Q1 2021 AXIS Capital Holdings Ltd Earnings Call
Good day and welcome to the Axis capital first quarter 2021 earnings Conference call. All participants will be in listen only mode share do you need assistance. Please signal a conference specialist by pressing the star He followed by zero. After today's presentation, there will be an opportunity to ask questions to ask a question you May press.
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Please also note. This event is being recorded I would now like to turn the conference over to Matt Warman Investor Relations. Please go ahead.
Thank you Carrie and good morning, ladies and gentlemen, I'm happy to welcome you to our conference call to discuss the financial results for Axis capital for the first quarter ended March 31, 2021 earnings press release and financial supplement were issued yesterday evening after the market close.
If you'd like copies. Please visit the information Investor information section of our website at Axis capital Dot Com, we set aside an hour of todays call, which is also available on the audio webcast found the investor information section of our website with me today are Albert bench of mall, our president and CEO and Pete Vogt our CFO.
Before I turn the call over to Albert I'll remind everyone that the statements made during this call, including the question and answer session, which are not historical facts may.
Maybe forward looking statements forward looking statements involve risks uncertainties and assumptions actual events or results may differ materially from those projected in the forward looking statements due to a variety of factors, including the risk factors set forth in the company's most recent report on form 10-K, and other reports the company files of the SEC.
This includes additional risks identified on the cautionary note regarding forward looking statements in our earnings press release issued yesterday evening, we undertake no obligation to publicly update or revise any forward looking statements. In addition, this presentation may contain non-GAAP financial measures. Reconciliations are included in our earnings press release and financial supplement with that I'll turn the call over.
Albert.
Thank you Matt Good morning, everyone and thank you for joining our call.
Notwithstanding our record first quarter for U S weather events for Axis 2021 is off to a promising start.
Our consolidated current your ex cat loss ratio of 55.
Ex cat combined ratio of 89 and sub 99, all in combined ratio all provide solid additional data points, indicating that our work to reposition of our business is delivering a portfolio that is both more profitable and more resilient than that of prior years.
And it appears that our momentum is only accelerating.
This represents the seventh quarter in the last night that we delivered improvements of our core underwriting performance highlighting of clear positive trend in our results.
Our insurance business is firing on all cylinders, taking the advantage of attractive market conditions to grow premiums gross premiums written by 17% deliver.
Delivering an ex cat combined ratio of 88 with a two point reduction in each of the attritional loss of expense ratios.
Even the cat loss ratio of showed good progress at less than six points to bring our all of an insurance combined ratio below 94.
In addition, our reinsurance team is contributing equally to our progress with continued underwriting discipline and portfolio management, emphasizing enhanced profitability and managing volatility.
Our reinsurance coverage of your ex cat combined ratio improved again to 85, allowing us to absorb the U S Winter storm losses, and still reported of 100 all in combined ratio.
I'm confident that our continuing improvements of the portfolio will lead to increased profitability and further reduce our vulnerability to cat events.
We've added and considered on hire strong underwriting talent to bolster our efforts to drive profitable growth and.
And we feel very good about our team our culture and our consistent ability to attract top caliber talent.
We've worked very hard to get to this point, there's a strong sense of optimism throughout the organization and we're excited about the future.
I'll pass the floor to Pete Who'll walk us through the first quarter financials, and then I'll come back to discuss market trends and while all of our Q&A Pete.
Thank you Albert and good morning, everyone. During the quarter, we generated strong results featuring net income available to common shareholders of $116 million in an annualized Roe of 9.9%.
Operating income was 83 million on an annualized operating ROE of seven 1%.
As Albert noted core underwriting results continued to show improvement as the company produced of current accident year combined ratio ex cat and weather of 89, 2%.
Or over four points better than the prior year quarter.
The previously announced the quarter pre tax cat and weather related losses net of reinstatement premiums.
$10 million or 10.1 points.
The cats in the quarter were primarily attributable to the Texas area of winter storms as those events contributed $88 million of cat weather related losses to the quarter.
The consolidated current accident year loss ratio ex cat and weather was 55, 1% a decrease of two points over prior year with the decrease attributable to both segments.
The consolidated acquisition cost ratio was 19, 8% also a decrease of two points and again the decrease was attributable to both segments.
