axis-ceo_r
AXIS CEO Albert Benchimol
26 April 2018Insurance

AXIS to further boost savings while Q1 profits rise

As part of AXIS Capital’s transformation initiative to strengthen its operating model, the firm expects to deliver an additional run-rate cost savings of $40 million over the previously announced $60 million related to the  integration of Novae, the company said while presenting the first quarter 2018 results.

The initiative encompasses the integration of Novae commenced in the fourth quarter of 2017, the realignment of the accident and health businesses and other initiatives designed to increase the company’s efficiency and enhance the profitability while delivering a customer-centric operating model.

To deliver the $100 million of savings across the broader transformation initiative and the Novae integration by year-end 2020, AXIS expects to incur cumulative pre-tax reorganization charges of approximately $100 million, of which a total of $28 million has already been incurred in the two most recent quarters. Pre-tax reorganization charges incurred in the two most recent quarters are primarily associated with the Novae integration and the re-alignment of our accident and health businesses.

For the first quarter of 2018, AXIS reported net income of $63 million compared to net income of $5 million in the same period a year ago.

"Over the past several years, AXIS has taken action to become a relevant and leading player in a select number of attractive specialty insurance and reinsurance markets, positioned to deliver superior results across a wide range of market conditions,” said CEO Albert Benchimol. “This quarter's results demonstrate the benefits of our portfolio optimization initiatives and overall earnings potential.

"We are focused on getting better, smarter, and faster in serving our clients and partners in distribution. We will, on the one hand, be more efficient in the delivery of our differentiated services, and on the other, invest in greater analytics, technology and development for our staff. Through the combined impact of the Novae integration and our transformation efforts, we expect to deliver savings of $100 million by year-end 2020, even as we continue to invest in leading capabilities."

In the first quarter of 2018, AXIS grew gross premiums written by 39 percent year on year to $2.7 billion. The insurance segment increased 62 percent year on year to $881 million, primarily due to the acquisition of Novae Group which closed on October 2, 2017, while the reinsurance segment grew 30 percent to $1.8 billion.

The growth in reinsurance included gross premiums written of $50 million attributable to catastrophe, marine and aviation lines associated with the acquisition of Novae. In addition, gross premiums written increased by 27 percent, attributable to motor, accident and health, credit and surety, catastrophe, liability, and professional lines, partially offset by a decrease in marine lines.

The reinsurance segment reported underwriting income of $74 million for the current quarter, compared to underwriting income of $5 million in the first quarter of 2017.

During the period, underwriting results in the reinsurance segment reflected a combined ratio of 88.4 percent, compared to 98.4 percent in the first three months of 2017. This included a decrease in the current accident year loss ratio to 63.2 percent in the first quarter of 2018 from 70.0 percent in the first quarter of 2017.

During the first quarter of 2018, AXIS incurred pre-tax catastrophe and weather-related losses of $7 million, attributable to US weather-related events, compared to $15 million of catastrophe and weather-related losses reported during the same period in 2017.

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