Axis Capital keeps its A rating as AM Best writes the cleanup rationale

Royal Gazette Bermuda Re reported September 6 that AM Best affirmed Axis Capital's ratings: A (excellent) financial strength and a+ (excellent) long-term issuer credit for the operating subsidiaries, bbb+ (good) long-term issuer credit for Axis Capital Holdings. None of those grades moved; the commentary did.

AM Best placed Axis's balance-sheet strength at the top of its scale, the strongest level, with risk-adjusted capitalization at the strongest level of the agency's Capital Adequacy Ratio. Financial flexibility at the holding company and its operating subsidiaries supports that assessment, as do capital management strategies that have kept common and preferred dividends and share repurchases consistent.

The reserve history attached to that capital is the harder part of the picture. Development has been favorable in recent years with one exception: 2023, when Axis strengthened casualty reserves for accident years 2017 through 2022 after higher-than-expected social and economic inflation pressed on claims experience. Then in 2025, Axis completed a loss portfolio transfer with Cavello Bay Reinsurance, retro-ceding approximately $2.3 billion in ceded reserves tied to casualty reinsurance from 2021 and prior underwriting years, leaving financial leverage broadly in line with the agency's expectations.

AM Best calls operating performance adequate, and its reasoning is the accounting of a cleanup: portfolio repositioning, the reserve strengthening and the loss portfolio transfer have reduced the earnings and underwriting volatility Axis showed across 2020-2022. The result, in the agency's phrasing, is a stable and resilient specialty-focused business with improved underwriting and profitability metrics.

The affirmation rewards finished work, a distinction that separates it from other reserve structures the agency has been scrutinizing in Bermuda. In late August, as this publication has reported, AM Best flagged reserve credits in offshore annuity reinsurance that were growing faster than the collateral behind them; here it credits a transfer that has already moved, with Axis having retro-ceded the book to Cavello Bay in 2025.

AM Best's rationale now leads with completed repairs — the 2023 charge absorbed, the Cavello Bay transfer placed. A balance sheet explained by finished transactions is in a better position at the next debt pricing than one explained by promises.