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Axis Capital Holdings Ltd. on Wednesday reported 2019 first-quarter net income of $98.1 million, an increase of nearly 60% over the first quarter of 2018, on lower catastrophe losses and amortization of acquired business.
Revenue inched up by about $1 million to stay essentially flat at 1.26 billion, the company said in the earnings report.
Net written premiums fell 11% to $1.77 billion from $1.98 billion as the company continued to adjust its business mix, according to Albert Benchimol, president and CEO of Axis Capital, speaking on the Bermuda-based insurer and reinsurer’s Thursday morning conference call.
The “small reduction” in premiums, Mr. Benchimol said, was due to “canceled or nonrenewed business that is no longer in alignment with our profitability and volatility goals.”
Additionally, the company’s expenses dropped substantially as the amortization of value of business acquired dropped to $13.1 million in the first quarter of 2019 from $57.1 million in the year ago period, according to financial data in the statement.
Net investment income rose to $107.3 million from $101.0 million in the year-ago period, Peter Vogt, chief financial officer of Axis, said on the call.
Catastrophe loss was “minimal,” Mr. Vogt said, declining to $11 million for the quarter against $35 million in the year-ago period.
Businesses exited included “some program business,” and there were also property nonrenewals as well, he said, “where we continue to hold our pricing discipline.”
The company’s combined ratio worsened to 96.9% from 90.8% in the year-ago period, the earnings statement said.
Rates continued to trend upward for Axis, according to Mr. Benchimol.
“We’ve now experienced five successive quarters of rate increases, and I’m optimistic the market will continue to head in the right direction,” he said.
In the insurance business, rate increases averaged 4% across the entire book, with the U.S. business at 9% led by casualty at 12% and excess and surplus property at 8%, he said.
Overall, 89% of the U.S. business renewed flat or up in the first quarter, Mr. Benchimol said.
Terms and conditions also improved, he said. “Improvements are not limited to rate but extend to terms and conditions,” including sublimits, exclusions, and higher deductibles.
In reinsurance, “We’re also seeing some progress in pricing, but more is required,” Mr. Benchimol said.
Axis Capital Holdings Ltd. said Wednesday its preliminary pretax loss estimate for the California wildfires is $125 million to $150 million.