AXIS Capital Reports Fourth Quarter Net Income Available to Common Shareholders of $41 Million, or $0.48 Per Diluted Common Share and Operating Income of $167 Million, or $1.95 Per Diluted Common Share
AXIS Capital Holdings announced its fourth quarter and full-year 2022 financial results, highlighting a net income of $193 million or $2.25 per diluted share. The annualized return on average common equity (ROACE) was 4.2% with an operating ROACE of 16.9%. Total gross premiums written rose by $529 million or 7% year-over-year to $8.2 billion. The combined ratio improved by 1.7 points to 95.8%, while pre-tax catastrophe losses decreased to $403 million. Book value per diluted share increased to $46.95, up 7.9% from the previous quarter, despite a 12.7% annual decline.
- Net income for the fourth quarter was $41 million, or $0.48 per diluted share.
- Gross premiums written increased by $196 million, or 13% in Q4.
- Operating income for the year rose to $498 million, or $5.81 per diluted share.
- Combined ratio improved to 95.8%, reflecting enhanced operational efficiency.
- Book value per diluted common share rose by $3.45, or 7.9% quarter-over-quarter.
- Net income available to common shareholders for Q4 2022 decreased from $197 million in Q4 2021.
- Total net income for 2022 was down significantly from $588 million in 2021.
- Net financial impact of $11 million from loss portfolio transfer reinsurance and adverse prior year reserves.
For the fourth quarter of 2022, the Company reports:
-
Annualized return on average common equity ("ROACE") of
4.2% and annualized operating ROACE of16.9% -
Book value per diluted common share of
$46.95 $3.45 7.9% , compared toSeptember 30, 2022
For the year ended 2022, the Company reports:
-
Net income available to common shareholders of
$193 million $2.25 $498 million $5.81 -
Improvement of 1.7 points in the combined ratio to
95.8% -
Pre-tax catastrophe and weather-related losses, net of reinsurance and reinstatement premiums, of
$403 million $443 million -
Return on average common equity ("ROACE") of
4.3% and operating ROACE of11.1%
PEMBROKE,
Commenting on the fourth quarter 2022 financial results,
"This was a strong quarter to cap a milestone year for AXIS, one in which we emerged as a leading specialty underwriter that is well-positioned to drive consistent, profitable growth in our chosen markets. This was evidenced in our fourth quarter and full year results which speak to the work that we’ve done in prior years to transform our business, enabling us to grow in profitable specialty markets, reduce our exposure to catastrophes, and create a more agile and responsive operating infrastructure.
"During a year where the industry was again negatively impacted by heavy catastrophe activity, the Russia-Ukraine War, and financial and social inflation, we improved our combined ratio by 1.7 points to
"Our specialty insurance business continued to deliver stellar performance, producing improvement across virtually all metrics in the quarter and the year, and we advanced our leadership position in specialty markets that are expected to remain attractive in 2023 and beyond. In addition, during the year and quarter, we took critical steps forward to focus AXIS Re as a specialist reinsurer and had a good 1.1 renewal period which speaks to the strength of our customer relationships and the value that we bring to the market. Stepping back, as we look to the future, we believe AXIS is exceedingly well-positioned to compete in a market where there is consistent and rising demand for specialty coverage.
"Finally, I would like to extend a heartfelt thank you to our colleagues, customers, shareholders, analysts, and our board of directors. In a few short months, after having served as President and CEO of AXIS for eleven years, I will transition the role to
Consolidated Results*
-
Net income available to common shareholders for the fourth quarter of 2022 was
$41 million $0.48 $197 million $2.31 -
Net income available to common shareholders for the year ended
December 31, 2022 was$193 million $2.25 $588 million $6.90 -
Operating income1 for the fourth quarter of 2022 was
$167 million $1.95 $182 million $2.13 -
Operating income for the year ended
December 31, 2022 was$498 million $5.81 $436 million $5.12 -
Corporate expenses attributable to executive-related compensation costs associated with the transition in our senior leadership were
$15 million -
Net financial impact of
$11 million $5 million $6 million -
Reorganization expenses mainly related to the exit from catastrophe and property reinsurance lines of business were
$9 million -
Our fixed income portfolio book yield was
3.5% atDecember 31, 2022 . The market yield was5.6% atDecember 31, 2022 . -
Adjusted for net unrealized investment losses of
$744 million $55.49 December 31, 2022 . -
Adjusted for dividends declared, book value per diluted common share increased by
$3.89 8.9% , compared toSeptember 30, 2022 . -
Adjusted for dividends declared, book value per diluted common share decreased by
$7.10 12.7% , over the past twelve months.
