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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 | |
---|---|---|---|---|---|---|---|---|
1.44 | 2.09% | 70.25 | 69.96 | 68.73 | 68.75 | 750,425 | 01:00:00 |
For the third quarter of 2023, the Company reports:
For the nine months ended September 30, 2023, the Company reports:
AXIS Capital Holdings Limited ("AXIS Capital" or "AXIS" or "the Company") (NYSE: AXS) today announced financial results for the third quarter ended September 30, 2023.
Commenting on the third quarter 2023 financial results, Vince Tizzio, President and CEO of AXIS Capital said:
“AXIS delivered another strong quarter as we produced excellent results across multiple measures. The quarter was highlighted by record operating earnings per share on both a third quarter and year-to-date basis. The continued positive momentum in our performance reflects the progress we’ve made in enhancing our integrated underwriting strategy to drive outstanding cycle management, deliver consistent profitable results and generate increased book value per share.
“During the quarter, we continued to grow in our chosen markets across both our insurance and reinsurance businesses, while capitalizing on favorable market conditions across nearly all our lines. This included achieving our highest-ever third quarter production on record for our specialty insurance business, coupled with an 88.2% combined ratio in the quarter. The repositioning of AXIS Re as a more focused and less volatile specialist continues to take hold as evidenced by a 92.7% combined ratio and solid new business growth in our key areas.
“Through our ‘How We Work’ initiative we’ve continued to enhance our operating model to increase our agility and efficiency. We’re energized for the future and see exciting upside potential for our business as we lean further into our markets to unlock new revenue opportunities, maximize our strong distribution relationships, and fully leverage our global platform to deliver value to our customers.”
Third Quarter Consolidated Results*
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.
Third Quarter Consolidated Underwriting Highlights2
Three months ended September 30,
KEY RATIOS
2023
2022
Change
Current accident year loss ratio, excluding catastrophe and weather-related losses3
56.3
%
57.1
%
(0.8 pts)
Catastrophe and weather-related losses ratio
3.2
%
16.6
%
(13.4 pts)
Current accident year loss ratio
59.5
%
73.7
%
(14.2 pts)
Prior year reserve development ratio
(0.2
%)
(0.4
%)
0.2 pts
Net losses and loss expenses ratio
59.3
%
73.3
%
(14.0 pts)
Acquisition cost ratio
19.9
%
18.7
%
1.2 pts
General and administrative expense ratio
13.5
%
12.3
%
1.2 pts
Combined ratio
92.7
%
104.3
%
(11.6 pts)
Current accident year combined ratio, excluding catastrophe and weather-related losses
89.7
%
88.1
%
1.6 pts
2 All comparisons are with the same period of the prior year, unless otherwise stated.
3 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.
Year to Date Consolidated Underwriting Highlights
Nine months ended September 30,
KEY RATIOS
2023
2022
Change
Current accident year loss ratio, excluding catastrophe and weather-related losses
56.1
%
55.5
%
0.6 pts
Catastrophe and weather-related losses ratio
2.9
%
8.9
%
(6.0 pts)
Current accident year loss ratio
59.0
%
64.4
%
(5.4 pts)
Prior year reserve development ratio
(0.3
%)
(0.4
%)
0.1 pts
Net losses and loss expenses ratio
58.7
%
64.0
%
(5.3 pts)
Acquisition cost ratio
19.6
%
19.5
%
0.1 pts
General and administrative expense ratio
13.4
%
12.9
%
0.5 pts
Combined ratio
91.7
%
96.4
%
(4.7 pts)
Current accident year combined ratio, excluding catastrophe and weather-related losses
89.1
%
87.9
%
1.2 pts
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.