The consolidated G&A expense ratio of 14, 3% with the slight decline to the first quarter of 2020 overall operating efficiency and expense control, we made important goals for us and we continue the targeted G&A ratio of the low fourteens for 2021.
Fee income from strategic capital partners was $12 million this quarter compared to $16 million in the prior year quarter.
We'll now discuss the segments I'll start in insurance, where we had some impressive performance across a number of metrics this quarter.
The gross premiums written increased 17% to $1 1 billion. This quarter. The increase primarily came from new business and favorable rate changes in the professional lines property marine and liability lines net.
Net premiums written grew growth was higher and I would note that reinstatement premiums paid last year was a contributing factor to that growth.
During the quarter the insurance current accident year combined ratio ex cat and weather decreased by four points from last year as the repositioning in the portfolio continued to earn through.
The current accident year loss ratio ex cat and weather decreased by 1.9 points in the quarter, principally due to favorable pricing overwatch trends across virtually all lines of business and improved loss experience in property lines associated with the repositioning of that portfolio.
These positives were partially offset by a large marine cargo loss.
The acquisition cost ratio decreased by a point in the first quarter compared to 2020.
Mainly attributable to the increase of ceding commissions associated with the growth in professional lines the.
Underwriting related G&A expense ratio decreased by slightly over a point in the quarter largely attributable to an increase of net premiums earned.
Let's now move over to the reinsurance segment the re.
The insurance segment gross premiums written of one 4 billion for the first quarter was 58 million or four push or 4% lower than the prior year.
Premiums written decreased in motor engineering, and catastrophe lines as we look to better balance the portfolio.
This decrease was partially offset by selective increases in the liability lines, where terms were attractive.
During the quarter the reinsurance current accident year combined ratio ex cat and weather decreased by over four points from 2020 as the repositioning of this portfolio continued to earn through the.
The current accident year loss ratio ex cat and weather decreased by one six points from the first quarter, principally due to favorable pricing over loss trends in most lines of business and benefits associated with the repositioning of the portfolio.
This was partially offset by an increase of loss experience and non cat property losses.
The acquisition cost ratio decreased by over three points of the quarter due to changes in business mix driven by reductions in proportional business, including trade credit and non cat property.
The underwriting related G&A expense ratio increased by half a point in the quarter attributable to the decrease in net premiums earned.
Net investment income for the quarter was $114 million and this was $21 million higher than the first quarter of 2020, primarily due to an increase of returns from alternative investments.
This increase was principally the principally related to private equity funds and hedge funds, which are reported on a one quarter lag. So the performance is indicative of the fourth quarter of 2020.
It was also helped by a gain of $17 million associated with the sale of the venture capital investment.
This was partially offset by a decrease in income from fixed maturities attributable to decreased yield on the portfolio.
At quarter end, the fixed income portfolio had a book yield of two 1% and the duration of three three years at our new money yield was one 5%.
For the quarter, you'll note there was a higher than usual effective tax rate. This was driven by earnings and capital gains realized in the U S and Europe, while the losses from the winter storms, mostly impacted the Bermuda balance sheet.
Diluted book value per share decreased by $2.06 in the quarter to $53. Three says this was principally driven by the decrease in net unrealized gains reported in other comprehensive income due to the rise in interest rates.
Overall, the continued improvement in most operating metrics and momentum in the core underwriting book Notwithstanding notable cat and weather events. This was a good quarter for axis.
With that I'll turn the call back over to Albert.
Thank you Pete.
Let's do a brief overview of market conditions and outlook and then we will open the call for questions.
Across both of our insurance and reinsurance segments. We saw positive rate actions continue during the first quarter.
This represents the 14th consecutive quarter in which we've seen overall rate increases on our insurance book.
And the fifth consecutive quarter of double digit average wage hike.
This quarter the average insurance rate increase was up about 13%.
This is of more than three points higher than the first quarter of 2020, but sequentially down from last year's fourth quarter reported the level of 18%.
In most lines, we monitor sequential rate of change in pricing has increased while it has remained flat or crested and others.
Looking at our insurance segment by region. The U S. The strongest with average rate increases of close to 15%, while the London market is up nearly 10%.
But overall line.
