AXIS CAPITAL HOLDINGS LTD

Previous wording

The following is a discussion and analysis of our results of operations for the three months ended March 31, 2024 and 2023 and our financial condition at March 31, 2024 and December 31, 2023. This should be read in conjunction with Item 1 Consolidated Financial Statements of this report and our Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2023. Unless otherwise noted, tabular dollars are in thousands, except per share amounts. Amounts in tables may not reconcile due to rounding differences.

Current wording

The following is a discussion and analysis of our results of operations for the three and six months ended June 30, 2024 and 2023 and our financial condition at June 30, 2024 and December 31, 2023. This should be read in conjunction with Item 1 'Consolidated Financial Statements' of this report and our Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2023. Unless otherwise noted, tabular dollars are in thousands, except per share amounts. Amounts in tables may not reconcile due to rounding differences.

Previous wording

First Quarter 2024 Consolidated Results of Operations

Current wording

Second Quarter 2024 Consolidated Results of Operations

Previous wording

•Net income available to common shareholders of $388 million, or $4.57 per common share, and $4.53 per diluted common share

Current wording

•Net income available to common shareholders of $204 million, or $2.42 per common share, and $2.40 per diluted common share

Previous wording

•Pre-tax catastrophe and weather-related losses, net of reinsurance, of $20 million ($17 million, after-tax), (Insurance: $19 million; Reinsurance: $1 million), or 1.5 points attributable to weather-related events.

Current wording

•Pre-tax catastrophe and weather-related losses, net of reinsurance, of $47 million ($38 million, after-tax), (Insurance: $46 million; Reinsurance: $1 million), or 3.6 points, including $9 million, or 0.7 points attributable to the Red Sea Conflict

Previous wording

•Underwriting income(2) of $146 million and combined ratio of 91.1%

Current wording

•Underwriting income(2) of $161 million and combined ratio of 90.4%

Previous wording

First Quarter 2024 Consolidated Financial Condition

Current wording

Second Quarter 2024 Consolidated Financial Condition

Previous wording

•Total cash and investments of $16.8 billion; fixed maturities, short-term investments, and cash and cash equivalents comprise 89% of total cash and investments and have an average credit rating of AA-

Current wording

•Total cash and investments of $17.2 billion; fixed maturities, short-term investments, and cash and cash equivalents comprise 87% of total cash and investments and have an average credit rating of AA-

Previous wording

•Reserve for losses and loss expenses of $16.6 billion and reinsurance recoverable on unpaid and paid losses and loss expenses of $7.0 billion

Current wording

•Reserve for losses and loss expenses of $16.7 billion and reinsurance recoverable on unpaid and paid losses and loss expenses of $7.1 billion

Previous wording

•Debt of $1.3 billion and debt to total capital ratio(3) of 19.3%

Current wording

•Debt of $1.3 billion and debt to total capital ratio(3) of 18.8%

Previous wording

•Total common shares repurchased were 1.3 million shares for a total of $76 million, including $62 million repurchased pursuant to our Board-authorized share repurchase program and$14 million from employees to satisfy personal withholding tax liabilities that arise on the vesting of share-settled restricted stock units

Current wording

•Total common shares repurchased were 545,000 shares for a total of $39 million, including $38 million repurchased pursuant to our Board-authorized share repurchase program and$0.4 million from employees to satisfy personal withholding tax liabilities that arise on the vesting of share-settled restricted stock units

Previous wording

•Common shareholders’ equity of $5.0 billion; book value per diluted common share of $57.13

Current wording

•Common shareholders’ equity of $5.1 billion; book value per diluted common share of $59.29

Previous wording

We provide our clients and distribution partners with a broad range of risk transfer products and services, and strong capacity, backed by excellent financial strength. We manage our portfolio holistically, aiming to construct the optimum portfolio of risks, consistent with our risk appetite and the development of our franchise. We nurture an ethical, entrepreneurial, disciplined and diverse culture that promotes outstanding client service, intelligent risk taking, operating efficiency, corporate citizenship and the achievement of superior risk-adjusted returns for our shareholders. We believe that the achievement of our objectives will position us as a global leader in specialty risks. The execution of our business strategy for the first three months of 2024 included the following:

Current wording

We provide our clients and distribution partners with a broad range of risk transfer products and services, and strong capacity, backed by excellent financial strength. We manage our portfolio holistically, aiming to construct the optimum portfolio of risks, consistent with our risk appetite and the development of our franchise. We nurture an ethical, entrepreneurial, disciplined and diverse culture that promotes outstanding client service, intelligent risk taking, operating efficiency, corporate citizenship and the achievement of superior risk-adjusted returns for our shareholders. We believe that the achievement of our objectives will position us as a global leader in specialty risks. The execution of our business strategy for the first six months of 2024 included the following:

Previous wording

We are committed to leadership in specialty insurance and reinsurance. We believe our market positioning, specialty underwriting acumen, global platform, claims management capabilities and deep relationships with our distributors and clients, supported by a conservative and well performing investment portfolio, will provide opportunities for increased profitability.

Current wording

We are committed to advancing AXIS as a specialty underwriting leader that delivers consistent, profitable growth. We believe our market positioning, diversified book of business, specialty underwriting acumen, global platform, claims management capabilities, and deep distribution relationships, supported by a conservative and well performing investment portfolio, provides opportunity for continued and increased profitability.

Previous wording

Across the business, we will continue to pursue targeted growth opportunities by employing a disciplined underwriting strategy and appetite. Where prices continue to deliver adequate profitability, we will look to grow within our risk and volatility guidelines. With a strengthened book of business, and a growing footprint in the specialty markets that are seeing the most favorable conditions, we believe AXIS is well positioned to drive profitable growth within the current environment.

Current wording

Across the business, we will continue to pursue targeted growth opportunities by employing a disciplined underwriting strategy and appetite. Where prices continue to deliver adequate profitability, we will look to grow within our risk and volatility guidelines. With a strengthened book of business, and an expanding footprint in specialty markets experiencing favorable conditions, we believe AXIS is well positioned to drive profitable growth within the current environment.

Previous wording

Reorganization expenses of $12 million primarily relate to severance costs mainly attributable to our "How We Work" program which is focused on simplifying the operating structure.

Current wording

Reorganization expenses of $14 million and $26 million for the three and six months ended June 30, 2024, respectively, primarily related to severance costs attributable to our "How We Work" program which is focused on simplifying the operating structure.

Previous wording

On December 27, 2023, the Government of Bermuda enacted the Corporate Income Tax Act 2023 (the "Act") which will apply a corporate income tax of 15% for fiscal years beginning on or after January 1, 2025. The Act includes a provision referred to as the economic transition adjustment, which is intended to provide a fair and equitable transition into the tax regime. Pursuant to the Act and subsequently issued guidance, we recorded a net deferred tax asset of $163 million in the first quarter of 2024 which we expect to utilize mainly over a 10-year period. We expect to incur increased taxes in Bermuda beginning in 2025. The Bermuda net deferred tax benefit is excluded from operating income (loss).

Current wording

On December 27, 2023, the Government of Bermuda enacted the Corporate Income Tax Act 2023 (the "Act") which will apply a corporate income tax of 15% for fiscal years beginning on or after January 1, 2025. The Act includes a provision referred to as the economic transition adjustment, which is intended to provide a fair and equitable transition into the tax regime. Pursuant to the Act and subsequently issued guidance, we recorded a net deferred tax asset of $163 million in the three months ended March 31, 2024, which we expect to utilize mainly over a 10-year period. We expect to incur increased taxes in Bermuda beginning in 2025. The Bermuda net deferred tax benefit is excluded from operating income (loss).

Previous wording

(1)Underwriting-related general and administrative expenses is a non-GAAP financial measure as defined in Item 10(e) of SEC Regulation S-K. The reconciliation to general and administrative expenses, the most comparable GAAP financial measure, also included corporate expenses of $26 millionfor thethree months ended March 31, 2024 and 2023, respectively. Refer to'Management’s Discussion and Analysis of Financial Condition and Results of Operations – Other Expenses (Revenues), Net' for further details on corporate expenses. Refer also to'Management’s Discussion and Analysis of Financial Condition and Results of Operations – Non-GAAP Financial Measures Reconciliation' for further details.