Segment Highlights
Insurance Segment
Three months ended September 30,
($ in thousands)
2023
2022
Change
Gross premiums written
$
1,457,624
$
1,317,890
10.6
%
Net premiums written
885,252
777,789
13.8
%
Net premiums earned
885,714
782,101
13.2
%
Underwriting income
104,610
15,738
nm
Underwriting ratios:
Current accident year loss ratio, excluding catastrophe and weather-related losses
51.5
%
52.6
%
(1.1 pts)
Catastrophe and weather-related losses ratio
4.2
%
14.1
%
(9.9 pts)
Current accident year loss ratio
55.7
%
66.7
%
(11.0 pts)
Prior year reserve development ratio
(0.2
%)
(0.3
%)
0.1 pts
Net losses and loss expenses ratio
55.5
%
66.4
%
(10.9 pts)
Acquisition cost ratio
19.1
%
17.8
%
1.3 pts
Underwriting-related general and administrative expense ratio
13.6
%
13.8
%
(0.2 pts)
Combined ratio
88.2
%
98.0
%
(9.8 pts)
Current accident year combined ratio, excluding catastrophe and weather-related losses
84.2
%
84.2
%
— pts
nm - not meaningful is defined as a variance greater than +/- 100%
Nine months ended September 30,
($ in thousands)
2023
2022
Change
Gross premiums written
$
4,557,386
$
4,114,776
10.8
%
Net premiums written
2,788,849
2,491,120
12.0
%
Net premiums earned
2,544,920
2,303,640
10.5
%
Underwriting income
322,617
203,948
58.2
%
Underwriting ratios:
Current accident year loss ratio, excluding catastrophe and weather-related losses
51.7
%
51.6
%
0.1 pts
Catastrophe and weather-related losses ratio
3.5
%
7.4
%
(3.9 pts)
Current accident year loss ratio
55.2
%
59.0
%
(3.8 pts)
Prior year reserve development ratio
(0.2
%)
(0.5
%)
0.3 pts
Net losses and loss expenses ratio
55.0
%
58.5
%
(3.5 pts)
Acquisition cost ratio
18.6
%
18.4
%
0.2 pts
Underwriting-related general and administrative expense ratio
13.7
%
14.3
%
(0.6 pts)
Combined ratio
87.3
%
91.2
%
(3.9 pts)
Current accident year combined ratio, excluding catastrophe and weather-related losses
84.0
%
84.3
%
(0.3 pts)
Reinsurance Segment
Three months ended September 30,
($ in thousands)
2023
2022
Change
Gross premiums written
$
448,254
$
389,918
15.0
%
Net premiums written
90,105
258,995
(65.2
%)
Net premiums earned
436,850
502,765
(13.1
%)
Underwriting income (loss)
42,368
(44,772
)
nm
Underwriting ratios:
Current accident year loss ratio, excluding catastrophe and weather-related losses
66.2
%
64.2
%
2.0 pts
Catastrophe and weather-related losses ratio
1.0
%
20.3
%
(19.3 pts)
Current accident year loss ratio
67.2
%
84.5
%
(17.3 pts)
Prior year reserve development ratio
(0.2
%)
(0.4
%)
0.2 pts
Net losses and loss expenses ratio
67.0
%
84.1
%
(17.1 pts)
Acquisition cost ratio
21.5
%
20.1
%
1.4 pts
Underwriting-related general and administrative expense ratio
4.2
%
4.9
%
(0.7 pts)
Combined ratio
92.7
%
109.1
%
(16.4 pts)
Current accident year combined ratio, excluding catastrophe and weather-related losses
91.9
%
89.2
%
2.7 pts
nm - not meaningful
Nine months ended September 30,
($ in thousands)
2023
2022
Change
Gross premiums written
$
2,014,846
$
2,341,123
(13.9
%)
Net premiums written
1,241,221
1,675,382
(25.9
%)
Net premiums earned
1,273,588
1,516,523
(16.0
%)
Underwriting income
112,217
22,505
nm
Underwriting ratios:
Current accident year loss ratio, excluding catastrophe and weather-related losses
64.9
