Q1 2025 AXIS Capital Holdings Ltd Earnings Call
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AXIS Capital Holdings Ltd
Speaker Change: Good day and welcome to the first quarter 2025 AXIS Capital Earnings Conference call. All participants will be in listen only mode. Should you need assistance please signal a conference specialist by pressing the star key followed by zero. After today's presentation there will be an opportunity to ask questions.
Speaker Change: to ask a question you may press star then one on a touch-tone phone and to withdraw your question please press star then two. Please note this event is being recorded.
Speaker Change: I would now like to turn the conference over to Clifford Gallant Investor Relations. Please go ahead.
but it's
Clifford Gallant: Thank you. Good morning and welcome to our first quarter, 2025 conference call. Our earnings press release and financial supplement were issued last night. If you would like copies, please visit the Investor Information section of our website at accesscapital.com.
Speaker Change: We set aside an hour for today's call, which is also available as an audio webcast on our website.
Speaker Change: Joining me on today's call are Vincent Tizzio, our president and CEO , and Pete Vogt, our CFO .
Speaker Change: In addition, I would like to remind everyone that the statements made during this call, including the question and answer session, which are not historical facts, may be forward-looking statements.
for looking statements involved risks uncertainties in assumptions.
Speaker Change: Actual events or results may differ 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 the Form 10K or our quarterly report on Form 10Q and other reports the company files with the SEC.
Speaker Change: This includes the additional risks identified in the cautionary note regarding the forward-looking statements in our earnings press release issued last night.
Speaker Change: We undertake no obligation to publicly update or revise any forward-looking statements.
Speaker Change: In addition, our non-GAAP financial measures may be discussed during this conference call. Reconciliation are included in our earnings press release and financial supplement.
To a debt, I'll turn the call over to Vince
Vince Tizzio: Thank you, Cliff. Good morning, and thank you for joining our call.
Vince Tizzio: 2025 is off to a strong start for AXIS as we continue to build on the positive momentum and bottom line focus that has defined our performance over the past two years.
Vince Tizzio: As shared at our Investor Day a year ago, we have a strategy in portfolio designed to guard against volatility and seek profitable growth.
Vince Tizzio: Even today, as we navigate uncertainty brought on by trade disruption, geopolitical tensions, and market volatility, AXIS is well positioned as a specialty underwriter that brings a strong value proposition to its distribution channels AXIS Capital Holdings Ltd
Vince Tizzio: Now, more than ever before, our customers are adapting to a dynamic and highly complex risk environment, and AXIS is providing customized and innovative specialty solutions to help them.
Vince Tizzio: Our first quarter financial results evidence that we have developed a portfolio that consistently performs even against outsized catastrophe events and changing risk dynamics.
Vince Tizzio: Indeed, across our organization, we continue to act with pace and seize profitable growth opportunities while serving our customers' needs [inaudible]
Vince Tizzio: I'll share some of the headline matters for this reporting period.
AXIS Capital Holdings Ltd
Vince Tizzio: In the quarter, we produced an annualized operating return on equity of 19.2% and record diluted book value for common share of 66.48%
Vince Tizzio: Operating earnings per share of 317, represented 23 percent increase over the prior year quarter, and our highest ever, quarterly operating earnings per share. AXIS Capital Holdings Ltd
Vince Tizzio: and All-In Combined Ratio of 90.2 delivered in a quarter in which natural catastrophe losses, including wildfires, approximated more than 55 billion. AXIS's share of the cat losses was less than 10 basis points.
Vince Tizzio: We generated record premiums of $2.8 billion, representing 5% growth, including $738 million in new premiums.
Vince Tizzio: Looking deeper, our insurance premiums grew 8% X primary casually and cyber, lines that we have mentioned as being reshaped during past earnings calls We remain on track to achieve our GA ratio target of 11% by 2026
Vince Tizzio: We produce net investment income of 208 million up 24% over the prior year quarter.
Vince Tizzio: Enabled by our strong capital position, we opportunistically repurchased 440 million in shares during the quarter.
Vince Tizzio: And last week we closed our previously announced LPT agreement with NSTAR, even further demonstrating confidence in our reserves. Let's now move on to our segment and we'll begin with insurance.
Vince Tizzio: Our insurance segment produced excellent results generating an overall combined ratio of 86.7.