And insurance liability of strongest with increases of at close to 18% with the best conditions in U S excess casualty space of plus 25, while primary casualties in the mid teens.
European rates are up in the mid to high single digits.
Professional lines of close behind with average rate increases at 17%.
Strongest as our London book, where we're seeing great increases in the mid to high twenties.
Canada U S D&O and financial institutions are all strong with increases in the 19% to 20% range, but with sub sub lines over 30%.
Cyber is accelerating rapidly with increase of anywhere from the mid teens to the high Twenty's.
Poverty averaged up about 10% with U S E&S property and global property strongest in the 13% to 14% range, while other lines, where more of the high single digits.
Our portfolio of specialty line, including Marine political risk in the Anh saw increases that averaged in the high single digits. Although of here again, many sub lines on the double digit range. For example of marine cargo on facilities are up 15, and 16% while aviation was strong at 18.
Overall, virtually all of the insurance portfolio of renewed flat to up with more than 50% of the book achieving renewal rate increases above 10%.
New business, we feel is price at least as well as renewable business.
In this environment, our insurance team did very well retentions are up versus last years first quarter of new business production set of New records.
I would observe that with these recent changes on pricing more of the opportunities that we're seeing are meeting our hurdles indeed.
Indeed, the past two quarters of the largest insurance production quarters in our company's history.
Let's move on to reinsurance.
The fourth quarter, we estimate overall reinsurance rate change was up about 11%.
The rates were strongest in the U S and global specialty lines with increases in the 12% range, while EMEA, which for US is Europe Middle East Africa, and Latin America was up about 10%.
In Asia, So average increases in the low single digits.
By line of business.
<unk> line saw increases that average in the mid teens with our EMEA region up 17% in U S of <unk>.
Liability average increases in the low teens globally with the rates up 14% on EMEA, 12% of Lloyds and 10% of the U S.
Generally we found other specialty reinsurance lines to be up in the double digit range, while aviation was much higher reaching up to 40%.
In the first quarter of property cat averaged about 16% of the U S. While we saw increases in the 5% to 10% range of the rest of the world.
We found these rates to the unimpressive given the recent property cat losses, the fact of which we were again reminded with the U S winter storms.
Non cat property changes were generally in the single digits.
Given the property and cat pricing, we observed our underwriting actions led to a reduction of approximately 5%.
And the gross writings and premiums of our property and cat reinsurance in the first quarter.
All in our first quarter of reinsurance gross written premiums were down about 4% as we focused on enhancing the profitability and reducing the volatility of our book all the while growing in the more attractive lines.
Looking at April one reinsurance renewals with momentum was in line with our expectations. We're seeing evidence of a growing supply of capital on competition, which may in the future dampened. The overall improvements that are needed across the sector.
The largest part of our renewal was Japan, where we experienced property cat and non cat rates, increasing in the 5% to 10% range, but where loss of impacted risk and wind flow treaties were renewed rates were a bit higher than that.
Elsewhere U S professional lines saw increases of 11% in U S liability was up more than 20%.
Overall, we booked a modest reduction to expiring premiums.
From one renewals.
I'm not concerned about the premium reductions in reinsurance one of the benefits of being of hybrid company is that we have access to the business across the lines in many markets and geographies.
It gives us a wealth of choices from which the choose and create the best optimize the portfolio under available circumstances.
I am just as proud of the strong growth delivered by our insurance team and attractive market.
I am by the discipline response exhibited by our reinsurance team under more mixed market conditions there.
They both contribute to building the best portfolio for access in terms of balance profitability and lower volatility.
Stepping back as we look to the months ahead, well anticipated the favorable market conditions will continue throughout the year on <unk>.
Jamie likely into next year, even if in some lines rates of increase come off their peak levels.
The many issues that our industry is facing right now, including low interest rates ongoing uncertainty is the longer term impacts of the COVID-19 pandemic loss cost inflation and climate change the sustained pricing discipline.
And if the relative market conditions of players. They are currently with the environment more favorable in insurance, we anticipate that much of our growth will continue to be focused there, particularly in non cat exposed lines of business.
As we continue to build our optimized one axis portfolio.
We see the hybrid model is the competitive differentiator, providing us with flexibility to allocate capital.
So the areas of our business that are offering the best returns.
