AXIS Capital Reports Fourth Quarter Net Income Available to Common Shareholders of $197 Million, or $2.31 Per Diluted Common Share and Operating Income of $182 Million, or $2.13 Per Diluted Common Share

For the fourth quarter of 2021, the Company reports:

• Improvement of 2.3 points in current accident year combined ratio, excluding catastrophe and weather-related losses, compared to the prior year, to 89.5%
• Annualized return on average common equity of 16.4%, and annualized operating return on average common equity of 15.1%
• Book value per diluted common share of $55.78

For the year ended 2021, the Company reports:

• Net income available to common shareholders of $588 million, or $6.90 per diluted common share, and operating income of $436 million, or $5.12 per diluted common share
• Improvement of 3.5 points in current accident year combined ratio, excluding catastrophe and weather-related losses, compared to the prior year, to 88.7%
• Return on average common equity of 12.2%, and operating return on average common equity of 9.1%

PEMBROKE, Bermuda--(BUSINESS WIRE)--
AXIS Capital Holdings Limited ("AXIS Capital" or the "Company") (NYSE: AXS) today announced financial results for the fourth quarter ended December 31, 2021.

Commenting on the fourth quarter 2021 financial results, Albert Benchimol, President and CEO of AXIS Capital, said:

"This was a strong fourth quarter highlighted by an annualized operating ROE of 15%, a good finish to a year of meaningful progress. Our results provide further evidence that our work in recent years to reposition our portfolio is delivering its intended outcome, and we’re committed to sustaining this momentum and producing consistent profitable growth.

In addition to driving significant improvement to our combined ratio, we continued to optimize balance and volatility in our portfolio as we drive PMLs lower across the entire curve. Further, we continued to capitalize on favorable market conditions to build upon our well-established positions in some of the best performing specialty insurance markets.

Within our Insurance segment, we delivered both record new business growth and total premium, as we produced the largest and most diversified insurance portfolio in the Company’s history. Our insurance business produced a combined ratio of 91.6% for the full year, and we’re focused on delivering performance in-line with the top ranks of the specialty insurance sector. Within our Reinsurance segment, which reported a full year combined ratio of 99%, we took substantial portfolio actions during the year and into the 1/1 renewals to improve the quality and reduce the volatility of the book, and we will continue to do so in 2022.

I’m proud of the commitment and agility demonstrated by our team, as we continued to navigate through a dynamic environment while producing the high level of service that our customers have come to expect from AXIS. We’re excited for the future and focused on building on our progress and further increasing the value that we deliver to all of our stakeholders."

Consolidated Results*

• Net income available to common shareholders for the fourth quarter of 2021 was $197 million, or $2.31 per diluted common share, compared to a net loss attributable to common shareholders of $(5) million, or $(0.06) per diluted common share, for the fourth quarter of 2020.
• Net income available to common shareholders for the year ended December 31, 2021 was $588 million, or $6.90 per diluted common share, compared to net loss attributable to common shareholders of $(151) million, or $(1.79), for the same period in 2020.
• Operating income¹ for the fourth quarter of 2021 was $182 million, or $2.13 per diluted common share¹, compared to operating loss of $(16) million, or $(0.20) per diluted common share, for the fourth quarter of 2020.
• Operating income¹ for the year ended December 31, 2021 was $436 million, or $5.12 per diluted common share¹, compared to operating loss of $(174) million, or $(2.08) per diluted common share, for the same period in 2020.
• Adjusted for dividends declared, book value per diluted common share increased by $1.35, or 2.5%, compared to September 30, 2021.
• Adjusted for dividends declared, book value per diluted common share increased by $2.38, or 4.3%, over the past twelve months.