Current wording

(1)Underwriting-related general and administrative expenses is a non-GAAP financial measure as defined in Item 10(e) of SEC Regulation S-K. The reconciliation to general and administrative expenses, the most comparable GAAP financial measure, also included corporate expenses of $27,673 and $35,248 for thethree months ended June 30, 2024 and 2023, respectively, and$53,252 and $61,664 for the six months ended June 30, 2024 and 2023, respectively. Refer to'Management’s Discussion and Analysis of Financial Condition and Results of Operations – Other Expenses (Revenues), Net' for further details on corporate expenses. Refer also to'Management’s Discussion and Analysis of Financial Condition and Results of Operations – Non-GAAP Financial Measures Reconciliation' for further details.

Previous wording

(1) The general and administrative expense ratio included corporate expenses not allocated to underwriting segmentsof 2.0% and 2.1% for the three months ended March 31, 2024 and 2023, respectively. Refer to 'Management’s Discussion and Analysis of Financial Condition and Results of Operations – Other Expenses (Revenues), Net'for further details.

Current wording

(2) The general and administrative expense ratio included corporate expenses not allocated to underwriting segmentsof 2.1% and 2.8% for the three months ended June 30, 2024 and 2023, respectively, and 2.1% and 2.5% for the six months ended June 30, 2024 and 2023, respectively. Refer to 'Management’s Discussion and Analysis of Financial Condition and Results of Operations – Other Expenses (Revenues), Net'for further details.

Previous wording

Gross premiums written for the three months ended March 31, 2024 increased by $159 million, or 11%, compared to the three months ended March 31, 2023. The increase was primarily attributable to property, marine and aviation, accident and health, professional lines, and credit and political risk lines, partially offset by a decrease in cyber lines.

Current wording

Gross premiums written for the six months ended June 30, 2024 increased by $289 million, or 9%, compared to the six months ended June 30, 2023. The increase was primarily attributable to property, marine and aviation, accident and health, credit and political risk, and professional lines, partially offset by decreases in cyber, and liability lines.

Previous wording

The decrease in cyber lines was attributable to premium adjustments in the three months ended March 31, 2024, related to business written on a line slip basis, and a decrease in premiums associated with two significant programs, partially offset by new business.

Current wording

The decrease in cyber lines was due to a decrease in premiums associated with two significant programs, and premium adjustments related to business written on a line slip basis, partially offset by new business. The decrease in liability lines was driven by underwriting actions taken to reposition the portfolio, partially offset by favorable rate changes.

Previous wording

The increase in property lines reflected the increase in gross premiums written for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. The increase in marine and aviation lines was attributable to reinstatement premiums associated with losses and loss expenses for the three months ended March 31, 2024. The decreases in cyber, and professional lines were due to the restructuring of significant existing quota share treaties.

Current wording

The decreases in property, cyber, and professional lines were due to the restructuring of significant existing quota share treaties. The decrease in cyber lines also reflected the decrease in gross premiums written for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The decrease in liability lines was attributable to the decrease in gross premiums written for the three months ended June 30, 2024, compared to the three months ended June 30, 2023.

Previous wording

Ceded premiums written for the three months ended March 31, 2024 was $552 million, or 35%, of gross premiums written, compared to $533 million, or 38%, of gross premiums written for the three months ended March 31, 2023. The increase in ceded premiums written of $19 million, or 4%, was primarily driven by increases in property, and marine and aviation lines, partially offset by decreases in cyber, and professional lines.

Current wording

Ceded premiums written for the six months ended June 30, 2024 was $1,172 million, or 35%, of gross premiums written, compared to $1,196 million, or 39%, of gross premiums written for the six months ended June 30, 2023. The decrease in ceded premiums written of $24 million, or 2%, was primarily driven by decreases in cyber, and professional lines, partially offset by increases in property, credit and political risk, and marine and aviation lines.

Previous wording

The decrease in cyber lines also reflected the decrease in gross premiums written for the three months ended March 31, 2024, compared to the three months ended March 31, 2023.

Current wording

The decreases in cyber, and professional lines were due to the restructuring of significant existing quota share treaties. The decrease in cyber lines also reflected the decrease in gross premiums written for the six months ended June 30, 2024, compared to the six months ended June 30, 2023.

Previous wording

The increase was primarily driven by increases in gross premiums earned in property, marine and aviation, and accident and health lines, together with a decrease in ceded premiums earned in professional lines. These amounts were partially offset by increases in ceded premiums earned in property, and marine and aviation lines, together with a decrease in gross premiums earned in professional lines.

