 

 

 

327,318

 

 

(20.3

%)

 

 

 

 

 

 

Underwriting ratios:

 

 

 

 

 

Current accident year loss ratio, excluding catastrophe and weather-related losses

 

51.8

%

 

 

51.0

%

 

0.8 pts

Catastrophe and weather-related losses ratio

 

3.2

%

 

 

6.5

%

 

(3.3 pts)

Current accident year loss ratio

 

55.0

%

 

 

57.5

%

 

(2.5 pts)

Prior year reserve development ratio

 

5.1

%

 

 

(0.5

%)

 

5.6 pts

Net losses and loss expenses ratio

 

60.1

%

 

 

57.0

%

 

3.1 pts

Acquisition cost ratio

 

18.7

%

 

 

18.4

%

 

0.3 pts

Underwriting-related general and administrative expense ratio

 

13.7

%

 

 

14.2

%

 

(0.5 pts)

Combined ratio

 

92.5

%

 

 

89.6

%

 

2.9 pts

 

 

 

 

 

 

Current accident year combined ratio

 

87.4

%

 

 

90.1

%

 

(2.7 pts)

 

 

 

 

 

 

Current accident year combined ratio, excluding catastrophe and weather-related losses

 

84.2

%

 

 

83.6

%

 

0.6 pts

• Gross premiums written increased by $555 million, or 10%, attributable to increases in all lines of business with the exception of professional lines which decreased in the year principally due to the unattractive pricing environment for U.S. public D&O business, together with the reduction in activity in transactional liability business.
• Net premiums written increased by $381 million, or 11% ($392 million, or 12%, on a constant currency basis), reflecting the increase in gross premiums written, together with a decrease in premiums ceded in professional lines.

Reinsurance Segment

 

Quarters ended December 31,

($ in thousands)

 

2023

 

 

 

2022

 

 

Change

Gross premiums written

$

200,915

 

 

$

287,891

 

 

(30.2

%)

Net premiums written

 

102,384

 

 

 

209,768

 

 

(51.2

%)

Net premiums earned

 

348,494

 

 

 

509,648

 

 

(31.6

%)

Underwriting income (loss)

 

(212,398

)

 

 

8,861

 

 

nm

 

 

 

 

 

 

Underwriting ratios:

 

 

 

 

 

Current accident year loss ratio, excluding catastrophe and weather-related losses

 

64.5

%

 

 

65.5

%

 

(1.0 pts)

Catastrophe and weather-related losses ratio

 

0.8

%

 

 

5.7

%

 

(4.9 pts)

Current accident year loss ratio

 

65.3

%

 

 

71.2

%

 

(5.9 pts)

Prior year reserve development ratio

 

69.8

%

 

 

(0.8

%)

 

70.6 pts

Net losses and loss expenses ratio

 

135.1

%

 

 

70.4

%

 

64.7 pts

Acquisition cost ratio

 

22.6

%

 

 

23.7

%

 

(1.1 pts)

Underwriting-related general and administrative expense ratio

 

5.1

%

 

 

4.7

%

 

0.4 pts

Combined ratio

 

162.8

%

 

 

98.8

%

 

64.0 pts

 

 

 

 

 

 

Current accident year combined ratio

 

93.0

%

 

 

99.6

%

 

(6.6 pts)

 

 

 

 

 

 

Current accident year combined ratio, excluding catastrophe and weather-related losses

 

92.2

%

 

 

93.9

%

 

(1.7 pts)

nm - not meaningful is defined as a variance greater than +/- 100%

• Gross premiums written decreased by $87 million, or 30% ($83 million, or 29%, on a constant currency basis), primarily attributable to a lower level of positive premium adjustments in the quarter compared to the prior year and the timing of renewals of significant contracts.
• Net premiums written decreased by $107 million, or 51% ($104 million, or 49%, on a constant currency basis), reflecting the decrease in gross premiums written in the quarter, together with an increase in premiums ceded associated with a new quota share retrocession agreement.
• The current accident year loss ratio, excluding catastrophe and weather-related losses, decreased by 1.0 point, principally due to favorable pricing over loss trends experienced in most lines of business. In addition, the prior year quarter included the impact of a year-to-date update to loss ratios to reflect the inflationary environment.
• The acquisition cost ratio decreased by 1.1 points, primarily related to an increase in ceding commissions from retrocessional agreements due to changes in business mix largely associated with increases in credit and surety, accident and health, liability, and motor lines written in recent periods.

