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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% | 74.47 | 0 | 09:53:54 |
For the second quarter of 2024, the Company reports:
For the six months ended June 30, 2024, the Company reports:
AXIS Capital Holdings Limited ("AXIS Capital" or "AXIS" or "the Company") (NYSE: AXS) today announced financial results for the second quarter ended June 30, 2024.
Commenting on the second quarter 2024 financial results, Vince Tizzio, President and CEO of AXIS Capital said:
"This was an excellent quarter and first half of the year for AXIS defined by consistent, profitable results and strong diluted book value per share growth as we pursued our ambition of achieving specialty underwriting leadership. In the quarter, we delivered on our stated goals, producing an annualized operating ROE of 20%, record operating EPS of $2.93, and a combined ratio of 90.4%.
"We continued to lean into attractive specialty markets where we hold leadership positions, while tapping into our deep distribution relationships. In our specialty insurance business, we delivered a solid 87.9% combined ratio while generating an 8% increase in gross premiums written, 17% net premiums written growth, and record second quarter new business volume. Within reinsurance, we produced an 89.3% combined ratio and a 4% increase in premiums highlighted by targeted growth in specialty lines, reflecting our repositioning of AXIS Re as a focused, specialist reinsurer.
"During the quarter, we also took important steps forward in enhancing our operations through our "How We Work" transformation program. This included implementing operating model changes to improve productivity, reduce our cost structure, and allow for reinvestment into the business. In summary, we are pleased with our second quarter results, feel good about the actions we are taking across all aspects of our business, and are intent on building on our momentum."
Second Quarter Consolidated Results*
Second Quarter Consolidated Underwriting Highlights2
Three months ended June 30,
KEY RATIOS
2024
2023
Change
Current accident year loss ratio, excluding catastrophe and weather-related losses(3) (4)
55.1
%
56.1
%
(1.0 pts)
Catastrophe and weather-related losses ratio(4)
3.6
%
2.6
%
1.0 pts
Current accident year loss ratio(4)
58.7
%
58.7
%
— pts
Prior year reserve development ratio
—
%
(0.5
%)
0.5 pts
Net losses and loss expenses ratio
58.7
%
58.2
%
0.5 pts
Acquisition cost ratio
20.3
%
20.0
%
0.3 pts
General and administrative expense ratio
11.4
%
13.3
%
(1.9 pts)
Combined ratio
90.4
%
91.5
%
(1.1 pts)
Current accident year combined ratio
90.4
%
92.0
%
(1.6 pts)
Current accident year combined ratio, excluding catastrophe and weather-related losses
86.8
%
89.4
%
(2.6 pts)
Year to Date Consolidated Underwriting Highlights
Six months ended June 30,
KEY RATIOS
2024
2023
Change
Current accident year loss ratio, excluding catastrophe and weather-related losses
55.7
%
56.0
%
(0.3 pts)
Catastrophe and weather-related losses ratio
2.6
%
2.8
%
(0.2 pts)
Current accident year loss ratio
58.3
%
58.8
%
(0.5 pts)
Prior year reserve development ratio
—
%
(0.4
%)
0.4 pts
Net losses and loss expenses ratio
58.3
%
58.4
%
(0.1 pts)
Acquisition cost ratio
20.3
%
19.4
%
0.9 pts
General and administrative expense ratio
12.2
%
13.4
%
(1.2 pts)
Combined ratio
90.8
%
91.2
%
(0.4 pts)
Current accident year combined ratio
90.8
%
91.6
%
(0.8 pts)
Current accident year combined ratio, excluding catastrophe and weather-related losses
88.2
%
88.8
%
(0.6 pts)
Segment Highlights
Insurance Segment
Three months ended June 30,
($ in thousands)
2024
2023
Change
Gross premiums written
$
1,814,066
$
1,684,150
7.7
%
Net premiums written
1,194,197
1,021,021
17.0
%
Net premiums earned
958,212
842,751
13.7
%