%
61.6
%
3.3 pts
Catastrophe and weather-related losses ratio
1.8
%
11.1
%
(9.3 pts)
Current accident year loss ratio
66.7
%
72.7
%
(6.0 pts)
Prior year reserve development ratio
(0.6
%)
(0.3
%)
(0.3 pts)
Net losses and loss expenses ratio
66.1
%
72.4
%
(6.3 pts)
Acquisition cost ratio
21.5
%
21.3
%
0.2 pts
Underwriting-related general and administrative expense ratio
4.9
%
5.4
%
(0.5 pts)
Combined ratio
92.5
%
99.1
%
(6.6 pts)
Current accident year combined ratio, excluding catastrophe and weather-related losses
91.3
%
88.3
%
3.0 pts
nm - not meaningful
Investments
Three months ended September 30,
Nine months ended September 30,
($ in thousands)
2023
2022
2023
2022
Net investment income
$
154,201
$
88,177
$
424,802
$
271,744
Net investments losses
(53,114
)
(146,458
)
(97,671
)
(414,231
)
Change in net unrealized gains (losses) on fixed
maturities(5)
(157,943
)
(296,487
)
(17,909
)
(1,142,423
)
Interest in income (loss) of equity method investments
2,940
(7,560
)
2,835
5,040
Total
$
(53,916
)
$
(362,328
)
$
312,057
$
(1,279,870
)
Average cash and investments(6)
$
16,281,540
$
15,824,697
$
16,057,260
$
16,003,712
Total return on average cash and investments, pre-tax:
Including investment related foreign exchange movements
(0.3
%)
(2.3
%)
1.9
%
(8.0
%)
Excluding investment related foreign exchange movements(7)
—
%
(1.8
%)
2.0
%
(6.8
%)
5 Change in net unrealized gains (losses) on fixed maturities is calculated by taking net unrealized gains (losses) at period end less net unrealized gains (losses) at the prior period end.
6 The average cash and investments balance is calculated by taking the average of the period end fair value balances.
7 Pre-tax total return on cash and investments excluding foreign exchange movements is a non-GAAP financial measure as defined in SEC Regulation G. The reconciliation to pre-tax total return on cash and investments, the most comparable GAAP financial measure, also included foreign exchange (losses) gains of $(49) million and $(83) million for the three months ended September 30, 2023 and 2022, respectively and foreign exchange (losses) gains of $(9) million and $(189) million for the nine months ended September 30, 2023 and 2022, respectively.
Capitalization / Shareholders’ Equity
September 30,
December 31,
($ in thousands)
2023
2022
Change
Total capital8
$
6,346,566
$
5,952,224
$
394,342
Book Value per diluted common share
September 30,
June 30,
September 30,
2023
2023
2022
Book value per diluted common share9
$
51.17
$
50.98
$
43.50
Three months ended,
Twelve months ended,
September 30, 2023
September 30, 2023
Change
% Change
Change
% Change
Book value per diluted common share
$
0.19
0.4
%
$
7.67
17.6
%
Book value per diluted common share - adjusted for dividends declared
$
0.63
1.2
%
$
9.43
21.7
%
8 Total capital represents the sum of total shareholders' equity and debt.
9 Calculated using the treasury stock method.
Conference Call
We will host a conference call on Thursday, November 2, 2023 at 9:30 a.m. (ET) to discuss the third 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 6504226 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 6757410. The webcast will be archived in the Investor Information section of our website.