A Current Accident Your Ex-Cat Combined Ratio of 83-4
Vince Tizzio: 1.7 billion in premiums, up 5% over the prior year quarter, including 547 million and new premiums.
Vince Tizzio: I'll add that both are total and new business premiums, or are best ever for the first quarter, and our quarterly underwriting income of 135 million is an all-time high for our insurance segment [inaudible]
Vince Tizzio: In North America, we continue to produce high single-digit growth at 9%.
Vince Tizzio: Coupled with Healthy Submission Flow, which was up 21% propelled by our E and S lines. We are also seeing increasing contributions from our recently launched new and expanded business units.
Vince Tizzio: including commercial surety, environmental, and ocean marine to name just a few.
Vince Tizzio: and our dedicated wholesale lower-middle-market unit group 41% in the quarter.
Vince Tizzio: in our global markets business, which is operating in a competitive market landscape. We drove selective growth in the quarter across targeted classes such as A&H, Renewable Energy, and Marine Species.
Vince Tizzio: Importantly, this business remains premiumatic and our team is maintaining underwriting discipline as we cycle manage that business
Let's now move to reinsurance.
Vince Tizzio: AXIS re-performed well in the quarter. In the quarter, the business delivered a 92.3 combined ratio and 1.1 billion in premiums, up about 5%.
Vince Tizzio: In the first quarter, we write approximately 45% of our reinsurance business for the year. We continue to pursue growth in our specialty folks classes and added $191 million in new business with 48% coming from our short tail specialty lines.
Vince Tizzio: While the overall reinsurance market remains varied by line, our focus is on producing consistent, profitable results with low volatility while also leveraging our dual underwriting platform model, seeking profitable growth where we see the best opportunities.
Let's now step back and discuss broader market conditions.
Vince Tizzio: As I noted at the outset of our call, the current trade and geopolitical environment introduces uncertainty across a number of dimensions.
Vince Tizzio: including rising loss costs, potential impacts on economic growth, and the threat of a recessionary environment.
Vince Tizzio: At AXIS on an ongoing basis, we assess all forms of uncertainty presented and through our abnormal underwriting practices, take steps and measures that guard against adverse
Vince Tizzio: With respect to tariffs in particular, we anticipate that the most immediate impact could be on loss cost
Vince Tizzio: This would be most likely reflected in our first party line, predominantly property and cargo.
Vince Tizzio: Additionally, should the current uncertainty surrounding tariffs persist? We would expect an impact on growth in certain of our lines of business. Nonetheless, we have confidence in our ability to address these factors while leveraging the diversification within our portfolio.
Vince Tizzio: That said, our strategy remains firm and contemplates shifting market conditions. We continue to see areas that bring our specialty underwriting capabilities to further serve customer needs globally.
Let's unpack this further.
Vince Tizzio: Our portfolio is highly premium adequate, and the business being placed on our books is meeting our risk-adjusted long-term expectations
Vince Tizzio: We continue to lean into premium adequate short tail lines where we are seeing attractive performance, which currently comprises 55% of our total gross premiums written.
Vince Tizzio: Notwithstanding, competition is increasing in property, and after seven years of rate hardening and strong results, we are pursuing the more selective growth strategy.
Vince Tizzio: In the quarter, we evidence a negative 7% rate change with 3% growth across our eight operating divisions that bring property to market. Our portfolio continues to be highly premium adequate, well constructed, and has an average net limit in the low single digit millions.
Vince Tizzio: And though, excuse me, and through the quarter, the changes in competition are primarily affecting the race and not terms and conditions.
Speaker Change: However, in liability, pricing momentum is being sustained at elevated levels, achieving a 13.5%
Speaker Change: In U.S. Access Casually, we generate a 16% rate change in the quarter. Further, in primary casualty, rates were up 21% in the quarter. Moreover, we completed our previously mentioned remediation of primary casualty this quarter.
As Respect Siber
Speaker Change: We've commented previously that we're leveraging our ability to deploy cyber capacity through both our underwriting businesses.
Speaker Change: In re-insurance, we grew our cyber portfolio by 29% in the quarter. More importantly, we remain confident in our premium adequacy, limit deployment, and accumulation management between both insurance and re-insurance supporting this growth.