Underwriting income
115,640
114,653
0.9
%
Underwriting ratios:
Current accident year loss ratio, excluding catastrophe and weather-related losses
51.8
%
51.5
%
0.3 pts
Catastrophe and weather-related losses ratio
4.8
%
3.1
%
1.7 pts
Current accident year loss ratio
56.6
%
54.6
%
2.0 pts
Prior year reserve development ratio
—
%
(0.3
%)
0.3 pts
Net losses and loss expenses ratio
56.6
%
54.3
%
2.3 pts
Acquisition cost ratio
19.6
%
18.6
%
1.0 pts
Underwriting-related general and administrative expense ratio
11.7
%
13.5
%
(1.8 pts)
Combined ratio
87.9
%
86.4
%
1.5 pts
Current accident year combined ratio
87.9
%
86.7
%
1.2 pts
Current accident year combined ratio, excluding catastrophe and weather-related losses
83.1
%
83.6
%
(0.5 pts)
Six months ended June 30,
($ in thousands)
2024
2023
Change
Gross premiums written
$
3,388,571
$
3,099,762
9.3
%
Net premiums written
2,216,551
1,903,597
16.4
%
Net premiums earned
1,876,159
1,659,206
13.1
%
Underwriting income
238,629
218,007
9.5
%
Underwriting ratios:
Current accident year loss ratio, excluding catastrophe and weather-related losses
51.9
%
51.8
%
0.1 pts
Catastrophe and weather-related losses ratio
3.5
%
3.1
%
0.4 pts
Current accident year loss ratio
55.4
%
54.9
%
0.5 pts
Prior year reserve development ratio
—
%
(0.2
%)
0.2 pts
Net losses and loss expenses ratio
55.4
%
54.7
%
0.7 pts
Acquisition cost ratio
19.4
%
18.3
%
1.1 pts
Underwriting-related general and administrative expense ratio
12.5
%
13.9
%
(1.4 pts)
Combined ratio
87.3
%
86.9
%
0.4 pts
Current accident year combined ratio
87.3
%
87.1
%
0.2 pts
Current accident year combined ratio, excluding catastrophe and weather-related losses
83.8
%
84.0
%
(0.2 pts)
Reinsurance Segment
Three months ended June 30,
($ in thousands)
2024
2023
Change
Gross premiums written
$
626,170
$
600,228
4.3
%
Net premiums written
379,547
425,336
(10.8
%)
Net premiums earned
346,266
422,994
(18.1
%)
Underwriting income
45,517
33,839
34.5
%
Underwriting ratios:
Current accident year loss ratio, excluding catastrophe and weather-related losses
64.2
%
65.3
%
(1.1 pts)
Catastrophe and weather-related losses ratio
0.3
%
1.4
%
(1.1 pts)
Current accident year loss ratio
64.5
%
66.7
%
(2.2 pts)
Prior year reserve development ratio
—
%
(0.8
%)
0.8 pts
Net losses and loss expenses ratio
64.5
%
65.9
%
(1.4 pts)
Acquisition cost ratio
22.3
%
22.8
%
(0.5 pts)
Underwriting-related general and administrative expense ratio
2.5
%
4.6
%
(2.1 pts)
Combined ratio
89.3
%
93.3
%
(4.0 pts)
Current accident year combined ratio
89.3
%
94.1
%
(4.8 pts)
Current accident year combined ratio, excluding catastrophe and weather-related losses
89.0
%
92.7
%
(3.7 pts)
Six months ended June 30,
($ in thousands)
2024
2023
Change
Gross premiums written
$
1,706,092
$
1,566,592
8.9
%
Net premiums written
1,079,266
1,151,116
(6.2
%)
Net premiums earned
686,360
836,738
(18.0
%)
Underwriting income
68,192
69,850
(2.4
%)
Underwriting ratios:
Current accident year loss ratio, excluding catastrophe and weather-related losses
66.0
%
64.2
%
1.8 pts
Catastrophe and weather-related losses ratio
0.3
%
2.3
%
(2.0 pts)
Current accident year loss ratio
66.3
%
66.5
%
(0.2 pts)
Prior year reserve development ratio
—
%
(0.8
%)
0.8 pts
Net losses and loss expenses ratio
66.3
%
65.7
%
0.6 pts
Acquisition cost ratio
22.6
%
21.5
%
1.1 pts
Underwriting-related general and administrative expense ratio
3.6
%
5.2
%
(1.6 pts)
Combined ratio
92.5
%
92.4
%
0.1 pts
Current accident year combined ratio
92.5
%
93.2
%
(0.7 pts)
Current accident year combined ratio, excluding catastrophe and weather-related losses
92.2
%
90.9
%
1.3 pts
Investments
Three months ended June 30,
Six months ended June 30,
($ in thousands)
2024
2023
2024
2023
Net investment income
$
190,975
$
136,829
$
358,358
$
270,601
Net investment gains (losses)