In addition, an investor financial supplement for the quarter ended September 30, 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 $5.0 billion at September 30, 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
SEPTEMBER 30, 2023 (UNAUDITED) AND DECEMBER 31, 2022
2023
2022
(in thousands)
Assets
Investments:
Fixed maturities, available for sale, at fair value
$
11,723,368
$
11,326,894
Fixed maturities, held to maturity, at amortized cost
712,840
698,351
Equity securities, at fair value
556,262
485,253
Mortgage loans, held for investment, at fair value
610,277
627,437
Other investments, at fair value
954,571
996,751
Equity method investments
162,412
148,288
Short-term investments, at fair value
115,959
70,310
Total investments
14,835,689
14,353,284
Cash and cash equivalents
889,574
751,415
Restricted cash and cash equivalents
377,741
423,238
Accrued interest receivable
99,978
94,418
Insurance and reinsurance premium balances receivable
3,207,444
2,733,464
Reinsurance recoverable on unpaid losses and loss expenses
6,031,527
5,831,172
Reinsurance recoverable on paid losses and loss expenses
594,375
539,676
Deferred acquisition costs
503,617
473,569
Prepaid reinsurance premiums
1,973,378
1,550,370
Receivable for investments sold
17,306
16,052
Goodwill
100,801
100,801
Intangible assets
189,612
197,800
Operating lease right-of-use assets
104,240
92,214
Other assets
547,242
438,338
Total assets
$
29,472,524
$
27,595,811
Liabilities
Reserve for losses and loss expenses
$
15,555,256
$
15,168,863
Unearned premiums
4,995,785
4,361,447
Insurance and reinsurance balances payable
1,900,188
1,522,764
Debt
1,313,358
1,312,314
Federal Home Loan Bank advances
85,790
81,388
Payable for investments purchased
87,992
19,693
Operating lease liabilities
116,547
102,577
Other liabilities
384,400
386,855
Total liabilities
24,439,316
22,955,901
Shareholders' equity
Preferred shares
550,000
550,000
Common shares
2,206
2,206
Additional paid-in capital
2,375,678
2,366,253
Accumulated other comprehensive income (loss)
(775,439
)
(760,300
)
Retained earnings
6,628,179
6,247,022
Treasury shares, at cost
(3,747,416
)
(3,765,271
)
Total shareholders' equity
5,033,208
4,639,910
Total liabilities and shareholders' equity
$
29,472,524
$
27,595,811
AXIS CAPITAL HOLDINGS LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
Three months ended
Nine months ended
2023
2022
2023
2022
(in thousands, except per share amounts)
Revenues
Net premiums earned
$
1,322,564
$
1,284,866
$
3,818,508
$
3,820,163
Net investment income
154,201
88,177
424,802
271,744
Net investment gains (losses)
(53,114
)
(146,458
)
(97,671
)
(414,231
)
Other insurance related income
10,344
1,092
16,444
9,998
Total revenues
1,433,995
1,227,677
4,162,083
3,687,674
Expenses
Net losses and loss expenses
783,940
941,911
2,240,840
2,444,196
Acquisition costs
263,389
240,511
747,027
746,443
General and administrative expenses
179,283
158,245
514,596
492,872
Foreign exchange gains
(50,570
)
(135,660
)
(11,755
)
(236,934
)
Interest expense and financing costs
16,445
15,915
50,077
46,720
Reorganization expenses
28,997
6,213
28,997
21,941
Amortization of intangible assets
2,729
2,729
8,188
8,188
Total expenses
1,224,213
1,229,864
3,577,970
3,523,426
Income (loss) before income taxes and interest in income (loss) of equity method investments
209,782
(2,187
)
584,113
164,248
Income tax (expense) benefit
(24,624
)
363
(68,078
)
5,304
Interest in income (loss) of equity method investments
2,940
(7,560
)
2,835
5,040
Net income (loss)
188,098
(9,384
)
518,870
174,592
Preferred share dividends
7,563
7,563
22,688
22,688
Net income (loss) available (attributable) to common shareholders
$
180,535
$
(16,947
)
$
496,182
$
151,904
Per share data
Earnings (loss) per common share:
Earnings (loss) per common share
$
2.12
$
(0.20
)
$
5.83
$
1.79
Earnings (loss) per diluted common share
$
2.10
$
(0.20
)
$
5.77
$
1.77
Weighted average common shares outstanding
85,223
84,660
85,099
84,930
Weighted average diluted common shares outstanding
86,108
84,660
85,927
85,674
Cash dividends declared per common share
$
0.44
$
0.43
$
1.32
$
1.29
AXIS CAPITAL HOLDINGS LIMITED
CONSOLIDATED SEGMENTAL DATA (UNAUDITED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
2023
2022
Insurance
Reinsurance
Total
Insurance
Reinsurance
Total
(in thousands)
Gross premiums written
$
1,457,624
$
448,254
$
1,905,878
$
1,317,890
$
389,918
$
1,707,808
Net premiums written