And as I said earlier, we feel great about the future. We're in a good place right now and we believe the wind is at our backs.
But while we're seeing exciting progress throughout our business and we're actively taking the advantage of all of the opportunities presented by the by the current market. We feel encouragement we stay on the momentum we're satisfied with this quarter results, but we're not satisfied with where we where we are overall and we know there is much to do and we remain focused on delivering additional.
The progress towards the achievement of our goals and ambitions.
Our action plan is very straightforward to.
To make the most of the current market to both enhance the balance of our portfolio and grow profitably.
Two investment in talent and technology to accelerate growth in existing and new markets.
And to leverage technology and growth the increase our capabilities productivity and efficiency, while lowering our overall expense ratio.
We believe that all of the years of hard work to reposition the business are now starting to be more fully reflected in our financial results and.
And we look forward to continuing to keep you updated with our progress and with that let's please open the line for questions operator.
We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone. If you are using a speakerphone. Please pick up your handset before pressing the keys.
Withdraw your question. Please press Star then two at this time, we will pause momentarily to assemble our roster.
Yes.
First question will be from Brian Meredith of UBS. Please go ahead.
Hi, Thanks, a couple of them here first you.
You talked a little bit about cyber and the price is going on can you talk about the kind of loss trends continuing in that line of business.
Give us kind of a quick update after last quarters kind of elevated loss picks on that area.
Good morning, Brian.
We're continuing to see things kind of within our expectations. Obviously, we've made a number of changes.
On the portfolio.
During the year it could do to do that.
So we feel of actions or are doing the good impact on our overall.
On our overall results.
We think pricing is going to continue but by and large I would say that the cyber and the first quarter met our expectations combined ratio of below 100, it's kind of doing what do we expect it to do.
Great Great and then my next question up on it.
Just curious so two of the lines of business you mentioned that you reduced in the reinsurance area, where non cat exposed property trade credit Chad on the quota share basis.
I would've thought that those two lines of business are probably pretty attractive right now from an underlying kind of.
The season Economics perspective, why why would you be reducing those lines.
The two different issues.
On the non cash side on the archive of property side.
We've been I think pretty clear on telling you that.
Reducing the volatility is a very important boulevard and Theres no doubt on the property cat had increasingly especially the non the non cat property actually has a very large amount of cat property on it.
And so we found that it was contributing a lot sort of volatility and I'll go back to the point I made earlier one of the great things of the hybrid is we can take property property cat volatility anywhere in the world insurance reinsurance E&S standard whatever and right now of the best returns for US are in the E&S property space and.
So if we're going on for what property cat exposed to volatility we're willing to take we're getting better paid right now on on the insurance property in E&S property side, and we think about the smarter place to put our lots of smarter place to put all of our exposure.
With regards to the credits and you'll notice we are actually reduce credit both in insurance and in reinsurance and I think frankly, that's just the question of where the economy is and where the opportunities are.
And again Thats just just just following where the market is now we are writing a little bit less.
The quota share of cred.
And that's just because when you add the very high acquisition expense ratio to the lot of volatility there, we think a smaller amount of that business makes sense for us.
Makes sense and the last question I'm just curious the acquisition cost ratio continues to come down I know you've talked a little bit about that should we continue to see that coming down during the course of the year both of insurance and on the reinsurance side.
Well again, we're not big on giving guidance, but what I will tell you is what drives these things.
So part of the drivers of of reducing the <unk>.
The acquisition expense ratio on the insurance side is that as we're repositioning of freight portfolio favorite of certain lines versus others, where we're writing a little bit less cover holder business are back cover holder business. As you know how generally of higher acquisition ratio. So as we write less of that cover holder business that won't have a lower acquisition of it back on the.
The other thing is you know.
We've got a good gross book of business, our reinsurers are happy to participate in that book and we've been able to get the good ceding commissions to offset our acquisition of expense. So those kinds of things are are moving in our favor on the reinsurance side. It's also a question of I've just discussed.
Reducing some of the higher acquisition expense of lines of business and we feel ultimately are not giving us the technical ratio. We want so the trend that youre seeing in Q1, I think it's consistent with what we're expecting but Peter I don't know if you want to add anything to that.
Yes, the only thing on it.