| * Amounts may not reconcile due to rounding differences |
| 1Operating income (loss) and operating income (loss) per diluted common share are non-GAAP financial measures as defined in SEC Regulation G. The reconciliations to the most comparable GAAP financial measures, net income (loss) available (attributable) to common shareholders and earnings (loss) per diluted common share, respectively, and a discussion of the rationale for the presentation of these items are provided later in this press release. |
Fourth Quarter Consolidated Underwriting Highlights2
-
Gross premiums written increased by
$196 million 13% ($241 million 15% , on a constant currency basis3), to$1.8 billion $156 million 12% in the insurance segment, and an increase of$40 million 16% in the reinsurance segment. -
Net premiums written increased by
$149 million 16% ($187 million 20% , on a constant currency basis3), to$1.1 billion $120 million 16% in the insurance segment, and an increase of$29 million 16% in the reinsurance segment.
|
Quarters ended |
||||
KEY RATIOS |
2022 |
|
2021 |
|
Change |
Current accident year loss ratio, excluding catastrophe and weather-related losses4 |
|
|
|
|
1.2 pts |
Catastrophe and weather-related losses ratio |
|
|
|
|
0.4 pts |
Current accident year loss ratio |
|
|
|
|
1.6 pts |
Prior year reserve development ratio |
( |
|
( |
|
0.1 pts |
Net losses and loss expenses ratio |
|
|
|
|
1.7 pts |
Acquisition cost ratio |
|
|
|
|
0.2 pts |
General and administrative expense ratio |
|
|
|
|
(0.9 pts) |
Combined ratio |
|
|
|
|
1.0 pts |
|
|
|
|
|
|
Current accident year combined ratio, excluding catastrophe and weather-related losses |
|
|
|
|
0.5 pts |
-
Pre-tax catastrophe and weather-related losses, net of reinsurance and reinstatement premiums, were
$64 million $54 million $33 million $30 million $32 million $23 million $9 million Russia -Ukraine war. Comparatively, pre-tax catastrophe and weather-related losses, net of reinsurance, were$54 million $23 million $32 million -
Net favorable prior year reserve development was
$8 million $4 million $4 million $9 million $5 million $4 million
| 2 All comparisons are with the same period of the prior year, unless otherwise stated. |
| 3Amounts presented on a constant currency basis are non-GAAP financial measures as defined in SEC Regulation G. The constant currency basis is calculated by applying the average foreign exchange rate from the current year to prior year amounts. The reconciliations to the most comparable GAAP financial measures is presented above and a discussion of the rationale for the presentation of these items is provided later in this press release. |
| 4The current accident year loss ratio, excluding catastrophe and weather-related losses is calculated by dividing the current accident year losses less estimated pre-tax catastrophe and weather-related losses, net of reinsurance, by net premiums earned less reinstatement premiums. |
Full Year Consolidated Underwriting Highlights
-
Gross premiums written increased by
$529 million 7% ($664 million 9% , on a constant currency basis), to$8.2 billion $722 million 15% in the insurance segment, partially offset by a decrease of$194 million 7% in the reinsurance segment. -
Net premiums written increased by
$336 million 7% ($458 million 9% , on a constant currency basis), to$5.3 billion $483 million 17% in the insurance segment, partially offset by a decrease of$147 million 7% in the reinsurance segment.