(53,479
)
(24,370
)
(62,687
)
(44,558
)
Change in net unrealized gains (losses) on fixed maturities(6)
21,232
(72,887
)
(30,731
)
140,034
Interest in income (loss) of equity method investments
7,900
2,100
9,069
(105
)
Total
$
166,628
$
41,672
$
274,009
$
365,972
Average cash and investments(7)
$
16,932,010
$
16,077,600
$
16,887,183
$
15,951,158
Total return on average cash and investments, pre-tax:
Including investment related foreign exchange movements
1.0
%
0.3
%
1.6
%
2.3
%
Excluding investment related foreign exchange movements(8)
1.0
%
0.1
%
1.8
%
2.0
%
Capitalization / Shareholders’ Equity
June 30,
December 31,
($ in thousands)
2024
2023
Change
Total capital(9)
$
6,973,909
$
6,576,910
$
396,999
Book Value per diluted common share
June 30,
March 31,
June 30,
2024
2024
2023
Book value per diluted common share(10)
$
59.29
$
57.13
$
50.98
Three months ended,
Twelve months ended,
June 30, 2024
June 30, 2024
Change
% Change
Change
% Change
Book value per diluted common share
$
2.16
3.8
%
$
8.31
16.3
%
Book value per diluted common share - adjusted for dividends declared
$
2.60
4.6
%
$
10.07
19.8
%
Conference Call
We will host a conference call on Wednesday, July 31, 2024 at 8:30 a.m. (EDT) to discuss the second 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 9099781 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 9537017. The webcast will be archived in the Investor Information section of our website.
In addition, an investor financial supplement for the quarter ended June 30, 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 $5.7 billion at June 30, 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
JUNE 30, 2024 (UNAUDITED) AND DECEMBER 31, 2023
2024
2023
(in thousands)
Assets
Investments:
Fixed maturities, available for sale, at fair value
$
12,585,137
$
12,234,742
Fixed maturities, held to maturity, at amortized cost
637,792
686,296
Equity securities, at fair value
589,899
588,511
Mortgage loans, held for investment, at fair value
544,859
610,148
Other investments, at fair value
936,680
949,413
Equity method investments
193,705
174,634
Short-term investments, at fair value
57,436
17,216
Total investments
15,545,508
15,260,960
Cash and cash equivalents
1,092,567
953,476
Restricted cash and cash equivalents
562,496
430,509
Accrued interest receivable
118,147
106,055
Insurance and reinsurance premium balances receivable
3,686,819
3,067,554
Reinsurance recoverable on unpaid losses and loss expenses
6,591,821
6,323,083
Reinsurance recoverable on paid losses and loss expenses
483,447
575,847
Deferred acquisition costs
592,067
450,950
Prepaid reinsurance premiums
2,113,364
1,916,087
Receivable for investments sold
11,899
8,767
Goodwill
100,801
100,801
Intangible assets
181,426
186,883
Operating lease right-of-use assets
101,101
108,093
Loan advances made
328,921
305,222
Other assets
568,498
456,385
Total assets
$
32,078,882
$
30,250,672
Liabilities
Reserve for losses and loss expenses
$
16,738,871
$
16,434,018
Unearned premiums
5,674,787
4,747,602
Insurance and reinsurance balances payable
2,005,126
1,792,719
Debt
1,314,438
1,313,714
Federal Home Loan Bank advances
85,790
85,790
Payable for investments purchased
118,706
26,093
Operating lease liabilities
116,264
123,101
Other liabilities
365,429
464,439
Total liabilities
26,419,411
24,987,476
Shareholders' equity
Preferred shares
550,000
550,000
Common shares
2,206
2,206
Additional paid-in capital
2,376,244
2,383,030
Accumulated other comprehensive income (loss)
(394,968
)
(365,836
)
Retained earnings
6,957,185
6,440,528
Treasury shares, at cost
(3,831,196
)
(3,746,732
)
Total shareholders' equity
5,659,471
5,263,196
Total liabilities and shareholders' equity
$
32,078,882
$
30,250,672
AXIS CAPITAL HOLDINGS LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023