Fourth Quarter Consolidated Underwriting Highlights²

• Gross premiums written increased by $214 million, or 16%, to $1.6 billion with an increase of $211 million, or 19%, in the insurance segment, and an increase of $4 million, or 1%, in the reinsurance segment.
• Net premiums written increased by $162 million, or 21% ($160 million, or 20% on a constant currency basis³), to $947 million with an increase of $138 million, or 22%, in the insurance segment, and an increase of $23 million, or 15%, in the reinsurance segment.

• Pre-tax catastrophe and weather-related losses, net of reinsurance, were $54 million ($42 million, after-tax), (Insurance: $23 million; Reinsurance: $32 million) or 4.3 points, primarily attributable to Quad-state tornadoes, the December Convective Storms which principally impacted the U.S. Southwest and the Upper Midwest, and other weather-related events, compared to $198 million, (Insurance: $118 million; Reinsurance: $80 million) or 18.4 points, in 2020, which included $125 million, or 11.6 points, attributable to the COVID-19 pandemic.
• No change to the net loss estimate of $360 million established in 2020 for the COVID-19 pandemic.
• Net favorable prior year reserve development was $9 million (Insurance: $5 million; Reinsurance: $4 million), compared to $7 million (Insurance: $4 million; Reinsurance: $2 million) in 2020.

Full Year Consolidated Underwriting Highlights

• Gross premiums written increased by $859 million, or 13% ($786 million or 12% on a constant currency), to $7.7 billion with an increase of $845 million, or 21%, in the insurance segment and an increase of $14 million, or 1%, in the reinsurance segment.
• Net premiums written increased by $590 million, or 14% ($523 million or 12%, on a constant currency), to $4.9 billion with an increase of $537 million, or 23%, in the insurance segment and an increase of $53 million, or 3%, in the reinsurance segment.

• Pre-tax catastrophe and weather-related losses, net of reinsurance and reinstatement premiums, were $443 million ($378 million, after-tax), (Insurance: $175 million; Reinsurance: $268 million) or 9.5 points, primarily attributable to Hurricane Ida, Winter Storms Uri and Viola, which principally impacted the state of Texas, July European floods, and other weather-related events, compared to $774 million (Insurance: $443 million; Reinsurance: $330 million), or 17.7 points, in 2020, which included $360 million, or 8.2 points, attributable to the COVID-19 pandemic.
• No change to the net loss estimate of $360 million established in 2020 for the COVID-19 pandemic.
• Net favorable prior year reserve development was $32 million (Insurance: $18 million; Reinsurance: $14 million), compared to $16 million (Insurance: $9 million; Reinsurance: $7 million) in 2020.

Segment Highlights

Insurance Segment

• Gross premiums written increased by $211 million, or 19%, primarily attributable to increases in professional lines, liability, property, and marine lines driven by new business and favorable rate changes.
• Net premiums written increased by $138 million, or 22%, reflecting the increase in gross premiums written in the quarter.
• Pre-tax catastrophe and weather-related losses, net of reinsurance, were $23 million, primarily attributable to Quad-state tornadoes, and other weather-related events, compared to $118 million in 2020, which included $67 million, or 11.4 points, attributable to the COVID-19 pandemic.
• The current accident year loss ratio, excluding catastrophe and weather-related losses, decreased by 5.3 points in the fourth quarter, compared to the same period in 2020, principally due to the impact of favorable pricing over loss trends and generally improved loss experience in several lines of business.
• The acquisition cost ratio decreased by 1.1 points in the fourth quarter, compared to the same period in 2020, primarily due to an increase in ceding commissions.
• The underwriting-related general and administrative expense ratio increased by 0.8 points in the fourth quarter, compared to the same period in 2020, mainly driven by an increase in performance-related compensation costs and personnel costs, partially offset by an increase in net premiums earned.