Current wording

The increase was primarily driven by increases in gross premiums earned in property, marine and aviation, and accident and health lines, together with a decrease in ceded premiums earned in professional lines. These amounts were partially offset by an increase in ceded premiums earned in property lines, together with a decrease in gross premiums earned in professional lines.

Previous wording

Refer to Item 1, Note 6 to the Consolidated Financial Statements'Reserve for losses and loss expenses' for details on the lines of business and prior year reserve development.

Current wording

Refer to Item 1, Note 7 to the Consolidated Financial Statements'Reserve for losses and loss expenses' for details on prior year reserve development by the lines of business.

Previous wording

The acquisition cost ratio increased to 19.2% for the three months ended March 31, 2024, from 18.0% for the three months ended March 31, 2023, primarily related to changes in business mix driven by an increase in property, and accident and health lines of business written in recent periods, together with a decrease in ceding commission mainly in professional lines and cyber lines.

Current wording

The acquisition cost ratio increased to 19.6% for the three months ended June 30, 2024, from 18.6% for the three months ended June 30, 2023, primarily related to the change in business mix driven by an increase in property business written in recent periods, together with decreases in ceding commissions mainly in professional lines and cyber lines, partially offset by a decrease in variable costs in property lines.

Previous wording

The increase in liability lines was related to new business, an increased line size on a significant contract and the timing of renewals of significant contracts, partially offset by non-renewals and decreased line sizes on several contracts, and a lower level of premium adjustments in the three months ended March 31, 2024, compared to the three months ended March 31, 2023.

Current wording

The increase in liability lines was related to new business and increased line sizes on several contracts, partially offset by the restructuring of a significant contract, the non-renewal of a significant contract, and a lower level of positive premium adjustments in the three months ended June 30, 2024, compared to the three months ended June 30, 2023.

Previous wording

The decreases in catastrophe and property lines were associated with the exit from these lines of business in June 2022.

Current wording

The decreases in catastrophe and property lines were attributable to the exit from these lines of business in June 2022.

Previous wording

Gross premiums written for the three months ended March 31, 2024, increased by $114 million, or 12% ($102 million, or 11%, on a constant currency basis), compared to the three months ended March 31, 2023. The increase was primarily attributable to credit and surety, liability, agriculture, marine and aviation, accident and health, motor, and professional lines, partially offset by decreases in catastrophe and property lines.

Current wording

Gross premiums written for the six months ended June 30, 2024, increased by $140 million, or 9% ($130 million, or 8%, on a constant currency basis), compared to the six months ended June 30, 2023. The increase was primarily attributable to credit and surety, liability, professional lines, accident and health, agriculture, marine and aviation, and motor lines, partially offset by decreases in catastrophe and property lines.

Previous wording

The increase in credit and surety lines was driven by new business, increased line sizes on surety contracts, the timing of renewals of several credit and surety contracts and positive premium adjustments in the three months ended March 31, 2024, compared to negative premium adjustments in the three months ended March 31, 2023.

Current wording

The increase in credit and surety lines was driven by new business, increased line sizes on surety contracts and a higher level of positive premium adjustments in the six months ended June 30, 2024, compared to the six months ended June 30, 2023.

Previous wording

The increase in accident and health lines was related to positive premium adjustments in the three months ended March 31, 2024, compared to the negative premium adjustments in the three months ended March 31, 2023, and new business, partially offset by decreased line sizes on several contracts.

Current wording

The increase in accident and health lines was related to new business and positive premium adjustments in the six months ended June 30, 2024, compared to the negative premium adjustments in the six months ended June 30, 2023, partially offset by decreased line sizes on several contracts.

Previous wording

The increase in motor lines was due to the timing of the renewal of a significant contract and new business, partially offset by non-renewals and decreased line sizes on several contracts associated with repositioning the portfolio.

Current wording

The increase in motor lines was due to the timing of the renewal of a significant contract and new non-proportional business associated with favorable market conditions, partially offset by non-renewals and decreased line sizes on several proportional contracts associated with repositioning the portfolio.

Previous wording

The increases in credit and surety, liability, accident and health, professional lines and motor lines were primarily attributable to premiums ceded to a quota share retrocession agreement entered into with Monarch Point Re (ISA 2024) Ltd. on January 1, 2024 compared to premiums ceded to a quota share retrocession agreement entered into with Monarch Point Re (ISA 2023) Ltd. on September 22, 2023 with an effective date of January 1, 2023.