Speaker Change: It's part of the reshaping of our delegated cyber portfolio. We feel good about the progress we're achieving through our partnership with Alpha Secure
Speaker Change: This partnership enables AXIS to address the lower middle market segment and enhance our value proposition through the advanced cybersecurity services that are provided. It is worth mentioning that we will continue to remediate, are delegated.
Speaker Change: Cyber Business. We expect that work to be completed by the end of the third quarter as we continue to reshape approximately $60 million of that business.
Speaker Change: Finally, our targeted insurance cyberbusiness continues to attract the large account segment where we continue to see adequate returns against our underwriting appetite.
Speaker Change: In summary, even amidst uncertainty and continued shifts in the market environment, we are profitably growing our business and we are deploying our capital into targeted, attractive markets while leaning into our specialty underwriting value proposition with agility.
Speaker Change: Through our how we work program, we continue to enhance all aspects of how we operate, and the more than 1% improvement
Speaker Change: In our GA ratio reported in the quarter is a direct result. However, and importantly, how we work is not solely about cost elimination
Speaker Change: Indeed, we continue to make investments in our technology and operating platforms while enhancing our underwriting and claims capabilities.
By Way of Example
I'll point to our wholesale lower-middle market business
Speaker Change: which I referenced earlier. This unit's steady profitable growth has been propelled by our investments in talent, data, technology, and AI. This is just one of a range of initiatives that were leading to help build a foundation of future growth for AXIS. AXIS Capital Holdings Ltd
Speaker Change: Accepting that, we continue to execute on our strategy and are advancing the strategic priorities that form our value creation framework.
Speaker Change: Growing our diluted book value for share and producing strong financial results, driving profitable growth in our targeted, specialty markets and tapping into new revenue opportunities, optimizing our operating model while enhancing productivity and managing our capital efficiently.
Speaker Change: Throughout the company, we remain focused on delivering on our stated goals and solving client's problems, and I thank our AXIS colleagues worldwide for their continuing outstanding contributions. With that, I'll now pass over to Pete for his financial report.
Pete Vogt: Thank you, Vince, and good morning everyone. AXIS had a very strong start to the year. Our net income available to common shareholders was $187 million, or $2.26 cents per diluted common share.
Pete Vogt: And our operating income was $261 million or $3.17 per diluted common share, producing a 19.2% annualized operating return on common equity.
Pete Vogt: To strove our book value for deluded common share to $66.48 at March 31, an increase of 16.4% over the past 12 months.
Let me give you some consolidated company underwriting highlights.
Pete Vogt: Our gross premium is written of 2.8 billion or up 5.3% over the prior year quarter. And we continue to see attractive opportunities across our businesses.
Our Combined Ratio was an excellent 90.2%
despite the California wildfires.
Pete Vogt: And our accident year-loss ratio, X Cat and Weather, was 56.3% similar to the prior year quarter.
Pete Vogt: Catlosses were just $49 million, producing a catloss ratio of 3.7%.
Pete Vogt: Cat losses were primarily driven by California wildfires. I'd add that the nature of these losses were not concentrated in commercial lines, but predominantly in personal lines where we are much less exposed.
Pete Vogt: We adhere to our philosophy of wanting to see sustained positive momentum before releasing reserves, and we recorded a release of $18 million from the short tail lines.
With 14 million in insurance and 4 million in re-insurance [inaudible]
Pete Vogt: Our Consolidated G&A Expense Ratio, Included Incorporate, was 11.9% down from 13% a year ago.
Pete Vogt: We remain on track to achieve our better than 11% target for 2026.
Pete Vogt: Now let's move on and discuss our segment results in more detail.
Insurance had a strong quarter. [inaudible]
Pete Vogt: Gross premiums written will 1.7 billion, and increase of 5% compared to the prior year quarter.
Vince Tizzio: As Vince mentioned, growth was just over 8% excluding the remediations in cyber which will continue into the third quarter and in primary casualty which was completed in this first quarter.
Vince Tizzio: Property growth in the quarter was led by good growth in renewable energy and construction property.
Vince Tizzio: And this was somewhat offset by a reduction in our EMS property book, Down About 2%
Vince Tizzio: Double Digit Decline in our London Global Property Book, as competition has increased.
We continue to see attractive opportunities in excess casualty.