885,252
90,105
975,357
777,789
258,995
1,036,784
Net premiums earned
885,714
436,850
1,322,564
782,101
502,765
1,284,866
Other insurance related income (loss)
(22
)
10,366
10,344
151
941
1,092
Net losses and loss expenses
(491,368
)
(292,572
)
(783,940
)
(519,006
)
(422,905
)
(941,911
)
Acquisition costs
(169,384
)
(94,005
)
(263,389
)
(139,436
)
(101,075
)
(240,511
)
Underwriting-related general and
administrative expenses(10)
(120,330
)
(18,271
)
(138,601
)
(108,072
)
(24,498
)
(132,570
)
Underwriting income (loss)(11)
$
104,610
$
42,368
146,978
$
15,738
$
(44,772
)
(29,034
)
Net investment income
154,201
88,177
Net investment gains (losses)
(53,114
)
(146,458
)
Corporate expenses(10)
(40,682
)
(25,675
)
Foreign exchange gains
50,570
135,660
Interest expense and financing costs
(16,445
)
(15,915
)
Reorganization expenses
(28,997
)
(6,213
)
Amortization of intangible assets
(2,729
)
(2,729
)
Income (loss) before income taxes and
interest in income (loss) of equity
method investments
209,782
(2,187
)
Income tax (expense) benefit
(24,624
)
363
Interest in income (loss) of equity method investments
2,940
(7,560
)
Net income (loss)
188,098
(9,384
)
Preferred share dividends
7,563
7,563
Net income (loss) available
(attributable) to common shareholders
$
180,535
$
(16,947
)
Net losses and loss expenses ratio
55.5
%
67.0
%
59.3
%
66.4
%
84.1
%
73.3
%
Acquisition cost ratio
19.1
%
21.5
%
19.9
%
17.8
%
20.1
%
18.7
%
General and administrative expense ratio
13.6
%
4.2
%
13.5
%
13.8
%
4.9
%
12.3
%
Combined ratio
88.2
%
92.7
%
92.7
%
98.0
%
109.1
%
104.3
%
10 Underwriting-related general and administrative expenses is a non-GAAP financial measure as defined in SEC Regulation G. The reconciliation to general and administrative expenses, the most comparable GAAP financial measure, also included corporate expenses of $41 million and $26 million for the three months ended September 30, 2023 and 2022, respectively. Underwriting-related general and administrative expenses and corporate expenses are included in the general and administrative expense ratio.
11 Consolidated underwriting income (loss) is a non-GAAP financial measure as defined in SEC Regulation G. The reconciliation to net income (loss), the most comparable GAAP financial measure, is presented above.
AXIS CAPITAL HOLDINGS LIMITED
CONSOLIDATED SEGMENTAL DATA (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
2023
2022
Insurance
Reinsurance
Total
Insurance
Reinsurance
Total
(in thousands)
Gross premiums written
$
4,557,386
$
2,014,846
$
6,572,232
$
4,114,776
$
2,341,123
$
6,455,899
Net premiums written
2,788,849
1,241,221
4,030,070
2,491,120
1,675,382
4,166,502
Net premiums earned
2,544,920
1,273,588
3,818,508
2,303,640
1,516,523
3,820,163
Other insurance related income
90
16,354
16,444
470
9,528
9,998
Net losses and loss expenses
(1,398,486
)
(842,354
)
(2,240,840
)
(1,346,585
)
(1,097,611
)
(2,444,196
)
Acquisition costs
(473,413
)
(273,614
)
(747,027
)
(422,979
)
(323,464
)
(746,443
)
Underwriting-related general and
administrative expenses(12)
(350,494
)
(61,757
)
(412,251
)
(330,598
)
(82,471
)
(413,069
)
Underwriting income(13)
$
322,617
$
112,217
434,834
$
203,948
$
22,505
226,453
Net investment income
424,802
271,744
Net investment gains (losses)
(97,671
)
(414,231
)
Corporate expenses(12)
(102,345
)
(79,803
)
Foreign exchange gains
11,755
236,934
Interest expense and financing costs
(50,077
)
(46,720
)
Reorganization expenses
(28,997
)
(21,941
)
Amortization of intangible assets
(8,188
)
(8,188
)
Income before income taxes and
interest in income of equity method
investments
584,113
164,248
Income tax (expense) benefit
(68,078
)
5,304
Interest in income of equity method
investments
2,835
5,040
Net Income
518,870
174,592
Preferred share dividends
22,688
22,688
Net income available to common
shareholders
$
496,182
$
151,904
Net losses and loss expenses ratio
55.0
%
66.1
%
58.7
%
58.5
%
72.4
%
64.0
%
Acquisition cost ratio
18.6
%
21.5
%
19.6
%
18.4
%
21.3
%
19.5
%
General and administrative expense ratio
13.7
%
4.9
%
13.4
%
14.3
%
5.4
%
12.9
%
Combined ratio
87.3
%
92.5
%
91.7
%
91.2
%
99.1
%
96.4
%
12 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 $102 million and $80 million for the nine months ended September 30, 2023 and 2022, respectively. Underwriting-related general and administrative expenses and corporate expenses are included in the general and administrative expense ratio.