|
Years ended |
||||
KEY RATIOS |
2022 |
|
2021 |
|
Change |
Current accident year loss ratio, excluding catastrophe and weather-related losses |
55.5 % |
|
55.1 % |
|
0.4 pts |
Catastrophe and weather-related losses ratio |
7.8 % |
|
9.5 % |
|
(1.7 pts) |
Current accident year loss ratio |
63.3 % |
|
64.6 % |
|
(1.3 pts) |
Prior year reserve development ratio |
( |
|
( |
|
0.2 pts |
Net losses and loss expenses ratio |
62.8 % |
|
63.9 % |
|
(1.1 pts) |
Acquisition cost ratio |
19.8 % |
|
19.6 % |
|
0.2 pts |
General and administrative expense ratio |
13.2 % |
|
14.0 % |
|
(0.8 pts) |
Combined ratio |
95.8 % |
|
97.5 % |
|
(1.7 pts) |
|
|
|
|
|
|
Current accident year combined ratio, excluding catastrophe and weather-related losses |
88.5 % |
|
88.7 % |
|
(0.2 pts) |
-
Pre-tax catastrophe and weather-related losses, net of reinsurance and reinstatement premiums, were
$403 million $350 million $207 million $196 million $338 million $23 million $43 million Russia -Ukraine war. Comparatively, pre-tax catastrophe and weather-related losses, net of reinsurance and reinstatement premiums, were$443 million $175 million $268 million -
Net favorable prior year reserve development was
$26 million $16 million $9 million $32 million $18 million $14 million
Segment Highlights
Insurance Segment
|
Quarters ended |
|||||||||
($ in thousands) |
|
2022 |
|
|
|
2021 |
|
|
Change |
|
Gross premiums written |
$ |
1,470,805 |
|
|
$ |
1,315,063 |
|
|
11.8 |
% |
Net premiums written |
|
886,786 |
|
|
|
766,694 |
|
|
15.7 |
% |
Net premiums earned |
|
830,514 |
|
|
|
722,369 |
|
|
15.0 |
% |
Underwriting income |
|
123,370 |
|
|
|
81,673 |
|
|
51.1 |
% |
|
|
|
|
|
|
|||||
Underwriting ratios: |
|
|
|
|
|
|||||
Current accident year loss ratio, excluding catastrophe and weather-related losses |
|
49.3 |
% |
|
|
50.8 |
% |
|
(1.5 pts) |
|
Catastrophe and weather-related losses ratio |
|
4.1 |
% |
|
|
2.9 |
% |
|
1.2 pts |
|
Current accident year loss ratio |
|
53.4 |
% |
|
|
53.7 |
% |
|
(0.3 pts) |
|
Prior year reserve development ratio |
|
(0.5 |
%) |
|
|
(0.6 |
%) |
|
0.1 pts |
|
Net losses and loss expenses ratio |
|
52.9 |
% |
|
|
53.1 |
% |
|
(0.2 pts) |
|
Acquisition cost ratio |
|
18.6 |
% |
|
|
18.9 |
% |
|
(0.3 pts) |
|
Underwriting-related general and administrative expense ratio |
|
13.7 |
% |
|
|
16.7 |
% |
|
(3.0 pts) |
|
Combined ratio |
|
85.2 |
% |
|
|
88.7 |
% |
|
(3.5 pts) |
|
|
|
|
|
|
|
|||||
Current accident year combined ratio, excluding catastrophe and weather-related losses |
|
81.6 |
% |
|
|
86.4 |
% |
|
(4.8 pts) |
|
-
Gross premiums written increased by
$156 million 12% ($194 million 15% , on a constant currency basis), primarily attributable to increases in property and liability lines due to new business and favorable rate changes, and marine and aviation, and accident and health lines due to new business. -
Net premiums written increased by
$120 million 16% ($151 million 20% , on a constant currency basis), reflecting the increase in gross premiums written in the quarter and a decrease in premiums ceded in professional lines, partially offset by an increase in premiums ceded in property lines. -
Pre-tax catastrophe and weather-related losses, net of reinsurance and reinstatement premiums, were
$33 million $24 million $9 million Russia -Ukraine war. Comparatively, pre-tax catastrophe and weather-related losses, net of reinsurance, were$23 million - The current accident year loss ratio, excluding catastrophe and weather-related losses, decreased by 1.5 points in the fourth quarter, compared to the same period in 2021, principally due to improved loss experience in property, marine and aviation, and cyber lines.
