Axis Capital Q3 net income falls 32% as combined ratio climbs to 94%

Axis Capital's third-quarter net income available to common shareholders fell 32% to $202 million, or $2.75 a diluted share, from $294 million a year earlier. Underwriting margins narrowed and investment losses replaced gains.

Axis booked $47 million of net investment losses against $31 million of gains a year earlier, a $78 million swing. Net investment income rose 14% to $211 million from $185 million, leaving the combined investment result at $164 million, down from $216 million.

The $52 million drop in the combined investment result was equal to more than half of the $92 million fall in net income available to common shareholders.

Underwriting income fell 29% to $134 million and the combined ratio deteriorated to 94% from 89.4%, still a six-point underwriting margin. Axis recorded $75 million of pre-tax catastrophe and weather losses net of reinsurance, including $44 million tied to the Middle East conflict and the Russia-Ukraine war and $31 million from weather events. Those losses added 4.6 points to the combined ratio.

The insurance division grew gross premiums written 13% to $1.9 billion. Underwriting income fell 32% to $104 million and its combined ratio rose to 92% from 85.9%. Axis said an acceleration in property market softening and more competitive casualty conditions contributed to a higher underlying loss ratio.

Axis Re produced its 11th consecutive profitable quarter. Reinsurance gross premiums written rose 4% to $449 million, principally on higher premiums from two agriculture contracts. Underwriting income fell 15% to $30 million and the combined ratio edged to 92.4% from 92.2%. Net premiums written declined 5% as Axis ceded a greater proportion of liability and motor premiums to reinsurers.

AM Best left Axis's A rating untouched in September, as Private Wealth Daily previously reported.

Operating income, which excludes investment gains and losses and certain other items, fell 10% to $229 million, or $3.12 a diluted share, and annualised operating return on average common equity was 15.7%. For the first nine months, net income available to common shareholders was $699 million, compared with operating income of $697 million. The $2 million gap left gains and losses netted to almost nothing across the period.