AXIS Capital discloses ‘disappointing’ quarter with US$33 million operating loss

Another Q3 earnings report is in, and the news is not good. AXIS Capital Holdings has delivered a net income of US$28 million for the quarter, compared to US$43 million in the same quarter in 2018. The company also reported an operating loss for Q3 2019 of US$33 million, while in the same period last year, it reported an operating income of US$79 million.

Albert Benchimol, president and CEO of AXIS Capital, commented on the tough results, attributing them to catastrophic events.

“This was a disappointing quarter, where our performance was marred by catastrophes that impacted our industry, coupled with mid-size losses in our credit and aviation lines,” he said. “These losses obscure positive underlying trends that reflect our progress in building an organisation that will consistently deliver strong results. Specifically, even with higher mid-size loss experience, within our insurance segment, the current year ex-cat loss ratio is down more than a point this quarter versus the prior year. In our reinsurance segment, while the ex-cat loss ratio is higher this quarter, this same ratio is down over a point year-to-date, reflecting the continued execution of our strategy to improve risk adjusted returns.”

For the nine months ended September 30, 2019, AXIS Capital reported operating income of US$209 million, compared to operating income of US$305 million for the same period in 2018. Meanwhile, net income available to common shareholders for the nine months ended September 30, 2019 was US$292 million. This figure came in at US$199 million for the same period in 2018.

Losses were also seen in the ex-PGAAP operating figure for Q3 2019, which came in at a loss of US$28 million. The previous year in Q3, the company realised an ex-PGAAP operating income of US$88 million. For the nine months ended September 30, 2019, AXIS Capital reported an ex-PGAAP operating income of US$227 million, versus an ex-PGAAP operating income of US$343 million for the same period in 2018.

Other third quarter highlights include the following:

• Gross premiums written decreased – by US$17 million, or 1%, to US$1.4 billion – as did net premiums written, which decreased by US$64 million, or 7%, to US$856 million;
• Pre-tax catastrophe and weather-related losses, net of reinsurance and reinstatement premiums, came in at US$160 million (compared to US$92 million in 2018), thanks to Hurricane Dorian and typhoons in Japan, alongside other weather-related events in Q3
• Underwriting losses for the third quarter of 2019 and 2018 included the recognition of premiums attributable to the balance sheet of Novae Group plc at the acquisition date of October 02, 2017, without the recognition of the associated acquisition costs, which were written off at that time.

“We remain focused on continuing our progress and are confident that these positive underlying trends can be sustained,” said Benchimol. “AXIS has leading positions in the markets that are experiencing the most significant pricing improvements which, combined with our underwriting actions and investments in digital capabilities, put us on a strong pathway toward long-term profitable growth.”