Vince Tizzio: which drove growth in liability and more than offset the remediation in primary casualty.
Vince Tizzio: As Vince mentioned, rate in both these lines continue to be above trend .
Vince Tizzio: In credit political risks, we grew our new surety business, and so good project financing opportunities in the quarter which also contributed to the growth.
Vince Tizzio: Crising generally remains highly adequate, and we are putting capital to work at attractive returns above our long-term targets.
Vince Tizzio: Importantly, our business from new initiatives which were launched over the past two years meaningfully contributed to our growth in the quarter.
Vince Tizzio: with premiums from these initiatives growing by about over 50 percent.
including the targeted lower-middle market business.
Vince Tizzio: I would note that our gross to net premium ratio was skewed in this quarter by a change in the structure of our quarter share for pet insurance and a restructured cyber occurrence XOL Treaty, purchased at 1-1 as part of our outward cyber renewal.
Vince Tizzio: Excluding A&H and Cyber, our 2% reported net written premium growth would have been 9.8%, which reflects our 2024 initiatives to retain more of our highly premium adequate business.
AXIS Capital
The Insurance Combined Ratio is an outstanding 86.7%
The quarter included 4.7% of cats and weather-related losses
and 1.4 points of reserve releases from short tail lines.
Vince Tizzio: Now let's move on to the reinsurance segment, where the business produced a 92.3% combined ratio .
Continuing to deliver stable, consistent, and strong profitability [inaudible]
Vince Tizzio: Gross premiums, what 5% in the quarter, as we see some opportunities, but also pull back when needed.
Vince Tizzio: Notably, liability lines grew 16 percent, but we stressed that we're maintaining a tough stance and maintain our cautious view on the line.
Vince Tizzio: In North America liability, we saw a decline in volume, offset by select opportunities in our international markets where we benefited from some restructured contracts.
Vince Tizzio: I'd note that 60% of the liability quarterly growth was due to timing.
Vince Tizzio: So this is premium that will not be available for renewal later in the year.
In professional lines, growth was driven by opportunities in cyber [inaudible]
Vince Tizzio: Offsetting the growth was reduced writings in motor where there was more competition in the U.K. Post the Ogden Rate Change, and in A&H.
Vince Tizzio: Where we non-renewed some business to increase competition and pricing that did not meet our standards.
AXIS Capital Holdings Ltd
Speaker Change: As I mentioned, the re-insurance combined ratio is 92.3% with an X-CAT accident year-loss ratio of 68.4% Cats were just a half a point and there was 1.2 points of benefit from the reserve releases
Speaker Change: The underlying loss ratio was similar to the prior year quarter which as we told you then was impacted by the Baltimore Ridge Bridge Collapse.
Speaker Change: We're being more cautious as we book our lost picks and reinsurance.
reflecting a somewhat higher level of uncertainty in this environment. [inaudible]
Speaker Change: We will continue to be cautious throughout 2025, but expect the year to have strong underwriting profits, much like this quarter.
AXIS Capital Holdings Ltd
Speaker Change: We had a very good quarter for investment income at 208 million, up 24% over the prior year quarter.
Speaker Change: I'd note our alternative portfolio performed very well in the quarter with a return at about double or expected quarterly run rate for the remainder of this year.
Speaker Change: Our outlook for investment income remains favorable as we continue to generate excellent operating cash flow.
Speaker Change: and our market yield of 5.2% is above the 4.5% book yield as of March 31.
Speaker Change: As announced last week, the LPT transaction with NSTAR has now closed.
The Associated Assets have been moved off our balance sheet [inaudible]
and will no longer be producing investment income for us.
Speaker Change: You will see the adjustment to invested assets in our 2Q balance sheet, where cash and cash equivalents will be substantially reduced.
for our tax rate,
Remuda is now a 15% corporate tax rate jurisdiction .
Speaker Change: and this is reflected in our effective tax rate of 18.6% in the quarter.
Speaker Change: We expect the full-year tax rate to be in the high teens.
Despite the gyration of financial markets,
We remain in a very strong capital position [inaudible]
The priority for capital is to advance our strategic goals.
Speaker Change: Whether it be growth opportunities, including organic growth, and the hiring of new teams.
Speaker Change: or investing in our capabilities such as the scale adoption of digital and analytical capabilities.