 

Years ended December 31,

($ in thousands)

 

2023

 

 

 

2022

 

 

Change

Gross premiums written

$

2,215,761

 

 

$

2,629,014

 

 

(15.7

%)

Net premiums written

 

1,343,605

 

 

 

1,885,150

 

 

(28.7

%)

Net premiums earned

 

1,622,081

 

 

 

2,026,171

 

 

(19.9

%)

Underwriting income (loss)

 

(100,182

)

 

 

31,365

 

 

nm

 

 

 

 

 

 

Underwriting ratios:

 

 

 

 

 

Current accident year loss ratio, excluding catastrophe and weather-related losses

 

64.8

%

 

 

62.6

%

 

2.2 pts

Catastrophe and weather-related losses ratio

 

1.6

%

 

 

9.7

%

 

(8.1 pts)

Current accident year loss ratio

 

66.4

%

 

 

72.3

%

 

(5.9 pts)

Prior year reserve development ratio

 

14.6

%

 

 

(0.4

%)

 

15.0 pts

Net losses and loss expenses ratio

 

81.0

%

 

 

71.9

%

 

9.1 pts

Acquisition cost ratio

 

21.7

%

 

 

21.9

%

 

(0.2 pts)

Underwriting-related general and administrative expense ratio

 

4.9

%

 

 

5.3

%

 

(0.4 pts)

Combined ratio

 

107.6

%

 

 

99.1

%

 

8.5 pts

 

 

 

 

 

 

Current accident year combined ratio

 

93.0

%

 

 

99.5

%

 

(6.5 pts)

 

 

 

 

 

 

Current accident year combined ratio, excluding catastrophe and weather-related losses

 

91.4

%

 

 

89.8

%

 

1.6 pts

nm - not meaningful is defined as a variance greater than +/- 100%

• Gross premiums written decreased by $413 million, or 16% ($365 million, or 14%, on a constant currency basis) including a decrease of $280 million attributable to run-off lines. In addition, a decrease of $19 million was associated with the exit from aviation business. In ongoing specialty lines, decreases in liability, motor, and professional lines were due to non-renewals.
• Net premiums written decreased by $542 million, or 29% ($493 million, or 26%, on a constant currency basis), reflecting the decrease in gross premiums written, together with an increase in premiums ceded associated with a new quota share retrocession agreement.

Investments

 

Quarters ended December 31,

 

Years ended December 31,

($ in thousands)

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

 

 

 

 

 

 

 

Net investment income

$

186,937

 

 

$

147,085

 

 

$

611,742

 

 

$

418,829

 

Net investments gains (losses)

 

23,041

 

 

 

(42,558

)

 

 

(74,630

)

 

 

(456,789

)

Change in net unrealized gains (losses) on fixed

maturities(6)

 

466,386

 

 

 

233,273

 

 

 

448,477

 

 

 

(909,150

)

Interest in income (loss) of equity method investments

 

1,328

 

 

 

(3,045

)

 

 

4,163

 

 

 

1,995

 

Total

$

677,692

 

 

$

334,755

 

 

$

989,752

 

 

$

(945,115

)

 

 

 

 

 

 

 

 

Average cash and investments(7)

$

16,395,033

 

 

$

15,782,384

 

 

$

16,155,418

 

 

$

15,963,535

 

 

 

 

 

 

 

 

 

Total return on average cash and investments, pre-tax:

 

 

 

 

 

 

 

Including investment related foreign exchange movements

 

4.1

%

 

 

2.1

%

 

 

6.1

%

 

 

(5.9

%)

Excluding investment related foreign exchange movements(8)

 

3.8

%

 

 

1.6

%

 

 

5.8

%

 

 

(5.2

%)

• Net investment income increased by $40 million, or 27%, in the quarter, compared to the fourth quarter of 2022, attributable to an increase in income from our fixed maturities portfolio due to increased yields.
• Net investment gains recognized in net income for the quarter included net unrealized gains of $50 million ($37 million excluding foreign exchange movements), attributable to an increase in the market value of our equity securities portfolio.
• Net unrealized gains, pre-tax of $466 million ($422 million excluding foreign exchange movements) were recognized in other comprehensive income (loss) in the quarter due to an increase in the market value of our fixed maturities portfolio attributable to a decline in yields, compared to net unrealized gains, pre-tax of $233 million ($182 million excluding foreign exchange movements) recognized during the fourth quarter of 2022.
• Book yield of fixed maturities was 4.2% at December 31, 2023, compared to 3.5% at December 31, 2022. The market yield was 5.4% at December 31, 2023.

6 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.


7 The average cash and investments balance is calculated by taking the average of the monthly fair value balances.


8 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 $60 million and $78 million for the quarters ended December 31, 2023 and 2022, respectively, and foreign exchange (losses) gains of $51 million and $(110) million for the years ended December 31, 2023 and 2022, respectively.

