Multi-year reinsurance deals drive growth for AXIS in 2016

AXIS Capital’s reinsurance business grew strongly in 2016 driven largely by a higher number of deals written on a multi-year basis; its profits remained broadly stable with the year before, if one-off fees received in 2015 are not included.

The re/insurer made a $465 million net profit in 2016, on the face of it a big decrease on the $602 million it made the year before but this 2015 number included a $280 million termination fee received when its proposed merger with PartnerRe did not go ahead. Its combined ratio for last year was 95.9 percent compared with 94.7 a year earlier.

The company’s gross written premiums for the year increased by 8 percent to reach $5 billion driven largely by growth in its reinsurance segment which increased by $229 million compared with the year before.

For the full year 2016, its reinsurance segment reported gross premiums written of $2.2 billion, an increase of 11 percent compared with 2015. The company said the increase was impacted by a higher level of premiums written on a multi-year basis during 2016, compared to 2015, most notably in its credit and surety and liability lines.

It said partially offsetting this increase was the impact of foreign exchange movements, as the strengthening of the US dollar drove comparative premium decreases in treaties denominated in foreign currencies.

Albert Benchimol, president and CEO of AXIS Capital, said: "The strength of our operating results in the fourth quarter—which included Hurricane Matthew and other US weather-related events, and 11 percent growth in our full-year operating earnings per share despite continued market pressure and elevated global cat losses—demonstrates the progression of our initiatives to deliver a more stable and growing earnings profile.

“Our growth in diluted book value per share adjusted for dividends was 10 percent over the year, a strong result in light of the higher interest rates in the quarter.

“Our core operating performance strengthened in both the quarter and full year, as the improvements we have put in place allowed us to absorb higher industry cat losses and to navigate negative market conditions while still delivering for our customers, our partners in distribution, and our shareholders.

“These encouraging financial results were delivered in a year when we made significant advances in our franchise including expanding our presence and reach into Dubai, Continental Europe, and the Latin American markets; further diversifying our portfolio by introducing new products and recruiting new teams; and growing our strategic capital partnerships highlighted by the launch of Harrington Re.

“Through these initiatives and others, we are laying the foundation of a differentiated leader in global specialty risks, achieving intelligent growth in selected markets, optimizing our portfolios, matching risks with the right capital, and delivering solid and stable profitability. We are confident that our progress will continue in 2017.”

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