- The acquisition cost ratio decreased by 0.3 points in the fourth quarter, compared to the same period in 2021. Excluding the impact of the loss portfolio transfer, the acquisition cost ratio decreased by 1.0 point, primarily related to a decrease in profit commission costs.
- The underwriting-related general and administrative expense ratio decreased by 3.0 points in the fourth quarter, compared to the same period in 2021, mainly driven by an increase in net premiums earned and a decrease in performance-related compensation costs and personnel costs.
|
Years ended |
|||||||||
($ in thousands) |
|
2022 |
|
|
|
2021 |
|
|
Change |
|
Gross premiums written |
$ |
5,585,581 |
|
|
$ |
4,863,232 |
|
|
14.9 |
% |
Net premiums written |
|
3,377,906 |
|
|
|
2,894,885 |
|
|
16.7 |
% |
Net premiums earned |
|
3,134,155 |
|
|
|
2,651,339 |
|
|
18.2 |
% |
Underwriting income |
|
327,318 |
|
|
|
224,377 |
|
|
45.9 |
% |
|
|
|
|
|
|
|||||
Underwriting ratios: |
|
|
|
|
|
|||||
Current accident year loss ratio, excluding catastrophe and weather-related losses |
|
51.0 |
% |
|
|
51.4 |
% |
|
(0.4 pts) |
|
Catastrophe and weather-related losses ratio |
|
6.5 |
% |
|
|
6.4 |
% |
|
0.1 pts |
|
Current accident year loss ratio |
|
57.5 |
% |
|
|
57.8 |
% |
|
(0.3 pts) |
|
Prior year reserve development ratio |
|
(0.5 |
%) |
|
|
(0.7 |
%) |
|
0.2 pts |
|
Net losses and loss expenses ratio |
|
57.0 |
% |
|
|
57.1 |
% |
|
(0.1 pts) |
|
Acquisition cost ratio |
|
18.4 |
% |
|
|
18.3 |
% |
|
0.1 pts |
|
Underwriting-related general and administrative expense ratio |
|
14.2 |
% |
|
|
16.2 |
% |
|
(2.0 pts) |
|
Combined ratio |
|
89.6 |
% |
|
|
91.6 |
% |
|
(2.0 pts) |
|
|
|
|
|
|
|
|||||
Current accident year combined ratio, excluding catastrophe and weather-related losses |
|
83.6 |
% |
|
|
85.9 |
% |
|
(2.3 pts) |
|
-
Gross premiums written increased by
$722 million 15% ($804 million 17% , on a constant currency basis), primarily attributable to increases in liability, property, marine and aviation, and professional lines due to favorable rate changes and new business, cyber lines due to favorable rate changes, and accident and health, and credit and political risk lines due to new business. -
Net premiums written increased by
$483 million 17% ($551 million 19% , on a constant currency basis), reflecting the increase in gross premiums written and a decrease in premiums ceded in professional lines, partially offset by an increase in premiums ceded in property lines. -
Pre-tax catastrophe and weather-related losses, net of reinsurance and reinstatement premiums, were
$207 million $177 million $29 million Russia -Ukraine war. Comparatively, pre-tax catastrophe and weather-related losses, net of reinsurance and reinstatement premiums, were$175 million
Reinsurance Segment
|
Quarters ended |
|||||||||
($ in thousands) |
|
2022 |
|
|
|
2021 |
|
|
Change |
|
Gross premiums written |
$ |
287,891 |
|
|
$ |
247,765 |
|
|
16.2 |
% |
Net premiums written |
|
209,768 |
|
|
|
180,714 |
|
|
16.1 |
% |