Current wording

The increases in professional lines, liability, credit and surety, motor, and accident and health lines were primarily attributable to premiums ceded to a quota share retrocession agreement entered into with Monarch Point Re (ISA 2024) Ltd. on January 1, 2024 compared to premiums ceded to a quota share retrocession agreement entered into with Monarch Point Re (ISA 2023) Ltd. on September 22, 2023 with an effective date of January 1, 2023.

Previous wording

The increases in liability lines and professional lines were also due to the restructuring of a significant quota share retrocession treaty with a strategic capital partner, partially offset by the restructuring of another significant quota share retrocession treaty with a strategic capital partner.

Current wording

The increases in professional lines and liability lines were also due to the restructuring of significant quota share retrocession treaties with strategic capital partners.

Previous wording

The increase in marine and aviation lines was attributable to an increase in gross premiums written in the three months ended March 31, 2024, compared to the three months ended March 31, 2023, and the restructuring of a significant quota share retrocessional treaty with a strategic capital partner.

Current wording

The increase in marine and aviation lines was associated with the restructuring of a significant quota share retrocessional treaty with a strategic capital partner.

Previous wording

The increase in credit and surety lines was also due to an increase in gross premiums written in the three months ended March 31, 2024, compared to the three months ended March 31, 2023, and the restructuring of a significant quota share retrocession treaty with a strategic capital partner, partially offset by the non-renewal of a significant quota share retrocession treaty.

Current wording

The increase in credit and surety lines was also due to an increase in gross premiums written in the six months ended June 30, 2024, compared to the six months ended June 30, 2023, and the restructuring of a significant quota share retrocession treaty with a strategic capital partner, partially offset by the non-renewal of a significant quota share retrocession treaty.

Previous wording

The decrease was primarily driven by decreases in gross premiums earned in catastrophe, property and professional lines, together with increases in ceded premiums earned in liability, professional lines, and motor lines. These amounts were partially offset by an increase in gross premiums earned in liability lines, together with a decrease in ceded premiums earned in catastrophe lines.

Current wording

The decrease was primarily driven by increases in ceded premiums earned in liability, professional lines, accident and health, and motor lines, together with decreases in gross premiums earned in catastrophe, property and motor lines. These amounts were partially offset by a decrease in ceded premiums earned in catastrophe lines, together with an increase in gross premiums earned in accident and health lines.

Previous wording

Net premiums earned for the three months ended March 31, 2024, decreased by $74 million, or 18% ($70 million, or 17%, on a constant currency basis), compared to the three months ended March 31, 2023.

Current wording

Net premiums earned for thesix months ended June 30, 2024, decreased by $150 million, or 18% ($146 million, or 17%, on a constant currency basis), compared to thesix months ended June 30, 2023.

Previous wording

Other insurance related income of $8 million for the three months ended March 31, 2024, compared to other insurance related income of $1 million for thethree months ended March 31, 2023, was primarily associated with an increase in fees related to arrangements with strategic capital partners.

Current wording

Other insurance related income of $9 million for the three months ended June 30, 2024, compared to other insurance related income of $5 million for thethree months ended June 30, 2023, was primarily associated with fees related to arrangements with strategic capital partners.

Previous wording

The current accident year loss ratio for three months ended March 31, 2024, compared to the same period in 2023, was impacted by a lower level of catastrophe and weather-related losses. During the three months ended March 31, 2024, catastrophe and weather-related losses, were $1 million, or 0.2 point, attributable to weather-related events. Comparatively, during the three months ended March 31, 2023, catastrophe and weather-related losses, were $13 million, or 3.3 points, primarily attributable to New Zealand floods, and other weather-related events.

Current wording

The current accident year loss ratio for three months ended June 30, 2024, compared to the same period in 2023, was impacted by a lower level of catastrophe and weather-related losses. During the three months ended June 30, 2024, catastrophe and weather-related losses, were $1 million, or 0.3 point, attributable to weather-related events. Comparatively, during the three months ended June 30, 2023, catastrophe and weather-related losses, were $6 million, or 1.4 points, primarily attributable to Cyclone Gabrielle, and other weather-related events.