13 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 LIMITEDNON-GAAP FINANCIAL MEASURES RECONCILIATION (UNAUDITED)
OPERATING INCOME AND OPERATING RETURN ON AVERAGE COMMON EQUITY
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
Three months ended
Nine months ended
2023
2022
2023
2022
(in thousands, except per share amounts)
Net income (loss) available (attributable) to common shareholders
$
180,535
$
(16,947
)
$
496,182
$
151,904
Net investment (gains) losses(14)
53,114
146,458
97,671
414,231
Foreign exchange gains(15)
(50,570
)
(135,660
)
(11,755
)
(236,934
)
Reorganization expenses(16)
28,997
6,213
28,997
21,941
Interest in (income) loss of equity method investments(17)
(2,940
)
7,560
(2,835
)
(5,040
)
Income tax benefit
(7,245
)
(5,117
)
(15,138
)
(14,779
)
Operating income
$
201,891
$
2,507
$
593,122
$
331,323
Earnings (loss) per diluted common share
$
2.10
$
(0.20
)
$
5.77
$
1.77
Net investment (gains) losses
0.62
1.72
1.14
4.83
Foreign exchange gains
(0.59
)
(1.59
)
(0.14
)
(2.77
)
Reorganization expenses
0.34
0.07
0.34
0.26
Interest in (income) loss of equity method investments
(0.03
)
0.09
(0.03
)
(0.06
)
Income tax benefit
(0.10
)
(0.06
)
(0.18
)
(0.17
)
Operating income per diluted common share
$
2.34
$
0.03
$
6.90
$
3.86
Weighted average diluted common shares outstanding
86,108
85,376
85,927
85,674
Average common shareholders' equity
$
4,477,086
3,973,027
$
4,286,559
$
4,327,040
Annualized return on average common equity
16.1
%
(1.7
%)
15.4
%
4.7
%
Annualized operating return on average common equity(18)
18.0
%
0.3
%
18.4
%
10.2
%
14 Tax expense (benefit) of $(4,318) and $(608) for the three months ended September 30, 2023 and 2022, respectively, and $(8,198) and $(33,519) for the nine months ended September 30, 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.
15 Tax expense (benefit) of $2,318 and $(3,757) for the three months ended September 30, 2023 and 2022, respectively, and $(1,695) and $21,191 for the nine months ended September 30, 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.
16 Tax expense (benefit) of $(5,245) and $(752) for the three months ended September 30, 2023 and 2022, respectively, and $(5,245) and $(2,451) for the nine months ended September 30, 2023 and 2022, respectively. Tax impact is estimated by applying the statutory rates of applicable jurisdictions.
17 Tax expense (benefit) of $nil for the three and nine months ended September 30, 2023 and 2022, respectively. Tax impact is estimated by applying the statutory rates of applicable jurisdictions.
18 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 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 catastrophes and other weather-related losses including losses related to the COVID-19 pandemic, 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
Strategic Risk
Credit and Market Risk
Liquidity Risk
Operational Risk
Regulatory Risk
Risks Related to Taxation
Readers should carefully consider the risks noted above together with other factors including but not limited to those described under Item 1A, 'Risk Factors' in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC"), as those factors may be updated from time to time in our periodic and other filings with the SEC, which are accessible on the SEC's website at www.sec.gov.