However,
Speaker Change: While our share price hit new highs in the quarter and we have a 12 month
Total Shareholder Return, 58% AXIS Capital Holdings Ltd
Speaker Change: We view repurchasing our shares as an attractive option for utilizing our capital.
Speaker Change: In the quarter, we completed $440 million in share repurchases and declared $36 million in common dividends [inaudible]
We have 160 million remaining on our research, our repurchase authorization.
Speaker Change: With a major natural catastrophe loss in turbulent financial markets, 2025 has already showed extreme volatility.
Speaker Change: But here at AXIS, we believe we are well-positioned both operationally and financially to continue to report the steady and strong operating EPS and both value-per-share growth that our shareholders have come to expect.
With that, we'd be happy to take your questions.
The end of the video
We will now begin the question and answer session.
Speaker Change: To ask a question, you may press star then one on your touchtone phone. If you are using a speaker phone, please pick up your handset before pressing the keys.
Speaker Change: If at any time your question has been addressed and you would like to withdraw your question please press star then two. At this time we will pause momentarily to assemble a roster. Thank you very much.
Speaker Change: The first question comes from Andrew Klingerman with TD Securities. Please go ahead.
Andrew Klingerman: Hey, good morning. So, I, I guess the first question is then she talked about
Speaker Change: I believe you were saying pricing was off about 7% in property across seven divisions.
and I'm curious...
Speaker Change: Are we at early innings of pricing reductions? Where do you see pricing going from here in the property lines? It seemed like it was creeping up and then this quarter pricing really came down hard in properties. So maybe a little color on where we're going. [inaudible]
Across the Boydney Property [inaudible]
Speaker Change: Good morning, Andrew. Thanks for the question. In the quarter, just as I said, we were off negative 7.1%. I think that there's a couple of phenomenons to account for.
Speaker Change: This is much about a geographic performance of rate as much as anything else. Importantly, the construct of our portfolio is global.
Speaker Change: Secondly, as I indicated, our term condition and limit profile remains.
Speaker Change: Largely unchanged, largely unchanged. So when you speak about rate, you have to understand that this is an environment where we have changing TIVs, we have a more competitive London market than in the United States.
Speaker Change: and so I think this is more directed in our global market business at the moment where we're seeing a more precipitous rate change within our predominant business in the US, our E&S, wholesale business, we're seeing rate moderation to be sure but not in the same order of magnitude.
Speaker Change: In terms of where we go from here, I believe that the events of the first quarter, as I estimated more than 55 billion.
Speaker Change: AXIS Enjoys. We're going to continue to make certain that we're recycle managing that business, that the business we retain and attract is meeting our risk adjusted returns. In that important respect, we feel very good about the outcome globally. [inaudible]
Speaker Change: Okay, and since, you know, premium, I guess, net written premium, constant currency was up three percent, but I believe, I...
Either would you repeat on the earlier comments?
Speaker Change: You talked about X some unusual items, it would have been up closer to 8%.
Speaker Change: You also mentioned 21% increase in North America's submissions, so what I'm getting at is, you know, how do you see net written premium growth?
Speaker Change: for the year. Can you can you do upward single digit? Is that something that's viable? I'm not necessarily asking for guidance, but do you feel like that's something realistic to expect? Okay.
Speaker Change: Yeah, I believe our view is yes, it is reasonable to expect, Pete, detailed what I would describe as
Speaker Change: Exceptions in this quarter relating to two specific products and our normal run rate excluding that we feel comfortable with mid to high single digit net written premium growth for the balance of 2025 35
and you pointed to submission growth, I would tell you.
Speaker Change: that we feel it's quite robust, quite robust. We represented more than 29% submission increase. This is a robust market. It is highly selective, of course. It is targeted, but that has been our underwriting approach these past several years. [inaudible]
Speaker Change: Pete, I don't know if you'd like to add additional color? Yeah, the only color I'd add is we did have, we did buy some extra protection, sideways protection in our cyberbook of business in this first quarter so that's going to provide us with more XOL protection in case an event happens.
Speaker Change: And all that got pushed through as seated written in the quarter [inaudible]
Speaker Change: Last year we reduced our quota share on our pro lines.
Speaker Change: Actually, this 4-1, we renewed our liability quota share. We reduced that a bit, so now we're keeping more of our own liability cooking.