Three months ended
Six months ended
2024
2023
2024
2023
(in thousands, except per share amounts)
Revenues
Net premiums earned
$
1,304,478
$
1,265,745
$
2,562,519
$
2,495,944
Net investment income
190,975
136,829
358,358
270,601
Net investment gains (losses)
(53,479
)
(24,370
)
(62,687
)
(44,558
)
Other insurance related income
8,526
5,524
16,867
6,100
Total revenues
1,450,500
1,383,728
2,875,057
2,728,087
Expenses
Net losses and loss expenses
765,988
736,257
1,494,659
1,456,899
Acquisition costs
265,091
253,265
519,345
483,638
General and administrative expenses
148,441
168,503
311,813
335,314
Foreign exchange losses (gains)
(7,384
)
30,104
(30,936
)
38,814
Interest expense and financing costs
17,010
16,738
34,157
33,632
Reorganization expenses
14,014
—
26,312
—
Amortization of intangible assets
2,729
2,729
5,458
5,458
Total expenses
1,205,889
1,207,596
2,360,808
2,353,755
Income before income taxes and interest in income (loss) of equity method investments
244,611
176,132
514,249
374,332
Income tax (expense) benefit
(40,547
)
(27,558
)
84,107
(43,454
)
Interest in income (loss) of equity method investments
7,900
2,100
9,069
(105
)
Net income
211,964
150,674
607,425
330,773
Preferred share dividends
7,563
7,563
15,125
15,125
Net income available to common shareholders
$
204,401
$
143,111
$
592,300
$
315,648
Per share data
Earnings per common share:
Earnings per common share
$
2.42
$
1.68
$
6.99
$
3.71
Earnings per diluted common share
$
2.40
$
1.67
$
6.93
$
3.68
Weighted average common shares outstanding
84,475
85,207
84,677
85,036
Weighted average diluted common shares outstanding
85,326
85,812
85,509
85,833
Cash dividends declared per common share
$
0.44
$
0.44
$
0.88
$
0.88
AXIS CAPITAL HOLDINGS LIMITED
CONSOLIDATED SEGMENTAL DATA (UNAUDITED)
FOR THE THREE MONTHS ENDED JUNE 30, 2024 AND 2023
2024
2023
Insurance
Reinsurance
Total
Insurance
Reinsurance
Total
(in thousands)
Gross premiums written
$
1,814,066
$
626,170
$
2,440,236
$
1,684,150
$
600,228
$
2,284,378
Net premiums written
1,194,197
379,547
1,573,744
1,021,021
425,336
1,446,357
Net premiums earned
958,212
346,266
1,304,478
842,751
422,994
1,265,745
Other insurance related income (loss)
(61
)
8,587
8,526
58
5,466
5,524
Net losses and loss expenses
(542,591
)
(223,397
)
(765,988
)
(457,650
)
(278,607
)
(736,257
)
Acquisition costs
(188,026
)
(77,065
)
(265,091
)
(156,972
)
(96,293
)
(253,265
)
Underwriting-related general and
administrative expenses(11)
(111,894
)
(8,874
)
(120,768
)
(113,534
)
(19,721
)
(133,255
)
Underwriting income(12)
$
115,640
$
45,517
161,157
$
114,653
$
33,839
148,492
Net investment income
190,975
136,829
Net investment gains (losses)
(53,479
)
(24,370
)
Corporate expenses(11)
(27,673
)
(35,248
)
Foreign exchange (losses) gains
7,384
(30,104
)
Interest expense and financing costs
(17,010
)
(16,738
)
Reorganization expenses
(14,014
)
—
Amortization of intangible assets
(2,729
)
(2,729
)
Income before income taxes and interest in income of equity method investments
244,611
176,132
Income tax (expense) benefit
(40,547
)
(27,558
)
Interest in income of equity method investments
7,900
2,100
Net income
211,964
150,674
Preferred share dividends
7,563
7,563
Net income available to common shareholders
$
204,401
$
143,111
Net losses and loss expenses ratio
56.6
%
64.5
%
58.7
%
54.3
%
65.9
%
58.2
%
Acquisition cost ratio
19.6
%
22.3
%
20.3
%
18.6
%
22.8
%
20.0
%
Underwriting-related general and administrative expense ratio
11.7
%
2.5
%
9.3
%
13.5
%
4.6
%
10.5
%
Corporate expense ratio
2.1
%
2.8
%
Combined ratio
87.9
%
89.3
%
90.4
%
86.4
%
93.3
%
91.5
%
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 $28 million and $35 million for the three months ended June 30, 2024 and 2023, 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 above.