Capitalization / Shareholders’ Equity

 

December 31,

 

December 31,

 

 

($ in thousands)

2023

 

2022

 

Change

Total capital(9)

$

6,576,910

 

$

5,952,224

 

$

624,686

• Total capital of $6.6 billion included $1.3 billion of debt and $550 million of preferred equity, compared to $6.0 billion at December 31, 2022, with the increase driven by net income, and net unrealized investment gains reported in accumulated other comprehensive income (loss), partially offset by common share dividends declared.
• On December 7, 2023, the Company's Board of Directors authorized the renewal of the share repurchase program for up to $100 million of the Company's common shares, effective January 1, 2024, through December 31, 2024.

Book Value per diluted common share

 

December 31,

 

September 30,

 

December 31,

 

2023

 

2023

 

2022

Book value per diluted common share(10)

$

54.06

 

$

51.17

 

$

46.95

• Dividends declared were $0.44 per common share in the current quarter and $1.76 per common share over the past twelve months.

 

Three months ended,

 

Twelve months ended,

 

December 31, 2023

 

December 31, 2023

 

Change

 

% Change

 

Change

 

% Change

Book value per diluted common share

$

2.89

 

5.6

%

 

$

7.11

 

15.1

%

Book value per diluted common share - adjusted for dividends declared

$

3.33

 

6.5

%

 

$

8.87

 

18.9

%

• Book value per diluted common share increased by $2.89 in the quarter, driven by net unrealized investment gains reported in accumulated other comprehensive income (loss), partially offset by the net loss for the period, and common share dividends declared.
• Book value per diluted common share increased by $7.11 over the past twelve months, driven by net income, and net unrealized investment gains reported in accumulated other comprehensive income (loss), partially offset by common share dividends declared.
• Adjusted for net unrealized investment losses, after-tax, reported in accumulated other comprehensive income (loss), book value per diluted common share was $58.05.
• Adjusted for dividends declared, the book value per diluted common share increased by $3.33 for the quarter, and increased by $8.87 over the past twelve months.

9 Total capital represents the sum of total shareholders' equity and debt.


10 Calculated using the treasury stock method.

Conference Call

We will host a conference call on Thursday, February 1, 2024 at 9:30 a.m. (EST) to discuss the fourth quarter and year-end 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 4812106 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 6289247. The webcast will be archived in the Investor Information section of our website.

In addition, an investor financial supplement for the quarter ended December 31, 2023 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 $5.3 billion at December 31, 2023, 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

DECEMBER 31, 2023 (UNAUDITED) AND DECEMBER 31, 2022

 

 

 

 

 

 

2023

 

 

 

2022

 

 

 

 

 

 

(in thousands)

Assets

 

Investments:

 

Fixed maturities, available for sale, at fair value

$

12,234,742

 

 

$

11,326,894

 

Fixed maturities, held to maturity, at amortized cost

 

686,296

 

 

 

698,351

 

Equity securities, at fair value

 

588,511

 

 

 

485,253

 

Mortgage loans, held for investment, at fair value

 

610,148

 

 

 

627,437

 

Other investments, at fair value

 

949,413

 

 

 

996,751

 

Equity method investments

 

174,634

 

 

 

148,288

 

Short-term investments, at fair value

 

17,216

 

 

 

70,310

 

Total investments

 

15,260,960

 

 

 

14,353,284

 

Cash and cash equivalents

 

953,476

 

 

 

751,415

 

Restricted cash and cash equivalents

 

430,509

 

 

 

423,238

 

Accrued interest receivable

 

106,055

 

 

 

94,418

 

Insurance and reinsurance premium balances receivable

 

3,067,554

 

 

 

2,733,464

 

Reinsurance recoverable on unpaid losses and loss expenses

 

6,323,083

 

 

 

5,831,172

 

Reinsurance recoverable on paid losses and loss expenses

 

575,847

 

 

 

539,676

 

Deferred acquisition costs

 

450,950

 

 

 

473,569

 

Prepaid reinsurance premiums

 

1,916,087

 

 

 

1,550,370

 

Receivable for investments sold

 

8,767

 

 

 

16,052

 

Goodwill

 

100,801

 

 

 

100,801

 

Intangible assets

 

186,883

 

 

 

197,800

 

Operating lease right-of-use assets

 

108,093

 

 

 

92,214

 

Loan advances made

 

305,222

 

 

 

87,160

 

Other assets

 

456,385

 

 

 

438,338

 

Total assets

$

30,250,672

 

 

$

27,682,971

 

 

 

 

 

Liabilities

 

 

 

Reserve for losses and loss expenses

$

16,434,018

 

 

$

15,168,863

 

Unearned premiums

 

4,747,602

 

 

 

4,361,447

 

Insurance and reinsurance balances payable

 

1,792,719

 

 

 

1,609,924

 

Debt

 

1,313,714

 

 

 

1,312,314

 

Federal Home Loan Bank advances

 

85,790

 

 

 

81,388

 

