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Catastrophes push Axis to quarterly loss

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Axis Capital Holdings Ltd. reported a loss of $467.7 million in the third quarter of 2017 compared with profit of $176.6 million in the year-ago quarter as catastrophe losses hit the Bermuda insurer and reinsurer.

Axis also swung to a nine-month loss of $377.7 million compared with income of $334.6 million in the same period last year.

Net premiums written for the quarter jumped 39.9% to $832.7 million but inched up only 0.02% for the first nine months of the year to $3.30 billion.

The company’s combined ratio for the quarter worsened to 152.9% from 92.6% in the year-ago period, and to 118.1% from 95.7% for the nine months ended Sept. 30.

Speaking on the company’s earnings call Thursday morning, however, Albert Benchimol, chairman and CEO, put the quarter’s catastrophe losses in historical perspective, saying Axis’ year-to-date catastrophe losses total approximately $700 million, with total industry losses estimates at about $110 billion, Axis estimates.

This compares with catastrophe losses of approximately $1.2 billion in 2005, when the industry as a whole saw $106 billion in losses, and Axis losses of $1 billion in 2011, which at $127 billion is the industry’s largest loss year on record, he said.

Joe Henry, Axis’ chief financial officer, said on the call that third-quarter catastrophe losses — largely due to hurricanes Harvey, Irma and Maria and the two Mexican earthquakes — totaled $617 million, compared with $22 million in the third quarter of 2016.

Net investment income dipped 18.6% to $95.2 million compared with the year-ago quarter but rose 16.3% for the first nine months to $299.9 million vs. the year-ago period.

Mr. Benchimol was also bullish on the catastrophes’ ability to help the market turn more quickly.

“The third quarter saw market conditions continue to deteriorate, but at a slower pace,” Mr. Benchimol said.

While the insurance average price change for Axis was minus 1% for the quarter, he said, 57% of renewals were flat or up, with 43% down, “so we were already beginning to see some resistance to further market declines.”

“The record third-quarter catastrophes have highlighted the need for appropriate risk-based pricing in our industry and will accelerate what was previously a slow-moving market transition,” Mr. Benchimol said on the call.