Brian as I remember when we talked earlier about what our expectations were for 'twenty. One we said we thought of the acquisition cost should come down and buy it by at least the point I think we said improve of point in our discussions with folks and this is the full year last year was 21, three I said as she come down to around 20, we've got a little bit more action. So now it's in the nines.
<unk> I would say the first quarter is representative of what I expect for the rest of the year.
Great. Thank you.
Yeah.
The next question is from ear on Qunar of Cold.
Alan Sachs.
Good morning, everybody.
Dominic.
My first question.
It goes back to reinsurance.
I guess I get that you have the hybrid capabilities here and allows you to kind of pick and choose where you want to play.
None of US is there a okay, what's the on play for.
The reinsurance segment as it.
Is it going to be as dominant.
Part of the business over time or is it something that really.
Becomes a much smaller component of the overall business.
I think what you've seen over the history of this company is that we kind of gone up and down growth rates of each.
On the segments based on the opportunities there.
I don't want to say right now of that reinsurance is always going to go down on what I'd say the reinsurance is always going to go up I don't want to say from the same I think it really depends on where the opportunities are what I will say is that over the last two three years, we've been spending more and more time.
Running not two portfolios one insurance portfolio of one reinsurance portfolio, but increasingly running one portfolio.
And when you run one portfolio you really have the opportunity to choose and in some cases, we're going to make the call on the insurance side in some cases, we're going to make the call on the reinsurance side.
And.
We will focus very much on on how we built the best portfolio.
There are some lines of business right now for example, where we prefer to allocate our capacity much more on the insurance side. A good example of that would be.
On the on cyber we most of what we buy some reinsurance number but most of it we went on the insurance side, we think that's the better way to play it.
Certainly I will tell you that I'm very very grateful for all of the contributions of reinsurance makes to the lines of business that we do not write in insurance. We are of very strong E&S player. We're very strong.
In the wholesale markets in the U S and in the London market, but that in and of itself tends to be a book of business that is very focused.
That has generally a little bit of volatility to it and we can add with our with our reinsurance book, we can add some very good.
International business that will have access to very good standard lines of business way back don't have access to so I think that the two of them will always be.
Every planning session at every quarterly review the.
All of the opportunities come up from the bottom they've got explored the.
They look we look on what contributes to the best portfolio and we move in that direction.
Got it that's helpful. Thank you and my second question looking at the underlying loss ratio on insurance.
If we adjust for the runoff losses that you had in <unk>.
<unk> 'twenty, you get about a point of improvement year over year.
That all coming from rate over trend or do you see the maybe some impact from kind of the slowdown on the economy and maybe courts being closed. This is also benefiting the loss ratio.
Peter you can follow up on that but what I would tell you is we're not I can tell but it is a part of general part of our reserving philosophy.
We are reserving of kind of our expectations or God forbid there, where it's more of a dollar number.
Are we recognize absolutely as you say, but right now there may be short term factors and so we're not letting favorable versus in <unk>.
Impact what we're booking those loss ratios, we're taking the more prudent view of than that.
Or you want to add to this yeah.
Yeah, I'd say the that.
We have been seeing as you noted some favorable <unk>, but we're not letting that flow through to the bottom line. There is an expectation that we'll of course open up that there will be claims that will go into those courts, and so we'll wait and see what happens in the future and I think you're about right. If I. If I look at the adjustments are with the book that has brought off which was running poorly.
That's about eight tenths of the 1.9 and the rest of it really is coming from good rate over trend as well as some other underwriting actions in the and obviously the property portfolio.
Got it and the run off is essentially done here, yeah, it's pretty much done yet okay. Thank you congrats on a good quarter.
Thank you.
The next question is from Derek on of K B W.
Good morning, and thanks for taking my question I really wanted to touch on how you're thinking about capital deployment opportunities from for the balance of the year.
On the reinsurance side.
You've obviously had significant underwriting actions and pullback of cat exposed businesses, but is that something that debt that could potentially change of this year given the the severe dislocation that we're seeing in the Florida market.
Well, the Florida market has to come on I think it'll be interesting to see.
Ultimately, where it goes I think we've told you already we found that most of the renewals of the dates.
I have been.
Lukewarm towards at least.
But I think Florida could be dislocated, we'll take a look at there I think there will be some natural.