We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.
Rationale for the Use of Non-GAAP Financial Measures
We present our results of operations in a way we believe will be meaningful and useful to investors, analysts, rating agencies and others who use our financial information to evaluate our performance. Some of the measurements we use are considered non-GAAP financial measures under SEC rules and regulations. In this press release, we present underwriting-related general and administrative expenses, consolidated underwriting income (loss), operating income (loss) (in total and on a per share basis), annualized operating return on average common equity ("operating ROACE"), amounts presented on a constant currency basis and pre-tax total return on cash and investments excluding foreign exchange movements which are non-GAAP financial measures as defined in SEC Regulation G. We believe that these non-GAAP financial measures, which may be defined and calculated differently by other companies, help explain and enhance the understanding of our results of operations. However, these measures should not be viewed as a substitute for those determined in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP").
Underwriting-Related General and Administrative Expenses
Underwriting-related general and administrative expenses include those general and administrative expenses that are incremental and/or directly attributable to our underwriting operations. While this measure is presented in the 'Segment Information' note to our Consolidated Financial Statements, it is considered a non-GAAP financial measure when presented elsewhere on a consolidated basis.
Corporate expenses include holding company costs necessary to support our worldwide insurance and reinsurance operations and costs associated with operating as a publicly-traded company. As these costs are not incremental and/or directly attributable to our underwriting operations, these costs are excluded from underwriting-related general and administrative expenses, and therefore, consolidated underwriting income (loss). General and administrative expenses, the most comparable GAAP financial measure to underwriting-related general and administrative expenses, also includes corporate expenses.
The reconciliation of underwriting-related general and administrative expenses to general and administrative expenses, the most comparable GAAP financial measure, is presented in the 'Consolidated Segmental Data' section of this press release.
Consolidated Underwriting Income (Loss)
Consolidated underwriting income (loss) is a pre-tax measure of underwriting profitability that takes into account net premiums earned and other insurance related income (loss) as revenues and net losses and loss expenses, acquisition costs and underwriting-related general and administrative expenses as expenses. While this measure is presented in the 'Segment Information' note to our Consolidated Financial Statements, it is considered a non-GAAP financial measure when presented elsewhere on a consolidated basis.
We evaluate our underwriting results separately from the performance of our investment portfolio. As a result, we believe it is appropriate to exclude net investment income and net investment gains (losses) from our underwriting profitability measure.
Foreign exchange losses (gains) in our consolidated statements of operations primarily relate to the impact of foreign exchange rate movements on our net insurance-related liabilities. However, we manage our investment portfolio in such a way that unrealized and realized foreign exchange losses (gains) on our investment portfolio, including unrealized foreign exchange losses (gains) on our equity securities, and foreign exchange losses (gains) realized on the sale of our available for sale investments and equity securities recognized in net investment gains (losses), and unrealized foreign exchange losses (gains) on our available for sale investments in other comprehensive income (loss), generally offset a large portion of the foreign exchange losses (gains) arising from our underwriting portfolio, thereby minimizing the impact of foreign exchange rate movements on total shareholders' equity. As a result, we believe that foreign exchange losses (gains) in our consolidated statements of operations in isolation are not a meaningful contributor to our underwriting performance. Therefore, foreign exchange losses (gains) are excluded from consolidated underwriting income (loss).
Interest expense and financing costs primarily relate to interest payable on our debt and Federal Home Loan Bank advances. As these expenses are not incremental and/or directly attributable to our underwriting operations, these expenses are excluded from underwriting-related general and administrative expenses and, therefore, consolidated underwriting income (loss).
Reorganization expenses in 2023 include impairments of computer software assets and severance costs associated with the departures of certain employees mainly attributable to our "How We Work" program which focuses 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.
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 associated with the departures of certain employees mainly attributable to our "How We Work" program which focuses 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 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 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.
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/20231101348967/en/
Miranda Hunter (Investor Contact): (441) 405-2635; investorrelations@axiscapital.com Nichola Liboro (Media Contact): (917) 705-4579; nichola.liboro@axiscapital.com
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