• Annualized Operating Return on Equity: 19.2%
• Diluted Book Value Per Share: $66.48
• Operating Earnings Per Share: $3.17, a 23% increase over the prior year quarter
• Combined Ratio: 90.2%
• Record Premiums: $2.8 billion, representing 5% growth
• Net Investment Income: $208 million, up 24% over the prior year quarter
• Share Repurchases: $440 million in shares repurchased during the quarter
• Insurance Segment Combined Ratio: 86.7%
• Insurance Premiums: $1.7 billion, up 5% over the prior year quarter
• Reinsurance Segment Combined Ratio: 92.3%
• Reinsurance Premiums: $1.1 billion, up about 5%
• Net Income Available to Common Shareholders: $187 million or $2.26 per diluted common share
• Gross Premiums Written: $2.8 billion, up 5.3% over the prior year quarter
• Catastrophe Losses: $49 million, primarily driven by California wildfires
• G&A Expense Ratio: 11.9%, down from 13% a year ago

• Warning! GuruFocus has detected 8 Warning Sign with AXS.

Release Date: May 01, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Axis Capital Holdings Ltd (NYSE:AXS) reported a strong start to 2025 with an annualized operating return on equity of 19.2% and record diluted book value per share of $66.48.
• The company achieved record operating earnings per share of $3.17, a 23% increase over the prior year quarter.
• AXS generated record premiums of $2.8 billion, representing 5% growth, including $738 million in new premiums.
• Net investment income increased by 24% over the prior year quarter, reaching $208 million.
• The insurance segment produced excellent results with a combined ratio of 86.7% and $1.7 billion in premiums, marking a 5% increase over the prior year quarter.

Negative Points

• The property segment experienced a 7% rate reduction, influenced by a more competitive global market, particularly in London.
• The reinsurance segment faced increased competition in the UK motor market post-Ogden rate change, impacting premium growth.
• AXS anticipates potential impacts on growth in certain lines of business due to ongoing trade and geopolitical uncertainties.
• The company remains cautious in its loss picks for reinsurance, reflecting a higher level of uncertainty in the current environment.
• Despite strong results, the company acknowledges the potential for rising loss costs due to tariffs, particularly affecting property and cargo lines.

Q & A Highlights

Q: Can you provide insights on the recent pricing trends in property lines and where you see them heading? A: Vincent Tizzio, President and CEO, explained that property pricing was down 7.1% in the quarter, influenced by geographic performance and a more competitive London market. Despite this, the terms, conditions, and limit profiles remain largely unchanged. AXIS continues to focus on ensuring that retained business meets risk-adjusted returns, especially after significant first-quarter events.

Q: How do you foresee net written premium growth for the year, considering the current market conditions? A: Vincent Tizzio stated that mid to high single-digit net written premium growth is reasonable for 2025. The company is seeing robust submission growth, with a 20% increase, and remains confident in its underwriting approach. CFO Peter Vogt added that adjustments in quota shares and additional protections in cyber have influenced current figures, but the underlying growth remains strong.

Q: Can you elaborate on the cautious approach to loss picks in reinsurance and its impact on casualty development? A: Peter Vogt clarified that the cautious approach is primarily in reinsurance, particularly in specialty lines, due to the uncertain macro environment. The casualty books have consistent loss ratios from 2024, and the company feels comfortable with its reserve positions across the board.

Q: What factors contributed to the drop in the expense ratio, and how should we view this going forward? A: Peter Vogt noted that the 11.9% expense ratio is normalized, with no one-off factors. The decrease is attributed to the company's "how we work" initiative, which focuses on processing business at a lower cost. The organization continues to leverage expense efficiencies and expects the first quarter to be the highest for the year.

Q: How does AXIS view the impact of tariffs on its credit and political risk lines, and are there growth opportunities in this area? A: Vincent Tizzio highlighted that the growth in credit and political risk was mainly driven by the surety business. The company has a rigorous underwriting approach that considers economic outlooks and obligors. While tariffs could impact certain lines, AXIS sees potential growth opportunities in areas like marine and trade credit.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.