Payable for investments purchased

 

26,093

 

 

 

19,693

 

Operating lease liabilities

 

123,101

 

 

 

102,577

 

Other liabilities

 

464,439

 

 

 

386,855

 

Total liabilities

 

24,987,476

 

 

 

23,043,061

 

 

 

 

 

Shareholders' equity

 

 

 

Preferred shares

 

550,000

 

 

 

550,000

 

Common shares

 

2,206

 

 

 

2,206

 

Additional paid-in capital

 

2,383,030

 

 

 

2,366,253

 

Accumulated other comprehensive income (loss)

 

(365,836

)

 

 

(760,300

)

Retained earnings

 

6,440,528

 

 

 

6,247,022

 

Treasury shares, at cost

 

(3,746,732

)

 

 

(3,765,271

)

Total shareholders' equity

 

5,263,196

 

 

 

4,639,910

 

Total liabilities and shareholders' equity

$

30,250,672

 

 

$

27,682,971

 

AXIS CAPITAL HOLDINGS LIMITED

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE QUARTERS AND YEARS ENDED DECEMBER 31, 2023 AND 2022

 

 

 

 

 

 

 

 

 

Quarters ended

 

Years ended

 

2023 (Unaudited)

 

2022 (Unaudited)

 

2023 (Unaudited)

 

 

2022

 

 

 

 

 

 

 

 

 

 

(in thousands, except per share amounts)

Revenues

 

 

 

 

 

 

 

Net premiums earned

$

1,265,273

 

 

$

1,340,162

 

 

$

5,083,781

 

 

$

5,160,326

 

Net investment income

 

186,937

 

 

 

147,085

 

 

 

611,742

 

 

 

418,829

 

Net investment gains (losses)

 

23,041

 

 

 

(42,558

)

 

 

(74,630

)

 

 

(456,789

)

Other insurance related income

 

6,050

 

 

 

3,076

 

 

 

22,495

 

 

 

13,073

 

Total revenues

 

1,481,301

 

 

 

1,447,765

 

 

 

5,643,388

 

 

 

5,135,439

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

Net losses and loss expenses

 

1,152,262

 

 

 

798,214

 

 

 

3,393,102

 

 

 

3,242,410

 

Acquisition costs

 

253,918

 

 

 

275,573

 

 

 

1,000,945

 

 

 

1,022,017

 

General and administrative expenses

 

169,849

 

 

 

187,472

 

 

 

684,446

 

 

 

680,343

 

Foreign exchange losses (gains)

 

69,871

 

 

 

78,989

 

 

 

58,115

 

 

 

(157,945

)

Interest expense and financing costs

 

18,344

 

 

 

16,426

 

 

 

68,421

 

 

 

63,146

 

Reorganization expenses

 

—

 

 

 

9,485

 

 

 

28,997

 

 

 

31,426

 

Amortization of intangible assets

 

2,729

 

 

 

2,729

 

 

 

10,917

 

 

 

10,917

 

Total expenses

 

1,666,973

 

 

 

1,368,888

 

 

 

5,244,943

 

 

 

4,892,314

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes and interest in income (loss) of equity method investments

 

(185,672

)

 

 

78,877

 

 

 

398,445

 

 

 

243,125

 

Income tax (expense) benefit

 

41,762

 

 

 

(27,341

)

 

 

(26,316

)

 

 

(22,037

)

Interest in income (loss) of equity method investments

 

1,328

 

 

 

(3,045

)

 

 

4,163

 

 

 

1,995

 

Net income (loss)

 

(142,582

)

 

 

48,491

 

 

 

376,292

 

 

 

223,083

 

Preferred share dividends

 

7,563

 

 

 

7,563

 

 

 

30,250

 

 

 

30,250

 

Net income (loss) available (attributable) to common shareholders

$

(150,145

)

 

$

40,928

 

 

$

346,042

 

 

$

192,833

 

 

 

 

 

 

 

 

 

Per share data

 

 

 

 

 

 

 

Earnings (loss) per common share:

 

 

 

 

 

 

 

Earnings (loss) per common share

$

(1.76

)

 

$

0.48

 

 

$

4.06

 

 

$

2.27

 

Earnings (loss) per diluted common share

$

(1.76

)

 

$

0.48

 

 

$

4.02

 

 

$

2.25

 

Weighted average common shares outstanding

 

85,268

 

 

 

84,667

 

 

 

85,142

 

 

 

84,864

 

Weighted average diluted common shares outstanding

 

85,268

 

 

 

85,655

 

 

 

86,012

 

 

 

85,669

 

Cash dividends declared per common share

$

0.44

 

 

$

0.44

 

 

$

1.76

 

 

$

1.73

 

AXIS CAPITAL HOLDINGS LIMITED

CONSOLIDATED SEGMENTAL DATA (UNAUDITED)