Net premiums earned |
|
509,648 |
|
|
|
515,391 |
|
|
(1.1 |
%) |
Underwriting income |
|
8,861 |
|
|
|
54,336 |
|
|
(83.7 |
%) |
|
|
|
|
|
|
|||||
Underwriting ratios: |
|
|
|
|
|
|||||
Current accident year loss ratio, excluding catastrophe and weather-related losses |
|
65.5 |
% |
|
|
59.2 |
% |
|
6.3 pts |
|
Catastrophe and weather-related losses ratio |
|
5.7 |
% |
|
|
6.2 |
% |
|
(0.5 pts) |
|
Current accident year loss ratio |
|
71.2 |
% |
|
|
65.4 |
% |
|
5.8 pts |
|
Prior year reserve development ratio |
|
(0.8 |
%) |
|
|
(0.8 |
%) |
|
— pts |
|
Net losses and loss expenses ratio |
|
70.4 |
% |
|
|
64.6 |
% |
|
5.8 pts |
|
Acquisition cost ratio |
|
23.7 |
% |
|
|
22.5 |
% |
|
1.2 pts |
|
Underwriting-related general and administrative expense ratio |
|
4.7 |
% |
|
|
3.7 |
% |
|
1.0 pts |
|
Combined ratio |
|
98.8 |
% |
|
|
90.8 |
% |
|
8.0 pts |
|
|
|
|
|
|
|
|||||
Current accident year combined ratio, excluding catastrophe and weather-related losses |
|
93.9 |
% |
|
|
85.4 |
% |
|
8.5 pts |
|
-
Gross premiums written increased by
$40 million 16% ($47 million 19% , on a constant currency basis), primarily attributable to increases in credit and surety lines driven by increased line sizes and new business, and increases in motor and professional lines associated with favorable market conditions. These increases were partially offset by a decrease in catastrophe lines attributable to the exit from these lines of business inJune 2022 , and a decrease in liability lines due to timing differences. -
Net premiums written increased by
$29 million 16% ($36 million 20% , on a constant currency basis), reflecting the increase in gross premiums written in the quarter. -
Pre-tax catastrophe and weather-related losses, net of reinsurance and reinstatement premiums, were
$30 million $8 million $23 million $32 million -
The current accident year loss ratio, excluding catastrophe and weather-related losses, increased by 6.3 points in the fourth quarter, compared to the same period in 2021, principally due to changes in business mix associated with the exit from catastrophe and property lines of business in
June 2022 , together with a year-to-date update to loss ratios for motor, liability, and professional lines to reflect the current inflationary environment. -
The acquisition cost ratio increased by 1.2 points in the fourth quarter, compared to the same period in 2021, primarily related to changes in business mix associated with the exit from catastrophe and property lines of business in
June 2022 and adjustments attributable to loss-sensitive features driven by improved loss performance mainly in credit and surety lines, partially offset by the impact of retrocessional contracts. - The underwriting-related general and administrative expense ratio increased by 1.0 point in the fourth quarter, compared to the same period in 2021, mainly driven by a decrease in fees related to arrangements with strategic capital partners, partially offset by a decrease in personnel costs.
