Axis Capital Holdings Ltd. reported lower net income but higher revenue in the second quarter of 2017 as it contended with a higher frequency of property losses and an adverse change in a key U.K. discount rate. 

The Pembroke, Bermuda-based insurer and reinsurer reported net income declined 28.8% from the prior-year period to $85 million, according to its second-quarter earnings report released after market close Wednesday. Total revenue rose 4% to $1.1 billion in the second quarter. 

The company’s underwriting results were impacted by a higher frequency of property losses and the continuing effect of a change in the United Kingdom’s Ogden discount rate, which is used to determine how much money insurers should pay out to people who have suffered life-changing injuries to cover all their predicted future losses. A new rate adopted earlier this year significantly increases the total settlement amount for insurers.

“The Ogden rate impact should dissipate by next year and assuming loss frequency in property normalizes, we should see corresponding improvements in underlying results,” Albert Benchimol, president and CEO of Axis Capital, said Thursday on an earnings conference call. “Therefore, I’m confident that further progress in underwriting results is achievable.” 

Axis announced on July 5 that it is acquiring Novae Group P.L.C., a specialty insurer and reinsurer that operates through Lloyd’s of London, for $604 million, creating a $2 billion insurer in the London specialty market anchored as a top 10 insurer at Lloyd’s, according to the company.

“We’re very excited about this transaction, as it accelerates many of our stated strategic goals, including greater leadership in specialty lines and increased relevance in the important London market for international specialty risks,” Mr. Benchimol said. 

Net premiums written decreased 5.1% to $956 million in quarter, compared with the same period last year, while the company’s overall combined ratio improved to 97.6% compared with 102.2%, according to the report.  

“The state of competition in most of our market remains challenging,” Mr. Benchimol said. “We do observe that rate reductions are less than what we’ve seen in the past few years, but they remain reductions nonetheless.”

Net premiums written for the company’s insurance segment stayed relatively flat, rising 0.2% to $527.7 million in the second quarter of 2017, while the segment’s second-quarter combined ratio improved to 100.2% compared with 102.5% in the same period in 2016 as the company experienced lower catastrophe and weather-related losses and a decrease in midsize loss experience in its marine lines.

Renewal rates in the insurance business were down 1% on average compared with minus 3.3% at the same time last year, Mr. Benchimol said.

“Encouragingly, about 53% of our insurance premium renewed flat to up in the quarter, and this compares to 41% last year,” he said. “But, of course, this is still not enough.” 

Net premiums written for the company’s reinsurance segment decreased by 10.9% to $428.3 million in the second quarter of 2017, while the segment’s second-quarter combined ratio improved to 88.6% compared with 95.7% in the same period in 2016 as catastrophe and weather-related losses in the segment dropped to $9 million compared with $61 million in the same period last year.

Net income declined 43% to $90 million in the first half of 2017 compared with the prior-year period, according to the report. Total revenue rose 8.5% to $2.1 billion in the first half of 2017.