• Gross premiums written increased by $845 million, or 21% ($802 million, or 20%, on a constant currency basis), primarily attributable to increases in professional lines, liability, property, and marine lines driven by new business and favorable rate changes.
• Net premiums written increased by $537 million, or 23% ($501 million, or 21% on a constant currency basis), reflecting the increase in gross premiums written.
• Pre-tax catastrophe and weather-related losses, net of reinsurance and reinstatement premiums, were $175 million, primarily attributable to Hurricane Ida, Winter Storms Uri and Viola, and other weather-related events, compared to $443 million in 2020, which included $204 million, or 8.8 points, attributable to the COVID-19 pandemic.

   

Reinsurance Segment

• Gross premiums written increased by $4 million, or 1% ($5 million, or 2% on a constant currency basis), primarily attributable to increases in motor and agriculture lines due to new business.
• Net premiums written increased by $23 million, or 15% ($24 million, or 16% on a constant currency basis), reflecting the slight increase in gross premiums written in the quarter together with decreases in premium ceded in catastrophe, credit and surety, and liability lines, partially offset by an increase in premium ceded in property lines.
• Pre-tax catastrophe and weather-related losses, net of reinsurance, were $32 million, primarily attributable to December Convective Storms, Quad-state tornadoes, and other weather-related events, compared to $80 million in 2020, which included $58 million, or 11.6 points, attributable to the COVID-19 pandemic.
• The current accident year loss ratio, excluding catastrophe and weather-related losses, increased by 0.2 points in the fourth quarter, compared to the same period in 2020, principally due to changes in business mix attributable to the increase in accident and health business and the decrease in catastrophe, and credit and surety business written in recent periods, largely offset by the impact of favorable pricing over loss trends.
• The acquisition cost ratio decreased by 0.4 points in the fourth quarter, compared to the same period in 2020, primarily due to the impact of retrocessional contracts.
• The underwriting-related general and administrative expense ratio decreased by 0.8 points in the quarter, compared to the same period in 2020, mainly driven by increases in fees related to arrangements with strategic capital partners and net premiums earned.

• Gross premiums written increased by $14 million, or 1% (decreased by $16 million, or 1% on a constant currency basis), primarily attributable to increases in liability, professional lines, and accident and health lines, largely due to favorable rate changes and new business. In addition, premium adjustments contributed to the increases in professional lines, and accident and health lines. These increases were partially offset by decreases in catastrophe, property, engineering, and motor lines due to non-renewals and decreased line sizes, and a decrease in credit and surety lines attributable to premium adjustments.
• Net premiums written increased by $53 million, or 3% ($22 million, or 1%, on a constant currency basis), reflecting the increase in gross premiums written together with decreases in premiums ceded in catastrophe, property, and credit and surety lines, partially offset by an increase in premiums ceded in liability lines.
• Pre-tax catastrophe and weather-related losses, net of reinsurance and reinstatement premiums, were $268 million, primarily attributable to Hurricane Ida, July European floods, Winter Storms Uri and Viola, and other weather-related events, compared to $330 million in 2020, which included $156 million, or 7.6 points, attributable to the COVID-19 pandemic.

Investments

Net investment income of $128 million increased from net investment income of $110 million for the fourth quarter of 2020, primarily attributable to positive returns from other investments in 2021. Net realized and unrealized gains recognized in net income for the quarter were $20 million, including net unrealized gains of $19 million ($23 million excluding foreign exchange movements), following an increase in the market value of our equity securities portfolio during the quarter, compared to net realized and unrealized gains of $83 million in the fourth quarter of 2020.

Pre-tax total return on cash and investments⁵ was 0.3% including foreign exchange movements (0.3% excluding foreign exchange movements⁶). A decrease in net unrealized gains of $107 million ($104 million excluding foreign exchange movements) were recognized in other comprehensive income in the quarter, compared to an increase in net unrealized gains of $65 million ($19 million excluding foreign exchange movements) recognized during the fourth quarter of 2020. The prior year pre-tax total return was 1.7% including foreign exchange movements (1.3% excluding foreign exchange movements).