FOR THE QUARTERS ENDED DECEMBER 31, 2023 AND 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

2023

 

2022

 

Insurance

 

Reinsurance

 

Total

 

Insurance

 

Reinsurance

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

Gross premiums written

$

1,583,378

 

 

$

200,915

 

 

$

1,784,293

 

 

$

1,470,805

 

 

$

287,891

 

 

$

1,758,696

 

Net premiums written

 

969,871

 

 

 

102,384

 

 

 

1,072,255

 

 

 

886,786

 

 

 

209,768

 

 

 

1,096,554

 

Net premiums earned

 

916,779

 

 

 

348,494

 

 

 

1,265,273

 

 

 

830,514

 

 

 

509,648

 

 

 

1,340,162

 

Other insurance related income (loss)

 

(289

)

 

 

6,339

 

 

 

6,050

 

 

 

89

 

 

 

2,987

 

 

 

3,076

 

Net losses and loss expenses

 

(681,515

)

 

 

(470,747

)

 

 

(1,152,262

)

 

 

(439,268

)

 

 

(358,946

)

 

 

(798,214

)

Acquisition costs

 

(175,050

)

 

 

(78,868

)

 

 

(253,918

)

 

 

(154,859

)

 

 

(120,714

)

 

 

(275,573

)

Underwriting-related general and

 

 

 

 

 

 

 

 

 

 

 

administrative expenses(11)

 

(121,600

)

 

 

(17,616

)

 

 

(139,216

)

 

 

(113,106

)

 

 

(24,114

)

 

 

(137,220

)

Underwriting income (loss)(12)

$

(61,675

)

 

$

(212,398

)

 

 

(274,073

)

 

$

123,370

 

 

$

8,861

 

 

 

132,231

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

 

 

 

186,937

 

 

 

 

 

 

 

147,085

 

Net investment gains (losses)

 

 

 

 

 

23,041

 

 

 

 

 

 

 

(42,558

)

Corporate expenses(11)

 

 

 

 

 

(30,633

)

 

 

 

 

 

 

(50,252

)

Foreign exchange (losses) gains

 

 

 

 

 

(69,871

)

 

 

 

 

 

 

(78,989

)

Interest expense and financing costs

 

 

 

 

 

(18,344

)

 

 

 

 

 

 

(16,426

)

Reorganization expenses

 

 

 

 

 

—

 

 

 

 

 

 

 

(9,485

)

Amortization of intangible assets

 

 

 

 

 

(2,729

)

 

 

 

 

 

 

(2,729

)

Income (loss) before income taxes and interest in income (loss) of equity method investments

 

 

 

 

 

(185,672

)

 

 

 

 

 

 

78,877

 

Income tax (expense) benefit

 

 

 

 

 

41,762

 

 

 

 

 

 

 

(27,341

)

Interest in income (loss) of equity method investments

 

 

 

 

 

1,328

 

 

 

 

 

 

 

(3,045

)

Net income (loss)

 

 

 

 

 

(142,582

)

 

 

 

 

 

 

48,491

 

Preferred share dividends

 

 

 

 

 

7,563

 

 

 

 

 

 

 

7,563

 

Net income (loss) available (attributable to common shareholders

 

 

 

 

$

(150,145

)

 

 

 

 

 

$

40,928

 

 

 

 

 

 

 

 

 

 

 

 

 

Net losses and loss expenses ratio

 

74.3

%

 

 

135.1

%

 

 

91.1

%

 

 

52.9

%

 

 

70.4

%

 

 

59.6

%

Acquisition cost ratio

 

19.1

%

 

 

22.6

%

 

 

20.1

%

 

 

18.6

%

 

 

23.7

%

 

 

20.6

%

General and administrative expense ratio

 

13.3

%

 

 

5.1

%

 

 

13.4

%

 

 

13.7

%

 

 

4.7

%

 

 

13.9

%

Combined ratio

 

106.7

%

 

 

162.8

%

 

 

124.6

%

 

 

85.2

%

 

 

98.8

%

 

 

94.1

%

11 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 $31 million and $50 million for the quarters ended December 31, 2023 and 2022, respectively. Underwriting-related general and administrative expenses and corporate expenses are included in the general and administrative expense ratio.


12 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 in the table above.