AXIS CAPITAL HOLDINGS LIMITED
CONSOLIDATED SEGMENTAL DATA (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 2024 AND 2023
2024
2023
Insurance
Reinsurance
Total
Insurance
Reinsurance
Total
(in thousands)
Gross premiums written
$
3,388,571
$
1,706,092
$
5,094,663
$
3,099,762
$
1,566,592
$
4,666,354
Net premiums written
2,216,551
1,079,266
3,295,817
1,903,597
1,151,116
3,054,713
Net premiums earned
1,876,159
686,360
2,562,519
1,659,206
836,738
2,495,944
Other insurance related income (loss)
(39
)
16,906
16,867
112
5,988
6,100
Net losses and loss expenses
(1,039,455
)
(455,204
)
(1,494,659
)
(907,117
)
(549,782
)
(1,456,899
)
Acquisition costs
(364,055
)
(155,290
)
(519,345
)
(304,030
)
(179,608
)
(483,638
)
Underwriting-related general and
administrative expenses(13)
(233,981
)
(24,580
)
(258,561
)
(230,164
)
(43,486
)
(273,650
)
Underwriting income(14)
$
238,629
$
68,192
306,821
$
218,007
$
69,850
287,857
Net investment income
358,358
270,601
Net investment gains (losses)
(62,687
)
(44,558
)
Corporate expenses(13)
(53,252
)
(61,664
)
Foreign exchange (losses) gains
30,936
(38,814
)
Interest expense and financing costs
(34,157
)
(33,632
)
Reorganization expenses
(26,312
)
—
Amortization of intangible assets
(5,458
)
(5,458
)
Income before income taxes and interest in income (loss) of equity method investments
514,249
374,332
Income tax (expense) benefit
84,107
(43,454
)
Interest in income (loss) of equity method investments
9,069
(105
)
Net Income
607,425
330,773
Preferred share dividends
15,125
15,125
Net income available to common shareholders
$
592,300
$
315,648
Net losses and loss expenses ratio
55.4
%
66.3
%
58.3
%
54.7
%
65.7
%
58.4
%
Acquisition cost ratio
19.4
%
22.6
%
20.3
%
18.3
%
21.5
%
19.4
%
Underwriting-related general and administrative expense ratio
12.5
%
3.6
%
10.1
%
13.9
%
5.2
%
10.9
%
Corporate expense ratio
2.1
%
2.5
%
Combined ratio
87.3
%
92.5
%
90.8
%
86.9
%
92.4
%
91.2
%
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 $53 million and $62 million for the six months ended June 30, 2024 and 2023, 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 above.