Speaker Change: So I would even point to the net earned premium growth of 10% in insurance in the quarter and say we really feel good about being able to grow the net written and the net earned as we actually renew some of our treaties, we're keeping more of a very premium adequate book of business.
Speaker Change: That was great. Maybe if I get to squeak one last one in. Prior your developments looked great, particularly in the insurance. Pete, in your comments, you talked about being, quote, more cautious, unquote, in your lost picks, should I read into that?
Speaker Change: But, you know, the casualty development is good, and you're just not...
Speaker Change: You're not taking any initiative to release reserves because it's it's casualty and the environment is unpredictable but but things are trending the way you'd like to see them trend in casualty [inaudible]
Speaker Change: Andrew, this has been Pete's comments were directed to our re-insurance business more broadly though your question cuts across our entire company so first we feel very good about our reserve positions
Speaker Change: In total, we feel very good about our position of reserves in liability as Pete indicated in our reinsurance business, not lost driven.
We brought more caution.
Speaker Change: across our lost ratios, including our specialty lines, which have been a targeted area of growth, and our team is executing well against its stated product strategies, and so...
Speaker Change: As Pete indicated expressly in his opening remarks this is more caution driven given the macro environment the uncertainty of the environment related in that business. [inaudible]
Speaker Change: And I guess I'd add on to that, since my comments were very much directed at the first quarter.
Speaker Change: Ex-Cat Loss Ratio and re-insurance. And that is where we actually put some more caution in our specialty lines, our short tail specialty lines and move those loss picks up from the run rate we had seen coming out of 2024. On the liability side, Andrew, the loss picks are consistent with where we were coming out of 2024. We feel very comfortable about that book of business, so the casualty books. And that's where we were coming out of, and that's where we were coming out of, and that's where we were coming out of.
Speaker Change: We actually let continued on a very consistent loss ratio from where we left 2024 but we did move up the short tail specialty lines.
Speaker Change: in abundance of caution given the current environment. So, that would be our A&H and our agriculture book of business where we actually just moved up some lost picks in the quarter.
Very helpful. Thank you so much.
You're welcome.
AXIS Capital Holdings Ltd
Speaker Change: The next question is from Hristian Getsov with Wells Fargo, please go ahead.
Christian Getsob: Hi, good morning. I had a question on your expense ratio in the quarter. It was a nice drop off year over year and I was just wondering if there's anything particular one off in the specific quarter just given the Q1 tends to be typically one of the highest expense ratio just given incentive comp and how should we think about the progression from here down to the sub 11 for the full year.
Pete Vogt: Hi, this is Pete, I'll take that. Actually, there was nothing really one-off in the quarter so I would suggest the 11-9 actual is almost a normalized and so 11-9 is where we are starting the year.
Christian Getsob: We, as you note, our first quarter does tend to be the highest quarter and I would expect that again to happen this calendar year so driven very much by you saw actual dollars of expense were down year over year so we continue to lean into how we work.
Christian Getsob: as a way to actually continue to process business at a lower cost and again net-earned premium was up.
Christian Getsob: Again, dollars down. So that expense leverage is what we've been pushing at as an entire organization. I've got to give my colleagues around the world credit for really looking at how we processed differently in this new age to bring our expense ratio under control.
Christian Getsob: Got it, thank you. And then for my second question, the reinsurance underlying loss ratio of the 68.4 .
Christian Getsob: Is that kind of a good run rate to think about for the balance of the year just giving your conservatism around the line or was there anything that was maybe like elevating the underlying loss ratio in the quarter maybe like aviation losses or something along those lines that we should be mindful of? [inaudible]
Christian Getsob: Yeah, this is Pete. I'll take that. I think as we look in today's environment, you know, what we do at the first quarter is a decent view of a run rate for the year for insurance. I would point out, because we have gotten questions about aviation, we were not...
Christian Getsob: We did not have any significant aviation losses in the quarter, I would say, so that was an impacting in the loss ratio and any of the re-insurance or insurance.
Great, thank you.
Speaker Change: The next question is from Meyer Shields with KBW. Please go ahead.
Myer Shields: Great, so first question I guess would be, you had decent growth in fiber and political, I'm sorry, credit and political risk in insurance. How should we think about the exposure of that to that specific line to
Meyer. Good morning. It's Evans. Firstly, please.