AXIS CAPITAL HOLDINGS LIMITED

CONSOLIDATED SEGMENTAL DATA

FOR THE YEARS ENDED DECEMBER 31, 2023 (UNAUDITED) AND 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

2023

 

2022

 

Insurance

 

Reinsurance

 

Total

 

Insurance

 

Reinsurance

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

Gross premiums written

$

6,140,764

 

 

$

2,215,761

 

 

$

8,356,525

 

 

$

5,585,581

 

 

$

2,629,014

 

 

$

8,214,595

 

Net premiums written

 

3,758,720

 

 

 

1,343,605

 

 

 

5,102,325

 

 

 

3,377,906

 

 

 

1,885,150

 

 

 

5,263,056

 

Net premiums earned

 

3,461,700

 

 

 

1,622,081

 

 

 

5,083,781

 

 

 

3,134,155

 

 

 

2,026,171

 

 

 

5,160,326

 

Other insurance related income (loss)

 

(198

)

 

 

22,693

 

 

 

22,495

 

 

 

559

 

 

 

12,514

 

 

 

13,073

 

Net losses and loss expenses

 

(2,080,001

)

 

 

(1,313,101

)

 

 

(3,393,102

)

 

 

(1,785,854

)

 

 

(1,456,556

)

 

 

(3,242,410

)

Acquisition costs

 

(648,463

)

 

 

(352,482

)

 

 

(1,000,945

)

 

 

(577,838

)

 

 

(444,179

)

 

 

(1,022,017

)

Underwriting-related general and

 

 

 

 

 

 

 

 

 

 

 

administrative expenses(13)

 

(472,094

)

 

 

(79,373

)

 

 

(551,467

)

 

 

(443,704

)

 

 

(106,585

)

 

 

(550,289

)

Underwriting income (loss)(14)

$

260,944

 

 

$

(100,182

)

 

 

160,762

 

 

$

327,318

 

 

$

31,365

 

 

 

358,683

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

 

 

 

611,742

 

 

 

 

 

 

 

418,829

 

Net investment gains (losses)

 

 

 

 

 

(74,630

)

 

 

 

 

 

 

(456,789

)

Corporate expenses(13)

 

 

 

 

 

(132,979

)

 

 

 

 

 

 

(130,054

)

Foreign exchange (losses) gains

 

 

 

 

 

(58,115

)

 

 

 

 

 

 

157,945

 

Interest expense and financing costs

 

 

 

 

 

(68,421

)

 

 

 

 

 

 

(63,146

)

Reorganization expenses

 

 

 

 

 

(28,997

)

 

 

 

 

 

 

(31,426

)

Amortization of intangible assets

 

 

 

 

 

(10,917

)

 

 

 

 

 

 

(10,917

)

Income before income taxes and interest in income of equity method investments

 

 

 

 

 

398,445

 

 

 

 

 

 

 

243,125

 

Income tax expense

 

 

 

 

 

(26,316

)

 

 

 

 

 

 

(22,037

)

Interest in income of equity method

investments

 

 

 

 

 

4,163

 

 

 

 

 

 

 

1,995

 

Net income

 

 

 

 

 

376,292

 

 

 

 

 

 

 

223,083

 

Preferred share dividends

 

 

 

 

 

30,250

 

 

 

 

 

 

 

30,250

 

Net income available to common shareholders

 

 

 

 

$

346,042

 

 

 

 

 

 

$

192,833

 

 

 

 

 

 

 

 

 

 

 

 

 

Net losses and loss expenses ratio

 

60.1

%

 

 

81.0

%

 

 

66.7

%

 

 

57.0

%

 

 

71.9

%

 

 

62.8

%

Acquisition cost ratio

 

18.7

%

 

 

21.7

%

 

 

19.7

%

 

 

18.4

%

 

 

21.9

%

 

 

19.8

%

General and administrative expense ratio

 

13.7

%

 

 

4.9

%

 

 

13.5

%

 

 

14.2

%

 

 

5.3

%

 

 

13.2

%

Combined ratio

 

92.5

%

 

 

107.6

%

 

 

99.9

%

 

 

89.6

%

 

 

99.1

%

 

 

95.8

%

13 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 $133 million and $130 million for the years ended December 31, 2023 and 2022, respectively. Underwriting-related general and administrative expenses and corporate expenses are included in the general and administrative expense ratio.


14 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 in the table above.



 

AXIS CAPITAL HOLDINGS LIMITED

NON-GAAP FINANCIAL MEASURES RECONCILIATION (UNAUDITED)

OPERATING INCOME, UNDERLYING OPERATING INCOME, AND OPERATING RETURN ON AVERAGE COMMON EQUITY

FOR THE QUARTERS AND YEARS ENDED DECEMBER 31, 2023 AND 2022

 

 

 

 

 

 

 

 

 

Quarters ended

 

Years ended

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

 

 

 

 

 

 

 

 

(in thousands, except per share amounts)

 

 

 

 

 

 

 

 

Net income (loss) available (attributable) to common shareholders

$

(150,145

)

 

$

40,928

 

 

$

346,042

 

 

$

192,833

 

Net investment (gains) losses (15)

 

(23,041

)

 

 

42,558

 

 

 

74,630

 

 

 

456,789

 

