Disaster claims drive Axis to $468m loss
Axis Capital Holdings Ltd tonight reported a third-quarter net loss of $468 million, as it dealt with hefty claims related to natural disasters.
The Bermudian insurer and reinsurer estimated catastrophe pre-tax net losses at $617 million, resulting from events including hurricanes Harvey, Irma and Maria, as well as two earthquakes in Mexico.
Albert Benchimol, Axis's chief executive officer, said the financial impact was consistent with the company's expectations.
He added that the quarter's losses were “comparable to full-year levels incurred in 2005 and 2011, which were the highest catastrophe loss years on record”.
“We know that the aftermath of catastrophic events is a time when our clients depend on us the most, and here at Axis, we take pride in demonstrating the real value of our products and services,” Mr Benchimol added.
“We expect the market to react strongly to industry losses this quarter, which when combined with low interest rates and sustained multiyear pricing erosion, will drive adjustments to risk-based pricing.”
The quarter's losses mean that Axis has made a net loss of $378 million, or $4.47 per share, over the first nine months of this year, compared with net income of $335 million, or $3.61 per diluted common share, for the corresponding period in 2016.
Axis said its operating loss for the third quarter was $446 million, or $5.35 per share, in line with the consensus forecasts of Wall Street analysts.
Mr Benchimol said the recent acquisition of London insurer Novae helped the company to be “strategically well positioned for improving conditions”.
“We are optimistic that the international specialty insurance market will deliver more benefits than we originally contemplated when the transaction was announced, and that we will approach the January 2018 renewal season with a strong platform, a strengthened brand, and a renewed commitment to deliver a superior value proposition to all of our stakeholders,” Mr Benchimol said.
Axis said gross premiums written increased by $226 million, or 24 per cent, to $1.2 billion during the quarter.
The combined ratio — a measure of underwriting profitability which reflects the proportion of premium dollars spent on claims and expenses — was 152.9 per cent compared to 92.6 per cent in the third quarter of last year.
Net investment income decreased to $95 million from $117 million last year.
Diluted book value per share fell by 8 per cent for the quarter and 5 per cent over the past year.
Axis shares closed down 18 cents at $56.34 in New York today, before the results were announced.