Myer Shields: We have a very strong team. This is a historical business that has been…
Quite consistent in profit generation, strong brand identity.
Myer Shields: More specifically, the growth from our insurance business and this product set really came from our surety
Business. That was the principal contribution of the increase.
of Growth in the Quarter [inaudible]
Myer Shields: Accounts for a rigorous underwriting approach that accounts for or takes into consideration.
Economic Outlooks
Myer Shields: Certainly the obligor, and so we feel very good about the leadership of that business, we feel very good about the diversity of our product mix in that business, but in the quarter discreet this is more about our surety growth that we enjoyed.
Myer Shields: Okay, that's helpful. And then on the re-intern side, we talked a little bit about primary motor race in the UK, decelerating post-oggin. Is that an issue that should impact written premier over the balance of the year as well?
AXIS Capital Holdings Ltd.
Myer Shields: Yeah, I'll take that. This is Pete. You know, a lot of that business does renew in the first. I'll call it three to four months of the year. And so that we don't necessarily see that coming back if that's your question, Meyer, for the rest of the year. It got very competitive at the 1-1's after the Ogden rate increased. For us, that was a lot of XOL type treaties out of the UK. And so...
Myer Shields: You know, that is going to be the impact for the year and I don't anticipate or we don't anticipate a movement where it could come back to us.
Okay, perfect. Thanks so much.
Thank you.
Myer Shields: The next question is from Andrew Anderson with Jeffries. Please go ahead.
Andrew Anderson: Hey, good morning. On US Primary Casualty and Access Casualty, still pretty good rate, but I think it was down a bit quarter over quarter. Was that kind of reflective of business mix or perhaps a willingness to compete a bit more?
Andrew, good morning. This is Vince. I think that the
The primary casualty story, this was the final quarter. This was the final quarter.
Speaker Change: of very strong remediation and just crudos to RENS primary team and leader of North America generally.
Speaker Change: That was really what drove the final quarter, the final mix that we were reshaping. And AXIS casually, we're pleased with the double digit, there is some mixed influence of course, but we're confident in what we delivered in the quarter, both in the dimension of rate change, but equally and importantly, the growth aspiration we have in that very profitable business.
. . . .
Speaker Change: Thanks, and then just on professional lines, I think it was up 9% in the quarter after kind of being flatish for the past few periods. You know, we've been hearing some commentary about increased competition on liability claims made, which is what I would think this is. Could you maybe just talk about the growth in that line?
AXIS Capital Holdings Ltd
Speaker Change: It's a broad SEC class reporting class professional, so let me unpack that. Firstly, this is not a function of public D&O growth as a company we remain
despite the increasing loss landscape in public D&O.
Speaker Change: Additionally, we've invested a number of classes, so if you think about Allied Health.
Speaker Change: If you think about our lower middle market private company D&O efforts these are key contributors to the growth and further I would also note internationally we had some increase in TL transactional liability which also formed I think the third prong of the chief growth we evidence in the professional lines.
This Quarter
Thank you.
You're welcome.
Speaker Change: Again, if you have a question, please press star then one [inaudible]
Speaker Change: The next question is from Charlie Lederer with BMO. Please go ahead.
Hey, thanks.
Charlie Lederer: I guess my first question, I'm wondering given some of the moving pieces you guys called out in insurance whether we should expect the underlying loss ratio and the acquisition cost ratio to move here from mixed just as
Charlie Lederer: You know, the remediation impact in liability goes away and maybe property growth, you know, continues to moderate. Thanks.
Charlie Lederer: Yeah, I'll take that, Charlie, this is Pete. I would think for the rest of the year, one boy, we don't give guidance, you know, the loss for the X-Cat loss racial equality and insurance.
Charlie Lederer: We'll probably still be in that, you know, 52 to 53 range. I mean the mix is not going to change materially through the rest of the year. It may change by a couple points, but I would still think that we'll be in that, you know, we'll call it 52 and a half plus or minus range for the remainder of the year.
Charlie Lederer: Thanks, and Vince, you made some interesting comments on tariffs impacting loss costs and top line. Can you unpack in which lines you think AXIS would feel that, and there have been a lot of headlines the last couple of days about import pull forwards.