For the year ended December 31, 2021, pre-tax total return on cash and investments was 1.3% including foreign exchange movements (1.6% excluding foreign exchange movements), compared to 4.8% including foreign exchange movements (4.4% excluding foreign exchange movements) for the same period in 2020. A decrease in net unrealized gains of $405 million ($361 million excluding foreign exchange movements) were recognized in other comprehensive income in the year, compared to an increase in net unrealized gains of $270 million ($233 million excluding foreign exchange movements) for the same period in 2020.

Our fixed income portfolio book yield was 1.9% at December 31, 2021, compared to 2.3% at December 31, 2020. The market yield was 1.7% at December 31, 2021.

Capitalization / Shareholders’ Equity

Total capital⁷ at December 31, 2021 was $6.7 billion, including $1.3 billion of debt and $550 million of preferred equity, compared to $6.6 billion at December 31, 2020, with the increase driven by net income generated for the year ended December 31, 2021, partially offset by a decrease in net unrealized gains reported in other comprehensive income following a decrease in the market value of our fixed income portfolio and common share dividends declared.

On December 2, 2021, the Company's Board of Directors authorized the repurchase of up to $100 million of the Company's common shares, which may be effected from time to time in open market or privately negotiated transactions through December 31, 2022. The Company intends to repurchase common shares opportunistically, with the timing and amount of the repurchases depending on a variety of factors, including market conditions and corporate and regulatory considerations.

Book value per diluted common share, calculated on a treasury stock basis, increased by $0.92 in the current quarter, and increased by $0.69 over the past twelve months, to $55.78. The increase in the quarter and over the past twelve months was driven by net income generated, partially offset by a decrease in net unrealized gains reported in other comprehensive income and common share dividends declared.

During the fourth quarter of 2021, the Company declared dividends of $0.43 per common share, which represents an increase of 2.4% and is the 18th consecutive year we have increased dividends since our initial public offering in 2003. The total dividends declared over the past twelve months was $1.69 per common share. Adjusted for dividends declared, the book value per diluted common share increased by $1.35, or 2.5%, for the quarter and increased by $2.38, or 4.3%, over the past twelve months.

Conference Call

We will host a conference call on Thursday, January 27, 2022 at 9:30 AM (EST) to discuss the fourth quarter and year-end financial results and related matters. The teleconference can be accessed by dialing 1-844-200-6205 (U.S. callers), or 1-929-526-1599 (international callers), and entering the passcode 677389 approximately ten minutes in advance of the call. A live, listen-only webcast of the call will also be available via the Investor Information section of our website at www.axiscapital.com. A replay of the teleconference will be available for two weeks by dialing 1-866-813-9403 (U.S. callers), or 44-204-525-0658 (international callers), and entering the passcode 714146. The webcast will be archived in the Investor Information section of our website.

In addition, an investor financial supplement for the quarter ended December 31, 2021 is available in the Investor Information section of the Company's website.

About AXIS Capital

AXIS Capital, through its operating subsidiaries, is a global provider of specialty lines insurance and treaty reinsurance with shareholders’ equity at December 31, 2021 of $5.4 billion and locations in Bermuda, the United States, Europe, Singapore and Canada. Its operating subsidiaries have been assigned a rating of "A+" ("Strong") by Standard & Poor’s and "A" ("Excellent") by A.M. Best. For more information about AXIS Capital, visit our website at www.axiscapital.com.

Website and Social Media Disclosure

We use our website (www.axiscapital.com) and our corporate LinkedIn (AXIS Capital) and Twitter (@AXIS_Capital) accounts as channels of distribution of Company information. The information we post through these channels may be deemed material. Accordingly, investors should monitor these channels, in addition to following our press releases, SEC filings and public conference calls and webcasts. In addition, e-mail alerts and other information about AXIS Capital may be received by those enrolled in our "E-mail Alerts" program which can be found in the Investor Information section of our website (www.axiscapital.com). The contents of our website and social media channels are not part of this press release.

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