|
Years ended |
|||||||||
($ in thousands) |
|
2022 |
|
|
|
2021 |
|
|
Change |
|
Gross premiums written |
$ |
2,629,014 |
|
|
$ |
2,822,752 |
|
|
(6.9 |
%) |
Net premiums written |
|
1,885,150 |
|
|
|
2,031,739 |
|
|
(7.2 |
%) |
Net premiums earned |
|
2,026,171 |
|
|
|
2,058,511 |
|
|
(1.6 |
%) |
Underwriting income |
|
31,365 |
|
|
|
41,317 |
|
|
(24.1 |
%) |
|
|
|
|
|
|
|||||
Underwriting ratios: |
|
|
|
|
|
|||||
Current accident year loss ratio, excluding catastrophe and weather-related losses |
|
62.6 |
% |
|
|
59.9 |
% |
|
2.7 pts |
|
Catastrophe and weather-related losses ratio |
|
9.7 |
% |
|
|
13.3 |
% |
|
(3.6 pts) |
|
Current accident year loss ratio |
|
72.3 |
% |
|
|
73.2 |
% |
|
(0.9 pts) |
|
Prior year reserve development ratio |
|
(0.4 |
%) |
|
|
(0.6 |
%) |
|
0.2 pts |
|
Net losses and loss expenses ratio |
|
71.9 |
% |
|
|
72.6 |
% |
|
(0.7 pts) |
|
Acquisition cost ratio |
|
21.9 |
% |
|
|
21.3 |
% |
|
0.6 pts |
|
Underwriting-related general and administrative expense ratio |
|
5.3 |
% |
|
|
5.1 |
% |
|
0.2 pts |
|
Combined ratio |
|
99.1 |
% |
|
|
99.0 |
% |
|
0.1 pts |
|
|
|
|
|
|
|
|||||
Current accident year combined ratio, excluding catastrophe and weather-related losses |
|
89.8 |
% |
|
|
86.3 |
% |
|
3.5 pts |
|
-
Gross premiums written decreased by
$194 million 7% ($140 million 5% , on a constant currency basis), primarily attributable to decreases in catastrophe and property lines due to non-renewals and decreased line sizes associated with repositioning the portfolio together with the exit from these lines of business inJune 2022 , and a decrease in motor lines due to non-renewals and decreased line sizes. These decreases were partially offset by increases in credit and surety, and agriculture lines driven by new business, and an increase in professional lines due to favorable market conditions. -
Net premiums written decreased by
$147 million 7% ($93 million 5% , on a constant currency basis), reflecting the decrease in gross premiums written together with increases in premiums ceded in professional lines, and motor lines. -
Pre-tax catastrophe and weather-related losses, net of reinsurance and reinstatement premiums, were
$196 million $160 million Eastern Australia floods,South Africa floods, Winter Storm Elliot, and other weather-related events. The remaining losses included$23 million $13 million Russia -Ukraine war. Comparatively, pre-tax catastrophe and weather-related losses, net of reinsurance and reinstatement premiums, were$268 million
Investments
Net investment income of
Pre-tax total return on cash and investments5 was
For the year ended
Our fixed income portfolio book yield was
| 5 Pre-tax total return on cash and investments includes net investment income (loss), net investment gains (losses), interest in income (loss) of equity method investments and change in unrealized investment gains (losses) generated by average cash and investment balances. Total cash and invested assets represents the total cash and cash equivalents, fixed maturities, equity securities, mortgage loans, other investments, equity method investments, short-term investments, accrued interest receivable and net receivable (payable) for investments sold (purchased). |