Foreign exchange losses (gains) (16)

 

69,871

 

 

 

78,989

 

 

 

58,115

 

 

 

(157,945

)

Reorganization expenses (17)

 

—

 

 

 

9,485

 

 

 

28,997

 

 

 

31,426

 

Interest in (income) loss of equity method investments (18)

 

(1,328

)

 

 

3,045

 

 

 

(4,163

)

 

 

(1,995

)

Income tax benefit

 

(2,348

)

 

 

(8,397

)

 

 

(17,488

)

 

 

(23,177

)

Operating income (loss) (19)

$

(106,991

)

 

$

166,608

 

 

$

486,133

 

 

$

497,931

 

Net losses and loss expenses (20)

 

425,001

 

 

 

—

 

 

 

425,001

 

 

 

—

 

Associated income tax benefit (20)

 

(64,038

)

 

 

—

 

 

 

(64,038

)

 

 

—

 

Underlying operating income

$

253,972

 

 

$

166,608

 

 

$

847,096

 

 

$

497,931

 

 

 

 

 

 

 

 

 

Earnings (loss) per diluted common share

$

(1.76

)

 

$

0.48

 

 

$

4.02

 

 

$

2.25

 

Net investment (gains) losses

 

(0.27

)

 

 

0.50

 

 

 

0.87

 

 

 

5.33

 

Foreign exchange losses (gains)

 

0.82

 

 

 

0.92

 

 

 

0.68

 

 

 

(1.84

)

Reorganization expenses

 

—

 

 

 

0.11

 

 

 

0.34

 

 

 

0.37

 

Interest in (income) loss of equity method investments

 

(0.02

)

 

 

0.04

 

 

 

(0.05

)

 

 

(0.02

)

Income tax benefit

 

(0.02

)

 

 

(0.10

)

 

 

(0.21

)

 

 

(0.28

)

Operating income (loss) per diluted common share (19)

$

(1.25

)

 

$

1.95

 

 

$

5.65

 

 

$

5.81

 

Net losses and loss expenses

 

4.93

 

 

 

—

 

 

 

4.94

 

 

 

—

 

Associated income tax benefit

 

(0.74

)

 

 

—

 

 

 

(0.74

)

 

 

—

 

Underlying operating income per diluted common share

$

2.94

 

 

$

1.95

 

 

$

9.85

 

 

$

5.81

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

85,268

 

 

 

84,667

 

 

 

85,142

 

 

 

84,864

 

Weighted average diluted common shares outstanding (19)

 

85,268

 

 

 

85,655

 

 

 

86,012

 

 

 

85,669

 

Weighted average diluted common shares outstanding

 

86,270

 

 

 

85,655

 

 

 

86,012

 

 

 

85,669

 

 

 

 

 

 

 

 

 

Average common shareholders' equity

$

4,598,202

 

 

$

3,941,666

 

 

$

4,401,553

 

 

$

4,475,283

 

Annualized return on average common equity

 

(13.1

%)

 

 

4.2

%

 

 

7.9

%

 

 

4.3

%

Annualized operating return on average common equity (21)

 

(9.3

%)

 

 

16.9

%

 

 

11.0

%

 

 

11.1

%

15Tax expense (benefit) of $(1) million and $(2) million for the quarters ended December 31, 2023 and 2022, respectively, and $(10) million and $(36) million for the years ended December 31, 2023 and 2022, respectively. Tax impact is estimated by applying the statutory rates of applicable jurisdictions, after consideration of other relevant factors including the ability to utilize capital losses.


16Tax expense (benefit) of $(1) million and $(5) million for the quarters ended December 31, 2023 and 2022, respectively, and $(3) million and $16 million for the years ended December 31, 2023 and 2022, respectively. Tax impact is estimated by applying the statutory rates of applicable jurisdictions, after consideration of other relevant factors including the tax status of specific foreign exchange transactions.


17Tax expense (benefit) of $nil and $(1) million for the quarters ended December 31, 2023 and 2022, respectively, and $(5) million and $(4) million for the years ended December 31, 2023 and 2022, respectively. Tax impact is estimated by applying the statutory rates of applicable jurisdictions.


18Tax expense (benefit) of $nil for the quarters and years ended December 31, 2023 and 2022. Tax impact is estimated by applying the statutory rates of applicable jurisdictions.


19Due to the operating loss recognized for the quarter ended December 31, 2023, the share equivalents were anti-dilutive.


20Net adverse prior year reserve development of $425 million, pre-tax ($361 million, post-tax) for the quarter ended December 31, 2023.


