AXIS CAPITAL HOLDINGS LTD

Previous 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.

Current wording

The following is a discussion and analysis of our results of operations for the three and nine months ended September 30, 2024 and 2023 and our financial condition at September 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

Second Quarter 2024 Consolidated Results of Operations

Current wording

Third Quarter 2024 Consolidated Results of Operations

Previous wording

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

Current wording

•Net income available to common shareholders of $173 million, or $2.06 per common share, and $2.04 per diluted common share

Previous 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

Current wording

•Pre-tax catastrophe and weather-related losses, net of reinsurance, of $78 million ($64 million, after-tax), (Insurance: $71 million; Reinsurance: $7 million), or 5.8 points, including $43 million, 3.2 points attributable to Hurricane Helene and Hurricane Beryl, and $2 million, or 0.2 points attributable to the Red Sea Conflict

Previous wording

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

Current wording

•Underwriting income(2) of $135 million and combined ratio of 93.1%

Previous wording

Second Quarter 2024 Consolidated Financial Condition

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Third Quarter 2024 Consolidated Financial Condition

Previous 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-

Current wording

•Total cash and investments of $18.1 billion; fixed maturities, short-term investments, and cash and cash equivalents comprise 88% of total cash and investments and have an average credit rating of AA-

Previous 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

Current wording

•Reserve for losses and loss expenses of $17.3 billion and reinsurance recoverable on unpaid and paid losses and loss expenses of $7.3 billion

Previous wording

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

Current wording

•Debt of $1.3 billion and debt to total capital ratio(3) of 17.8%

Previous 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

Current wording

•Total common shares repurchased were 542,000 shares for a total of $40 million, including$40 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 $5.1 billion; book value per diluted common share of $59.29

Current wording

•Common shareholders’ equity of $5.5 billion; book value per diluted common share of $64.65

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 six 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 nine months of 2024 included the following:

Previous wording

Overall market conditions continue to be favorable, even as the general pace of price increases is slowing. We anticipate rate change to remain positive across the casualty classes, in excess of loss cost trends, but expect to continue to see rate increases moderate across other classes. Following multiple years of rate increases outpacing loss cost trends across the specialty sector, pricing has begun to moderate due to emerging conditions which include an increase in capacity in the market. We continue to pursue selective profitable growth areas where premium adequacy metrics remain strong and where we find market dislocations creating opportunity.

Current wording

Overall, the current property and casualty market trends continue to be favorable for specialty insurance and reinsurance carriers. We anticipate market rate change to continue to exceed loss cost trends across the casualty classes but do expect to experience moderate rate erosion in the first party as well as financial lines sectors. Following multiple years of rate increases outpacing loss cost trends across the specialty sector, pricing has moderated in these distinct areas due to the emergence of new capital creating an increase in available capacity. We will continue to lean into sectors, and sub sectors, where premium adequacy metrics remain strong and where we see market dislocations creating opportunity for additional profitable growth.

Previous wording

The wholesale channel continues to experience growth due to market dislocations in the admitted market. We anticipate this continuing throughout 2024 with market opportunities arising predominantly in the Specialty and E&S lines. We continue to pursue targeted growth opportunities by employing a disciplined underwriting appetite and strategy.

Current wording

The wholesale channel continues to experience growth due to market dislocations in the admitted market. We anticipate this continuing throughout 2024 with market opportunities arising predominantly in Specialty and Excess and Surplus lines. We continue to pursue targeted growth opportunities by employing a disciplined underwriting appetite and strategy.

Previous 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.

Current wording

Reorganization expenses of $nil and $26 million for the three and nine months ended September 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

(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.

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 $33,621 and $40,682 for thethree months ended September 30, 2024 and 2023, respectively, and$86,873 and $102,345 for the nine months ended September 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

(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.

Current wording

(2) The general and administrative expense ratio included corporate expenses not allocated to underwriting segmentsof 2.5% and 3.1% for the three months ended September 30, 2024 and 2023, respectively, and 2.2% and 2.7% for the nine months ended September 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

The increase in accident and health lines was also attributable to an increase in gross premiums written in the three months ended June 30, 2024, compared to the three months ended June 30, 2023, partially offset by the non-renewal of a quota share retrocessional treaty.

Current wording

The increases in property lines, and credit and political risk lines were due to new business. The increase in property lines was also due to a higher level of premiums associated with renewed business and increased lines sizes on several programs. The increase in credit and political risk lines was also attributable to the timing of the renewal of a significant program, partially offset by a decrease in business opportunities. The increase in accident and health lines was driven by new pet insurance business and a higher level of premiums associated with renewed pet insurance business. The increase in liability lines was driven by favorable rate change associated with excess casualty business, partially offset by a decrease in primary casualty business attributable to underwriting actions taken to reposition the portfolio.

Previous wording

Gross premiums written for the three months ended June 30, 2024 increased by $130 million, or 8%, compared to the three months ended June 30, 2023. The increase was primarily attributable to property, credit and political risk, accident and health, marine and aviation, and professional lines, partially offset by decreases in cyber, and liability lines.

