Axis Capital Holdings’ credit ratings outlook has been upgraded by Standard and Poor’s Global Ratings to stable from negative.

The ratings agency also affirmed the Bermudian insurer and reinsurer’s A+ financial strength rating and A- long-term issuer credit and senior debt ratings.

“Axis’s capital management and implementation of its various strategic initiatives are bearing fruit and will help rebuild the company’s capital redundancy at the ‘AAA’ level by year-end 2019, based on S&P Global Ratings’ risk-adjusted capital model,” S&P said.

S&P pointed out that Axis’s capitalisation declined because of its $611.5 million acquisition of Novae Group in late 2017, though the situation was made worse by late-2017 catastrophe losses that were well above normal levels.

S&P gave credit to Axis for taking a number of steps after that to rebalance its finances.

“Axis stopped its share buybacks; is lowering its net aggregate property-catastrophe probable maximum losses through reinsurance/retrocession usage and alternative capital; and has exited underperforming lines of business such as onshore energy, US retail property and excess casualty lines,” S&P stated.

The rating agency added that Axis would realise about $100 million in expense savings per year due to the Novae integration and “additional corporate cost synergies”.

S&P also pointed out that the industry faced “ongoing heightened competitive pressures in the global property/casualty reinsurance sector and US specialty insurance lines of business”, as well as possible earnings volatility due to severity risks with property-catastrophe exposures.