Reductions in as much as a few of the clients that we support in the past on the I've been acquired were writing less there.
There is.
I would take a look at Florida on its own merits, but it doesn't change the fact that when we look at our portfolio.
We are being very careful about managing the volatility the southeast remains our largest zone. So we're not going to want to go.
The crazy in terms of having a peak zone compared to the rest of the wire zone.
I'm not looking for any any any massive increase in type pricing.
The relative trends stay the way they have been for the last six months.
Okay. Thanks, and then my second question of more qualitative.
Is there any weighted since the conservatism of your accident year 2021 loss picks.
Yeah.
That's always a difficult subject, but what I would recommend.
Is that you do what probably you have done with other companies such as ours, which is how do you reconcile.
Average growth rate increases last year of 14% with a loss ratio is going down all of the a couple of points and I think what that speaks to is the fact that we believe there's a lot of uncertainty in the current environment.
And we're reflecting by definition in our loss picks much higher loss ratio than you would anticipate simply by doing the right minus trends and the reason for that is we feel theres a lot of uncertainty right now, we'd rather take a more prudent approach and I'd like to believe that.
When these lines of business starts to mature, we'll be able to bring them down to a a better loss ratio, but we'd rather start high and finished slow than the other way round, but if you look at the rate over trend you would have a priori have expected of higher or greater reduction of the loss ratio youre not seeing that because I think we're showing the.
Peter I don't know if you want to add to that.
No I think you've pretty much covered it there Albert that that's exactly what I would say I mean, I do believe we're being appropriate and of our loss picks there is risk.
And the uncertainty around the loss cost inflation, and I think we're being appropriately prudent and I would remind folks of our standard reserve philosophy as you know we.
Put of Bad news early and I mean, we put of bad news early and we take the news later, so so we will see how these reserves develop over the next couple of years.
Thank you.
Yes.
The next question is from Elyse Greenspan of Wells Fargo. Please go ahead.
Hi, Thanks. Good morning on my first question is probably I think popping up on the last question on.
So on the outlook that you guys also related for the year you pointed to two to three points on your line loss ratio improvement for the full year two minutes to parse that in the Q1 on kind of.
Some things together it sounds like still really healthy rate increases, but some slow down on you guys are being conservative with loss trend. So given the two forces.
Would you expect the.
Equipment pick up as we go through the year and get your question on the high end of that range or two price.
The 2% in the Q1 kind of a good barometer.
For the next three quarters.
I guess of lease yeah. This is Pete I'll take that I mean, the full year ex cat loss ratio of consolidated last year was 57 seven we came in at 55. One you know so that's about two and a half points. That's like at least when I go full year, the first quarter and that's.
The spot on the middle of the two to three I'd say the first quarter is pretty indicative, we'll see how much more rate we get.
But I would say the first quarter is fairly indicative of where we think things will play out for the rest of the year.
That's helpful.
And then one.
One quick numbers on pointed to a large marine and cargo of slots in the quarter on.
Just trying to get a sense of the magnitude of that in terms of on the impact within the insurance segment.
Yeah, we had a weighted big Japanese cargo loss in the quarter.
That ran through the still like to point out the large losses per se, but if I'm looking overall debt probably hit the insurance.
The loss ratio by about.
I'd call it a let's see.
Maybe a little less than a point in the quarter.
Yeah, I wouldn't want to make too much of that I wouldn't want to make too much of that you know we have visa we.
We spun out of large losses before we're going to have large losses right, but the issue.
She was willing to absorb them and generally we are of a couple of them one or two of quarter No big deal. We've talked to you in the past, sometimes we've had an unusual quarter with more than that but.
I don't want to I don't want to assume that we're not gonna have you know $10 million to $15 million losses here or there that's part of our business and as long as we can absorb it.
The I consider those part of the Attritional loss ratio and I really wouldn't want to make anything exceptional of lot of that.
Okay. That's helpful and then on the Cat side.
You know you guys on I think alluded to write you brought down your P. M L.
Cat exposure you also I think of alluded to cash.
The cat ratio.
To the fine points better than your five year average, excluding COVID-19 that may think and buy something.
Around seven three to eight 3% for the full year given that the Q1 was elevated and I did see you know some of your P&L. They come down in April line is that still a good rule of thumb for the full year, even with the slightly higher cat losses to start the year.