Current wording

Gross premiums written for the nine months ended September 30, 2024 increased by $358 million, or 8%, compared to the nine months ended September 30, 2023. The increase was primarily attributable to property, accident and health, credit and political risk, marine and aviation, and professional lines, partially offset by decreases in cyber, and liability lines.

Previous wording

The increase in property lines was due to new business and favorable rate changes. The increase in marine and aviation lines was related to premium adjustments associated with marine war business, new marine program business, and favorable rate changes in aviation business. The increase in accident and health lines was driven by new pet insurance business, partially offset by non-renewals. The increase in credit and political risk lines was driven by new business, partially offset by non-renewals. The increase in professional lines was attributable to higher level of activity in transactional liability business, partially offset by a decrease in U.S. public D&O business reflecting the unattractive pricing environment.

Current wording

The increase in property lines was due to new business, a higher level of premiums associated with renewed business and increased lines sizes on several programs. The increase in accident and health lines was driven by new pet insurance business, partially offset by non-renewals. The increase in credit and political risk lines was attributable to new business, partially offset by non-renewals. The increase in marine and aviation lines was related to premium adjustments associated with marine war business written on a line slip basis, new marine business, and favorable rate changes in marine business as well as aviation business. The increase in professional lines was attributable to higher level of activity in transactional liability business, partially offset by a decrease in U.S. public D&O business reflecting the unattractive pricing environment.

Previous 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.

Current wording

The decrease in cyber lines was due to lower levels of 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 a decrease in primary casualty business attributable to underwriting actions taken to reposition the portfolio, partially offset by favorable rate change associated with excess casualty business.

Previous 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.

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 three months ended September 30, 2024, compared to the three months ended September 30, 2023. The decrease in marine and aviation lines was attributable to the decrease in gross premiums written for the three months ended September 30, 2024, compared to the three months ended September 30, 2023.

Previous 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.

Current wording

Ceded premiums written for the nine months ended September 30, 2024 was $1,723 million, or 35%, of gross premiums written, compared to $1,769 million, or 39%, of gross premiums written for the nine months ended September 30, 2023. The decrease in ceded premiums written of $46 million, or 3%, was primarily driven by decreases in cyber, and professional lines, partially offset by increases in property, accident and health, credit and political risk, and marine and aviation lines.

Previous 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.

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 nine months ended September 30, 2024, compared to the nine months ended September 30, 2023.

Previous wording

The increase in property lines reflected the increase in gross premiums written for the six months ended June 30, 2024, compared to the six months ended June 30, 2023, and the restructuring of a significant existing quota share treaty. The increase in credit and political risk lines reflected the increase in gross premiums written for the six months ended June 30, 2024, compared to the six months ended June 30, 2023. The increase in marine and aviation lines was attributable to reinstatement premiums associated with losses and loss expenses for the six months ended June 30, 2024.

Current wording

The increase in property lines reflected the increase in gross premiums written for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, and the restructuring of a significant existing quota share treaty. The increase in accident and health lines was driven by a new quota share treaty and the increase in gross premiums written for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. The increase in credit and political risk lines was due to the increase in gross premiums written for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. The increase in marine and aviation lines was attributable to reinstatement premiums associated with losses and loss expenses for the nine months ended September 30, 2024.

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 an increase in ceded premiums earned in property 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, credit and political risk, and accident and health lines, together with decreases in ceded premiums earned in professional lines and cyber lines. These amounts were partially offset by increases in ceded premiums earned in property, and credit and political risk lines.

Previous wording

Net premiums earned for the three months ended June 30, 2024 increased by $115 million, or 14%, compared to the three months ended June 30, 2023.

Current wording

Net premiums earned for thenine months ended September 30, 2024 increased by $355 million, or 14%, compared to thenine months ended September 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 decreases in ceded premiums earned in professional lines and cyber lines. These amounts were partially offset by increases in ceded premiums earned in property, and marine and aviation lines, together with decreases in gross premiums earned in professional lines and cyber lines.

Current wording

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

Previous wording

Adjusting for the impact of the catastrophe and weather-related losses, the current accident year loss ratio increased to 51.8% for the three months ended June 30, 2024, from 51.5% for the three months ended June 30, 2023. The increase was principally due to higher loss ratios in liability and cyber lines consistent with changes in loss assumptions reflected in recent periods, partially offset by the change in business mix associated with an increase in property business written in recent periods which is associated with a relatively lower loss ratio.

Current wording

Adjusting for the impact of the catastrophe and weather-related losses, the current accident year loss ratio increased to 52.3% for the three months ended September 30, 2024, from 51.5% for the three months ended September 30, 2023. The increase was principally due to higher loss ratios in cyber and liability lines consistent with changes in loss assumptions, partially offset by the change in business mix attributable to the increase in property business written in recent periods which is associated with a relatively lower loss ratio, and improved loss experience in property lines.

