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Axis posts $73M third-quarter loss amid spike in catastrophes

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Albert Benchimol

Axis Capital Holdings Ltd. swung to a third-quarter loss of $73 million from a net profit of $28 million in the year-earlier period, as catastrophe losses hit the company’s insurance and reinsurance operations.

Net premiums written dropped 4.7% to $816.0 million, the Bermuda-based insurer and reinsurer reported late Wednesday. In the insurance segment, net premiums written increased 5.4% to $544.9 million. In the reinsurance segment, net premiums written fell 20% to $271.1 million.

Catastrophe effects could also be seen in the company’s third-quarter combined ratio of 114.5%, up from 109.4% in the prior-year period.

Excluding catastrophes, Axis’ combined ratio was 92.4%, compared with 97.6% in the third quarter of 2019, Albert Benchimol, Axis president and CEO, noted on an earnings call Thursday with analysts.

He called 2020 a year of “exceptional catastrophe activity,” as the world experienced “the impact from the global COVID-19 pandemic” compounded by “a highly active year in terms of natural catastrophes.”

Estimated pre-tax catastrophe and weather-related losses, net of reinsurance and reinstatement premiums, were $240 million, with $132 million in insurance and $108 million in reinsurance, equating to $205 million after-tax.

Net investment income declined 11.9% to $102.0 million primarily due to the decrease in yields, Peter Vogt, Axis chief financial officer, said on the call.

Rates continued to climb in the third quarter, Mr. Benchimol said.

“We continue to see acceleration across virtually every line of business,” he said. “Within insurance, we saw average rate increases of more than 16% across the book, compared to 15% in the second quarter and 10% in first-quarter 2020.”

Axis’ U.S division saw average rate increases of more than 16%, Mr. Benchimol said. Excess casualty was up more than 25% and primary casualty increases averaged more than 15%, while excess and surplus property rates were up almost 20%.