Yeah.
On.
Okay got it.
I would say I would say so at least mostly because when we talked about the the cat loss ratio and we said we were bringing it down.
A couple of you folks thought that we should bring it down even further so I would say our expectations were to be even better than that and you know this this.
This Texas storm just put some pressure on it so I'd say, that's still a pretty good ballpark.
Oh yeah.
What I would just say of.
Always lowest of the kind of create patterns on Cabot in the cabin by definition is unpredictable and volatile and then so you don't know where things are what we do know is that we've got less exposure than we've had in the past that we're building of our portfolio better and smarter than we have in the past that we have less exposures of lower layers.
Which would give US you know less again just the on.
On the frequency basis. So we think that we're building a more intelligence cat exposed portfolio.
But I think you know I've been in this business a long time I don't make projections on the cat ratios.
Okay. That's helpful. Thanks for the color.
Youre welcome.
The next question will be from Josh Shanker of Bank of America. Please go ahead.
Yeah, good morning, everyone.
Martin So if I look at some of your competitors not many but some of you see a few outliers maybe a few more net growing top line of you know <unk>.
<unk> 15, 20 per cent range here.
And some of them are even buying back shares at the same time, obviously the axis of growth isn't not necessarily at this point as robots it might be in the future, but the the.
The share repurchase activity isn't as strong can we talk a little about.
How much capital is being consumed by business mix flash growth changes.
And given the stock trades at one time book, how you're doing the math between canceling shares versus versus investing in the business.
I can tell you that right now.
It's the market opportunities of the way they are we anticipate using all of our capital the.
To fund the growth of attractive business and to build our positioning and in our in our chosen markets.
You know for the foreseeable future.
Has your activities consumed capital over the past three months of you've lowered AD exposure I assume that frees up capital and we're just not really I guess, we're not seeing it so greatly on the top line side is there more capital consumption going on in the booked on there was three months ago.
I think it was just different kinds of the consumption I mean, you've got top you've got cash which is it takes up short term consumption, but then in rebalancing our book to bring a property down you know we're getting from over 30% of the overall book down closer to the 20% range. You are by definition going to be riding the lines of business like liability and professional lines that have.
A longer.
Reserve tail, which requires you to keep capital longer the support those reserve so.
You know again, we are.
We're looking to do is to allocate our capital to those areas that will deliver the best portfolio delivering the best profitability at acceptable volatility so.
You know as well as I do liability can use up a lot of cash on the same ways of cat can use of a lot of cash they just do so differently.
Or do you have less excess capital now than you did one year ago or about the same.
I would say that our certainly when we look at the our rating agency models. When we look at where we are we feel very good I mean, I think you can read.
The various rating agencies tell you. The we are at a very strong capital position.
Continue to believe that to be the case we're.
We're growing more now than we did last year. So by definition, we're going to start to use of <unk>.
More of the capital, but we still feel very comfortable with our capital position.
Do you want add anything of that theater.
No I think we're using the capital well and the only other thing right now we just had is on.
The last year at the end of the first quarter, where interest rates went up.
The capital was pressure just because interest rates rose so much. So right now we're just keeping our eye on interest rates to we did have.
No about tuned up most of the dropping of the book value was because of interest rates going through OCI. So we just keep our eye on that to Josh.
Thank you very much for the answers and good luck of the year goes on.
Thank you.
This concludes our question and answer session I would now like to turn the conference back over to Albert benchmark for any closing remarks.
Thank you operator, and thank you all from your time this morning.
Obviously with the pleasure for us to be able to discuss with you a good quarter for axis and the continuation of our momentum, but before we complete the call, but I just want to thank my team for their continued hard work their passion everything they do every day to support our clients and partners of distribution to make axis stronger company I really do believe and we feel strongly that ours are.
Standing in the market continues to strengthen our relationship with the brokers are very strong and of that said we feel good about our progress we know there's more to do but we've got the wind at our backs and we've got a great team doing it. So we look forward to sharing our progress operator. This ends our conference call Goodbye everybody talk to you soon.
Thank you. The conference has now concluded. Thank you all for attending today's presentation. You may now disconnect your lines have a great day.
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