AXIS CAPITAL HOLDINGS LIMITED
NON-GAAP FINANCIAL MEASURES RECONCILIATION (UNAUDITED)
OPERATING INCOME AND OPERATING RETURN ON AVERAGE COMMON EQUITY
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023
Three months ended
Six months ended
2024
2023
2024
2023
(in thousands, except per share amounts)
Net income available to common shareholders
$
204,401
$
143,111
$
592,300
$
315,648
Net investment (gains) losses
53,479
24,370
62,687
44,558
Foreign exchange losses (gains)
(7,384
)
30,104
(30,936
)
38,814
Reorganization expenses
14,014
—
26,312
—
Interest in (income) loss of equity method investments
(7,900
)
(2,100
)
(9,069
)
105
Bermuda net deferred tax asset(15)
—
—
(162,705
)
—
Income tax benefit(16)
(6,621
)
(4,308
)
(8,435
)
(7,893
)
Operating income
$
249,989
$
191,177
$
470,154
$
391,232
Earnings per diluted common share
$
2.40
$
1.67
$
6.93
$
3.68
Net investment (gains) losses
0.63
0.28
0.73
0.52
Foreign exchange losses (gains)
(0.09
)
0.35
(0.36
)
0.45
Reorganization expenses
0.16
—
0.31
—
Interest in (income) loss of equity method investments
(0.09
)
(0.02
)
(0.11
)
—
Bermuda net deferred tax asset
—
—
(1.90
)
—
Income tax benefit
(0.08
)
(0.05
)
(0.10
)
(0.09
)
Operating income per diluted common share
$
2.93
$
2.23
$
5.50
$
4.56
Weighted average diluted common shares outstanding
85,326
85,812
85,509
85,833
Average common shareholders' equity
$
5,032,313
$
4,440,595
$
4,911,334
$
4,280,436
Annualized return on average common equity
16.2
%
12.9
%
24.1
%
14.7
%
Annualized operating return on average common equity(17)
19.9
%
17.2
%
19.1
%
18.3
%
15 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. 16 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. 17 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), current accident year loss ratio, catastrophe and weather-related losses ratio, current accident year loss ratio, excluding catastrophe and weather-related losses, current accident year combined ratio, current accident year combined ratio, excluding catastrophe and weather-related losses, 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 primarily relate to severance costs 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.
Current Accident Year Loss Ratio
Current accident year loss ratio represents net losses and loss expenses ratio exclusive of net favorable (adverse) prior year reserve development. We believe that the presentation of current accident year loss ratio provides investors with an enhanced understanding of our results of operations by highlighting net losses and loss expenses associated with our underwriting activities excluding the impact of volatile prior year reserve development. The reconciliation of current accident year loss ratio to net losses and loss expenses ratio, the most comparable GAAP financial measure, is presented in the 'Consolidated Underwriting Highlights' section of this press release.
Catastrophe and Weather-Related Losses Ratio and Current Accident Year Loss Ratio, excluding Catastrophe and Weather-Related Losses
Catastrophe and weather-related losses ratio represents net losses and loss expenses ratio associated with natural disasters, man-made catastrophes, other catastrophe events and other weather-related events exclusive of net favorable (adverse) prior year reserve development.
Current accident year loss ratio, excluding catastrophe and weather-related losses represents net losses and loss expenses ratio exclusive of net favorable (adverse) prior year reserve development and net losses and loss expenses associated with natural disasters, man-made catastrophes, other catastrophe events and other weather-related events.
We believe that the presentation of these ratios that separately identify net losses and loss expenses associated with catastrophe and weather-related events provide investors with an enhanced understanding of our results of operations due to the inherently unpredictable nature of the occurrence of these events, the potential magnitude of these losses and the complexity that affects our ability to accurately estimate ultimate losses associated with these events.
The reconciliation of catastrophe and weather-related losses ratio and current accident year loss ratio, excluding catastrophe and weather-related losses to net losses and loss expenses ratio, the most comparable GAAP financial measure, is presented in the 'Consolidated Underwriting Highlights' 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. The reconciliation of current accident year combined ratio to combined ratio, the most comparable GAAP financial measure, is presented in the 'Consolidated Underwriting Highlights' section of this press release.
Current Accident Year Combined Ratio, excluding Catastrophe and Weather-Related Losses
Current accident year combined ratio, excluding catastrophe and weather-related losses represents underwriting results exclusive of net favorable (adverse) prior year reserve development and net losses and loss expenses associated with natural disasters, man-made catastrophes, other catastrophe events and other weather-related events.
We believe that the presentation of current accident year combined ratio, excluding catastrophe and weather-related losses 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 and by separately identifying net losses and loss expenses associated with catastrophe and weather-related events due to the inherently unpredictable nature of the occurrence of these events, the potential magnitude of these losses and the complexity that affects our ability to accurately estimate ultimate losses associated with these events.
The reconciliation of current accident year combined ratio, excluding catastrophe and weather-related losses to combined ratio, the most comparable GAAP financial measure, is presented in the 'Consolidated Underwriting Highlights' 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 primarily relate to severance costs 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/20240730360405/en/
Cliff Gallant (Investor Contact): (415) 262-6843; investorrelations@axiscapital.com Anna Kukowski (Media Contact): (929) 254-8043; anna.kukowski@axiscapital.com
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