| 6 Pre-tax total return on cash and investments excluding foreign exchange movements is a non-GAAP financial measure as defined in SEC Regulation G. The reconciliation to pre-tax total return on cash and investments, the most comparable GAAP financial measure, also included foreign exchange (losses) gains of |
Capitalization / Shareholders’ Equity
Total capital7 at
On
Book value per diluted common share, calculated on a treasury stock basis, increased by
During the fourth quarter of 2022, the Company declared dividends of
| 7Total capital represents the sum of total shareholders' equity and debt. |
Conference Call
We will host a conference call on
In addition, an investor financial supplement for the quarter ended
About
Website and Social Media Disclosure
We use our website (www.axiscapital.com) and our corporate LinkedIn (
Follow
LinkedIn: http://bit.ly/2kRYbZ5
CONSOLIDATED BALANCE SHEETS
|
|||||||||
|
|
|
|
|
|
||||
|
|
|
2022 |
|
2021 |
||||
|
|
|
(in thousands) |
||||||
Assets |
|
|
|
||||||
Investments: |
|
||||||||
Fixed maturities, available for sale, at fair value |
$ |
11,326,894 |
|
|
$ |
12,313,200 |
|
||
Fixed maturities, held to maturity, at amortized cost |
|
698,351 |
|
|
|
446,016 |
|
||
Equity securities, at fair value |
|
485,253 |
|
|
|
655,675 |
|
||
Mortgage loans, held for investment, at fair value |
|
627,437 |
|
|
|
594,088 |
|
||
Other investments, at fair value |
|
996,751 |
|
|
|
947,982 |
|
||
Equity method investments |
|
148,288 |
|
|
|
146,293 |
|
||
Short-term investments, at fair value |
|
70,310 |
|
|
|
31,063 |
|
||
Total investments |
|
14,353,284 |
|
|
|
15,134,317 |
|
||
Cash and cash equivalents |
|
751,415 |
|
|
|
844,592 |
|
||
Restricted cash and cash equivalents |
|
423,238 |
|
|
|
473,098 |
|
||
Accrued interest receivable |
|
94,418 |
|
|
|
64,350 |
|
||
Insurance and reinsurance premium balances receivable |
|
2,733,464 |
|
|
|
2,622,676 |
|
||
Reinsurance recoverable on unpaid losses and loss expenses |
|
5,831,172 |
|
|
|
5,017,611 |
|
||
Reinsurance recoverable on paid losses and loss expenses |
|
539,676 |
|
|
|
642,215 |
|
||
Deferred acquisition costs |
|
473,569 |
|
|
|
465,593 |
|
||
Prepaid reinsurance premiums |
|
1,550,370 |
|
|
|
1,377,358 |
|
||
Receivable for investments sold |
|
16,052 |
|
|
|
4,555 |
|
||
|
|
100,801 |
|
|
|
100,801 |
|
||
Intangible assets |
|
197,800 |
|
|
|
208,717 |
|
||
Operating lease right-of-use assets |
|
92,214 |
|
|
|
103,295 |
|
||
Other assets |
|
438,338 |
|
|
|
309,792 |
|
||
Total assets |
|
|
$ |
27,595,811 |
|
|
$ |
27,368,970 |
|
Liabilities |
|
|
|
|
|
||||
Reserve for losses and loss expenses |
$ |
15,168,863 |
|
|
$ |
14,653,094 |
|
||
Unearned premiums |
|
4,361,447 |
|
|
|
4,090,676 |
|
||
Insurance and reinsurance balances payable |
|
1,522,764 |
|
|
|
1,324,620 |
|
||
Debt |
|
1,312,314 |
|
|
|
1,310,975 |
|
||
|
|
|
81,388 |
|
|
|
— |
|
|
Payable for investments purchased |
|
19,693 |
|
|
|
31,543 |
|
||
Operating lease liabilities |
|
102,577 |
|
|
|
119,512 |
|
||
Other liabilities |
|
386,855 |
|
|
|
427,894 |
|
||
Total liabilities |
|
|
|
22,955,901 |
|
|
|
21,958,314 |
|
Shareholders' equity |
|
|
|
|
|||||
Preferred shares |
|
550,000 |
|
|
|
550,000 |
|
||
Common shares |
|
2,206 |
|
|
|
2,206 |
|
||
Additional paid-in capital |
|
2,366,253 |
|
|
|
2,346,179 |
|
||
Accumulated other comprehensive income (loss) |
|
(760,300 |
) |
|
|
56,536 |
|