Previous wording

The increase in the current accident year loss ratio for the six months ended June 30, 2024, compared to the same period in 2023, was impacted by a higher level of catastrophe and weather-related losses. During the six months ended June 30, 2024, catastrophe and weather-related losses, were $65 million, or 3.5 points, including $10 million, or 0.6 points attributable to the Red Sea Conflict. Comparatively, during the six months ended June 30, 2023, catastrophe and weather-related losses, were $51 million, or 3.1 points, primarily attributable to the Earthquake in Turkey, Cyclone Gabrielle, New Zealand floods, and other weather-related events.

Current wording

The increase in the current accident year loss ratio for the nine months ended September 30, 2024, compared to the same period in 2023, was impacted by a higher level of catastrophe and weather-related losses. During the nine months ended September 30, 2024, catastrophe and weather-related losses, were $136 million, or 4.7 points, including natural catastrophe and weather-related losses of $123 million, or 4.3 points, primarily attributable to Hurricane Helene, Hurricane Beryl, and other weather-related events. The remaining losses of $13 million, or 0.5 points were attributable to the Red Sea Conflict. Comparatively, during the nine months ended September 30, 2023, catastrophe and weather-related losses, were $88 million, or 3.5 points, primarily attributable to the Earthquake in Turkey, Maui wildfires, Cyclone Gabrielle, New Zealand floods, Hurricane Idalia, and other weather-related events.

Previous wording

Adjusting for the impact of the catastrophe and weather-related losses, the current accident year loss ratio for the six months ended June 30, 2024 of 51.9% was comparable to the current accident year loss ratio for the six months ended June 30, 2023 of 51.8% principally due to higher loss ratios in liability and cyber lines consistent with changes in loss assumptions reflected in recent periods, largely offset by the change in business mix associated with an increase in property business written in recent periods which is associated with a relatively lower loss ratio.

Current wording

Adjusting for the impact of the catastrophe and weather-related losses, the current accident year loss ratio increased to 52.1% for the nine months ended September 30, 2024, from 51.7% the nine months ended September 30, 2023. The increase was principally due to higher loss ratios in liability and cyber lines consistent with changes in loss assumptions, partially offset by the change in business mix attributable to the increase in property business written in recent periods which is associated with a relatively lower loss ratio, and improved loss experience in marine and aviation, and property lines.

Previous 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.

Current wording

The acquisition cost ratio increased to 19.6% for the nine months ended September 30, 2024, from 18.6% for the nine months ended September 30, 2023, primarily related to a decrease in ceding commission in professional lines.

Previous wording

The underwriting-related general and administrative expense ratio decreased to 11.7% for the three months ended June 30, 2024, from 13.5% for the three months ended June 30, 2023, mainly driven by an increase in net premiums earned and a decrease in information technology support costs, partially offset by an increase in professional fees.

Current wording

The underwriting-related general and administrative expense ratio decreased to 12.2% for the nine months ended September 30, 2024, from 13.7% for the nine months ended September 30, 2023, mainly driven by an increase in net premiums earned and a decrease in information technology costs, partially offset by an increase in professional fees.

Previous 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.

Current wording

Gross premiums written for the three months ended September 30, 2024, decreased by $39 million, or 9% ($36 million, or 8%, on a constant currency basis), compared to the three months ended September 30, 2023. The decrease was primarily attributable to liability, accident and health, catastrophe, agriculture, and property lines, partially offset by increases in credit and surety, motor, and marine and aviation lines.

Previous wording

The increase in agriculture lines was due to the timing of renewals of several contracts, partially offset by negative premium adjustments in the three months ended June 30, 2024, compared to positive premium adjustments in three months ended June 30, 2023.

Current wording

The decrease in accident and health lines was due to non-renewals and decreased line sizes on several contracts, together with negative premium adjustments in the three months ended September 30, 2024, compared to positive premium adjustments in three months ended September 30, 2023, partially offset by new business.

Previous wording

The decreases in catastrophe and property lines were attributable to 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 this line of business in June 2022.

Previous wording

The increase in motor lines was partially offset by the restructuring of a significant quota share retrocession treaty with a strategic capital partner.

Current wording

The increase in motor lines was due to the timing of the renewal of two significant contracts and a higher level of positive premium adjustments associated with favorable market conditions in the three months ended September 30, 2024, compared to a lower level of positive premium adjustments attributable to several contracts in the three months ended September 30, 2023.

Previous 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.

Current wording

The increase in credit and surety lines was driven by new business, increased line sizes on surety contracts, premium adjustments associated with mortgage business and a higher level of positive premium adjustments related to several contracts in the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023.

Previous wording

The increase in professional lines was attributable to new cyber business and increased line sizes on a several cyber contracts, partially offset by negative premium adjustments associated with challenging market conditions in the six months ended June 30, 2024, compared to positive premium adjustments associated with favorable market conditions in the six months ended June 30, 2023, and the non-renewals of several under-performing contracts.

Current wording

The increase in professional lines was attributable to new cyber business and increased line sizes on a several cyber contracts, partially offset by negative premium adjustments associated with challenging market conditions in the nine months ended September 30, 2024, compared to positive premium adjustments associated with favorable market conditions in the nine months ended September 30, 2023, and non-renewals of several under-performing contracts.

Previous 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.

Current wording

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