21Annualized 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 market 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 including our exit from catastrophe and property reinsurance lines of business, 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

• the cyclical nature of the insurance and reinsurance business leading to periods with excess underwriting capacity and unfavorable premium rates;
• the occurrence and magnitude of natural and man-made disasters, including the potential increase of our exposure to natural catastrophe losses due to climate change and the potential for inherently unpredictable losses from man-made catastrophes, such as cyber-attacks;
• the effects of emerging claims, systemic risks, and coverage and regulatory issues, including increasing litigation and uncertainty related to coverage definitions, limits, terms and conditions;
• actual claims exceeding reserves for losses and loss expenses;
• losses related to the Israel-Hamas conflict, the Russian invasion of Ukraine, terrorism and political unrest, or other unanticipated losses;
• the adverse impact of inflation;
• the failure of any of the loss limitation methods we employ;
• the failure of our cedants to adequately evaluate risks;

Strategic Risk

• underwriting and investment exposure in light of the recent disruption in the banking sector, which we expect to be within our risk appetite for an event of this nature;
• changes in the political environment of certain countries in which we operate or underwrite business, including the United Kingdom's withdrawal from the European Union;
• the loss of business provided to us by major brokers;
• a decline in our ratings with rating agencies;
• the loss of one or more of our key executives;
• increasing scrutiny and evolving expectations from investors, customers, regulators, policymakers and other stakeholders regarding environmental, social and governance matters;
• the adverse impact of contagious diseases (including COVID-19) on our business, results of operations, financial condition, and liquidity;

Credit and Market Risk

• the inability to purchase reinsurance or collect amounts due to us from reinsurance we have purchased;
• the failure of our policyholders or intermediaries to pay premiums;
• general economic, capital and credit market conditions, including banking and commercial real estate sector instability, financial market illiquidity and fluctuations in interest rates, credit spreads, equity securities' prices, and/or foreign currency exchange rates;
• breaches by third parties in our program business of their obligations to us;

Liquidity Risk

• the inability to access sufficient cash to meet our obligations when they are due;

Operational Risk

• changes in accounting policies or practices;
• the use of industry models and changes to these models;
• difficulties with technology and/or data security;
• the failure of the processes, people or systems that we rely on to maintain our operations and manage the operational risks inherent to our business, including those outsourced to third parties;

Regulatory Risk

• changes in governmental regulations and potential government intervention in our industry;
• inadvertent failure to comply with certain laws and regulations relating to sanctions, foreign corrupt practices, data protection and privacy; and

Risks Related to Taxation

• changes in tax laws.

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), current accident year combined ratio, operating income (loss) (in total and on a per share basis), annualized operating return on average common equity ("operating ROACE"), underlying operating income (loss) (in total and on a per share basis), 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 2023 include impairments of computer software assets and severance costs mainly attributable to our "How We Work" program which is focused on simplifying our operating structure. Reorganization expenses in 2022 included severance costs and impairments of computer software assets mainly attributable to our exit from catastrophe and property reinsurance lines of business which was part of an overall approach to reduce our exposure to volatile catastrophe risk. 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.

Current accident year combined ratio

Current accident year combined ratio represents underwriting results exclusive of net favorable (adverse) prior year reserve development. We believe that the presentation of current accident year combined ratio provides investors with an enhanced understanding of our results of operations by highlighting the profitability of our underwriting activities excluding the impact of volatile prior year reserve development. A reconciliation to the most comparable GAAP financial measure, combined ratio is provided in the 'Fourth Quarter Consolidated Underwriting Highlights' and 'Full Year Consolidated Underwriting Highlights' sections 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 and interest in income (loss) of equity method investments.

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 2023 include impairments of computer software assets and severance costs mainly attributable to our "How We Work" program which is focused on simplifying our operating structure. Reorganization expenses in 2022 included severance costs and impairments of computer software assets mainly attributable to our exit from catastrophe and property reinsurance lines of business which was part of an overall approach to reduce our exposure to volatile catastrophe risk. 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 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).

Certain users of our financial statements evaluate performance exclusive of after-tax net investment gains (losses), foreign exchange losses (gains), reorganization expenses and interest in income (loss) of equity method investments 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 and interest in income (loss) of equity method investments 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.

Underlying Operating Income (Loss)

Underlying operating income (loss) represents underwriting results exclusive of net adverse prior year reserve development of $425 million, pre-tax and $361 million, post-tax for the fourth quarter of 2023. We believe that the presentation of underlying operating income (loss) provides investors with an enhanced understanding of our results of operations by highlighting the profitability of our underwriting activities excluding the impact of the fourth quarter net adverse prior year reserve development. The reconciliation of underlying 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 underlying operating income (loss) per diluted common share which is derived from the underlying operating income (loss) measure and is reconciled to the most comparable GAAP financial measure, earnings (loss) per diluted common share 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.

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Cliff Gallant (Investor Contact): [phone]; [e-mail] Nichola Liboro (Media Contact): [phone]; [e-mail]