AXIS Capital outlook downgraded to negative due to COVID-19 impact

Fitch Ratings has revised the outlook of AXIS Capital Holdings and its operating subsidiaries to 'negative' from 'stable', due to the impact of COVID-19 pandemic on its foreseeable results and deteriorating combined ratio.

The Bermuda-based re/insurer has revealed an estimated net claims provision of $235 million, pre-tax, for the COVID-19 pandemic. According to Fitch, this amount is above its industry-level assumptions and results, and would lead to a 106 percent annual combined ratio in 2020.

AXIS posted a 2019 combined ratio of 102.6 percent and operating ratio of 92.2 percent, up from 99.9 percent and 90.7 percent, respectively, in 2018.

Fitch believes that AXIS's underwriting performance will be further pressured in 2020 by coronavirus-related re/insurance exposure.

Having analysed the re/insurer's fundamental trends, as well as the current assessment of overall economic impact of the pandemic, Fitch noted that although AXIS maintains a diversified market position in both insurance and reinsurance lines, the company's competitive positioning could face challenges in the current crisis environment.

Hence, the outlook revision to negative reflects recent and pro forma results that fall outside financial performance and earnings rating sensitivities and criteria guidelines.