Speaker Change: Um, is there growth opportunity in the short term because of that maybe in marine and trade credit?
So we have a diverse product portfolio that's global.
Speaker Change: and in my prepared remarks, I certainly pointed to how we're assessing. Thank you very much.
Speaker Change: The potential impact of tariffs as they're as A, if they're sustained. [inaudible]
Speaker Change: Executed, so we pointed to property, we pointed to cargo explicitly, we did not point to auto physical damages, that is not a material portfolio for the AXIS organization.
Speaker Change: We equally, as you infern the latter part of your question, do see opportunities that continue to emerge, and we do think that we're well positioned geographically with the product breadth that we have to meet that potential need as well, and so I think we have a very reproodant approach.
Speaker Change: and how we're accounting for tariffs. We certainly don't have a crystal ball on the outcome. It remains highly fluid, but our organization is agile in being responsive to a number of scenarios, including the potential impact of loss costs in our company.
AXIS Capital Holdings Ltd
Speaker Change: Thanks, and one last one. I don't know if you guys called this out. The pet insurance dynamic impacting the net to gross premium ratio and insurance.
Speaker Change: Should that impact, should that impact last throughout the year or to that lap at some point in the next few quarters? Thanks. Hey, Charles, to speak, that really started up in the second half of last year, so it will really impact more the first half of the year than the entire year.
AXIS Capital Holdings Ltd
Speaker Change: The next question is from Josh Shanker with Bank of America. Please go ahead.
Yes, thank you for taking my question. Good morning
Ab
Speaker Change: Looking at the buyback, you guys did $440 million this quarter, which was about 10-11% of the daily volume in the stock. I'm just trying to understand the dynamic of how that's achieved.
Speaker Change: Also, I know you knew you had some capital being freed up from the end star deal, but I mean this pace obviously you like your shares here, but it's not sustainable. Can you sort of frame how we should think about the first quarters buyback and what that means for the remainder of the year?
Speaker Change: Yeah, hi Josh, this is Pete, I'll handle that. I'd remind you that one of the things we talk about, always talk about when we think about buybacks is we're going to do it opportunistically.
Speaker Change: based upon where we think we're trading at the current moment. In the quarter, opportunistically we had a large shareholder come to us and so 400 of the 440 was actually done on two transactions that were not done on open market activity.
Speaker Change: That's how we were able to actually execute 400 of the 440 without dealing with the necessary, as you point out trying to get that done and push it through the market.
Speaker Change: For the remainder of the year, we've got $160 million left in our authorization. I'll tell you we're going to continue to be opportunistic as we deploy that 160, as I mentioned in my prepare remarks. We still think our shares are undervalued, so we do anticipate some buyback during the year, but we don't have a set plan in place that I would actually articulate to you. [inaudible]
AXIS Capital Holdings Ltd
Speaker Change: Okay, I mean, I'm not quibbling. I think the cube says open market, but it's really makes sense that they weren't done in the open. I'm looking at the statement of cash loads there for what it's worth. [inaudible]
Um yeah, I totally make sense. Okay [inaudible]
Um.
Speaker Change: and in terms of the capital freed by the N-Star deal, this sort of already contemplator is this incremental to how you view the capital return potential for the year.
AXIS Capital Holdings
Yeah, hey Josh, again, the-
Speaker Change: The LPT transaction completed, so we're really excited about that. We did contemplate the impact of that when we went to the board and asked for the $400 million authorization back in February . We're already seeing the benefit on our balance sheet at year end because we've already moved a lot of fixed income assets into cash and so the capital charge is associated with the assets sideboard already coming down.
Speaker Change: and so I'd say already somewhat contemplated in what we've asked the board for.
All right. Fantastic. Thank you for the information.
You're welcome, Josh.
Speaker Change: This concludes our question and answer session. I would like to turn the conference back over to Vince Tizzio for any closing remarks.
Vince Tizzio: Thank you all for joining today's call. I again express my deep appreciation to our AXIS teammates and to our value trading partners and customers. This completes our first quarter call and we look forward to reporting our continued progress as we pursue our specialty ambition. Thank you.
AXIS Capital Holdings Ltd
Vince Tizzio: The conference has concluded. Thank you for attending today's presentation. You may now disconnect.