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Axis Capital Holdings Ltd. on Tuesday reported net income of $120 million for the second quarter of 2020, down 32.2% compared with the same period last year as investment income plummeted.
Revenue also fell slightly but the Bermuda-based insurer and reinsurer posted an improved combined ratio and said insurance and reinsurance rates hikes would likely continue into next year and maybe beyond.
Axis reported net premium written of $1.1 billion for the second quarter, down 1% from the same period in 2019. The company’s second-quarter combined ratio improved to 94.7% from 96.1% in the same period last year.
Net investment income of $45 million was down 67.4% from last year, the Axis earnings statement said.
In Axis’s insurance segment, net premium written increased 1.8% to $602.8 million. The insurance segment’s combined ratio improved to 94.2% from 97.8% in the second quarter of 2019.
In the company’s reinsurance segment, net premium written decreased 5.3% to $453.2 million. The combined ratio deteriorated slightly to 90.2% from 89.1% in the second quarter of 2019.
Speaking on Axis’s conference call with analysts on Wednesday, Albert Benchimol, president and CEO, said the company continues to see “accelerated improvement in pricing throughout our business.”
The insurance segment has seen 11 consecutive quarters of rate increases, with reinsurance seeing “more recent pricing action…but seeing positive momentum picking up now,” he said.
The insurance segment saw average rate increases of almost 15% in the second quarter, following average increases of 10% in the first quarter, Mr. Benchimol said.
The U.S. insurance division saw the largest increases, up more than 17% on average, with excess casualty seeing average rate increases of more than 30%, primary casualty up 11% and North American professional lines up more than 13%, Mr. Benchimol said.
June 1 reinsurance renewals were completed amidst “the best market conditions the market has in more than 10 years, with tightening terms and conditions and higher pricing,” Mr. Benchimol said.
During the renewal, rates for lower reinsurance layers were up about 15% while upper layers saw increases of up to 60%, Mr. Benchimol said.
The “favorable conditions we are seeing will likely sustain well into 2021,” with a growing consensus such conditions may extend even further forward, Mr. Benchimol said.
Axis reported a net loss for the first half of 2020 of $57.8 million compared with a $285.8 million profit for the same period in 2019.
Net premium written decreased 4% to $2.7 billion, with a 10% decrease in the reinsurance segment partially offset by a 6% increase in the insurance segment.