AXIS Operating Income Falls as Underwriting Margins Narrow
Second-quarter net income rose 16% to $251 million.
Axis Capital Holdings (AXS), the specialty insurer and reinsurer, reported a 19% decline in operating income as its combined ratio deteriorated amid higher catastrophe losses and weaker underlying underwriting results.
Operating income fell to $211 million from a year earlier and declined from $257 million in the first quarter. Annualized operating return on average common equity dropped sequentially to 14.3% from 17.7%, extending a retreat from 17.2% in the fourth quarter of 2024.
Total revenue increased about 7% to $1.75 billion as net premiums earned rose 9% to $1.52 billion. Net income available to common shareholders was $3.38 a diluted share, while the $251 million total was roughly flat with the first quarter’s $247 million.
Underwriting income decreased 24% to $143 million and fell from $187 million in the first quarter. The combined ratio worsened to 93.1% from 88.9% a year earlier and 89.8% sequentially, reflecting higher loss and acquisition-cost ratios.
Catastrophe and weather losses rose to 5.3 percentage points from 2.6 points, including $49 million of natural-catastrophe losses and $31 million tied to the Middle East conflict. Underlying performance also weakened: the current accident-year combined ratio excluding catastrophe and weather losses increased one point to 88.8%.
Insurance gross premiums written rose 15.3% to $2.23 billion, supported by $165 million from AXIS Capacity Solutions, while underwriting income in the segment fell 21.3% to $119 million. Its combined ratio deteriorated 4.7 points to 90.0% due to faster property-market softening, increasingly competitive casualty conditions and changes in business mix.
Reinsurance gross premiums written declined 24.7% to $439 million as AXIS reduced casualty line sizes and declined renewals. Reinsurance underwriting income fell 37.3% to $24 million, and the segment’s combined ratio worsened 2.5 points to 94.5%.
AXIS returned $122 million to common shareholders, up from $93 million in the first quarter, as share repurchases increased to $89 million and dividends remained at $33 million. Book value per diluted share rose 3.2% during the quarter to $80.67, leaving capital returns as a counterweight to the decline in operating profitability.