||
Retained earnings |
|
6,247,022 |
|
|
|
6,204,745 |
|
||
|
|
(3,765,271 |
) |
|
|
(3,749,010 |
) |
||
Total shareholders' equity |
|
4,639,910 |
|
|
|
5,410,656 |
|
||
Total liabilities and shareholders' equity |
$ |
27,595,811 |
|
|
$ |
27,368,970 |
|
||
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE QUARTERS AND YEARS ENDED |
|||||||||||||||
|
|
|
|
|
|
|
|
||||||||
|
Quarters ended |
|
Years ended |
||||||||||||
|
2022
|
|
2021
|
|
2022
|
|
2021 |
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(in thousands, except per share amounts) |
||||||||||||||
Revenues |
|
|
|
|
|
|
|
||||||||
Net premiums earned |
$ |
1,340,162 |
|
|
$ |
1,237,760 |
|
|
$ |
5,160,326 |
|
|
$ |
4,709,850 |
|
Net investment income |
|
147,085 |
|
|
|
128,128 |
|
|
|
418,829 |
|
|
|
454,301 |
|
Net investment gains (losses) |
|
(42,558 |
) |
|
|
20,410 |
|
|
|
(456,789 |
) |
|
|
134,279 |
|
Other insurance related income |
|
3,076 |
|
|
|
7,033 |
|
|
|
13,073 |
|
|
|
23,295 |
|
Total revenues |
|
1,447,765 |
|
|
|
1,393,331 |
|
|
|
5,135,439 |
|
|
|
5,321,725 |
|
|
|
|
|
|
|
|
|
||||||||
Expenses |
|
|
|
|
|
|
|
||||||||
Net losses and loss expenses |
|
798,214 |
|
|
|
716,225 |
|
|
|
3,242,410 |
|
|
|
3,008,783 |
|
Acquisition costs |
|
275,573 |
|
|
|
252,180 |
|
|
|
1,022,017 |
|
|
|
921,834 |
|
General and administrative expenses |
|
187,472 |
|
|
|
184,484 |
|
|
|
680,343 |
|
|
|
663,304 |
|
Foreign exchange losses (gains) |
|
78,989 |
|
|
|
4,632 |
|
|
|
(157,945 |
) |
|
|
315 |
|
Interest expense and financing costs |
|
16,426 |
|
|
|
15,543 |
|
|
|
63,146 |
|
|
|
62,302 |
|
Reorganization expenses |
|
9,485 |
|
|
|
— |
|
|
|
31,426 |
|
|
|
— |
|
Amortization of value of business acquired |
|
— |
|
|
|
771 |
|
|
|
— |
|
|
|
3,854 |
|
Amortization of intangible assets |
|
2,729 |
|
|
|
3,260 |
|
|
|
10,917 |
|
|
|
12,424 |
|
Total expenses |
|
1,368,888 |
|
|
|
1,177,095 |
|
|
|
4,892,314 |
|
|
|
4,672,816 |
|
|
|
|
|
|
|
|
|
||||||||
Income before income taxes and interest in income (loss) of equity method investments |
|
78,877 |
|
|
|
216,236 |
|
|
|
243,125 |
|
|
|
648,909 |
|
Income tax expense |
|
(27,341 |
) |
|
|
(12,557 |
) |
|
|
(22,037 |
) |
|
|
(62,384 |
) |
Interest in income (loss) of equity method investments |
|
(3,045 |
) |
|
|
1,213 |
|
|
|
1,995 |
|
|
|
32,084 |
|
Net income |
|
48,491 |
|
|
|
204,892 |
|
|
|
223,083 |
|
|
|
618,609 |
|
Preferred share dividends |
|
7,563 |
|
|
|
7,563 |
|
|
|
30,250 |
|
|
|
30,250 |
|
Net income available to common shareholders |
$ |
40,928 |
|
|
$ |
197,329 |
|
|
$ |
192,833 |
|
|
$ |
588,359 |
|
|
|
|
|
|
|
|
|
||||||||
Per share data |
|
|
|
|
|
|
|
||||||||
Earnings per common share: |
|
|
|
|
|
|
|
||||||||
Earnings per common share |
$ |
0.48 |
|
|
$ |
2.33 |
|
|
$ |
2.27 |
|
|
$ |
6.95 |
|
Earnings per diluted common share |
$ |
0.48 |
|
|
$ |
2.31 |
|
|
$ |
2.25 |
|
|
$ |
6.90 |
|
Weighted average common shares outstanding |
|
84,667 |
|
|
|
84,774 |
|
|
|
84,864 |
|
|
|
84,707 |
|
Weighted average diluted common shares outstanding |
|
85,655 |
|
|
|
85,591 |
|
|
|
85,669 |
|
|
|
85,291 |
|
Cash dividends declared per common share |
$ |
0.44 |
|
|
$ |
0.43 |
|
|
$ |
1.73 |
|
|
$ |
1.69 |
|
CONSOLIDATED SEGMENTAL DATA (UNAUDITED)
FOR THE QUARTERS ENDED |
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
2022 |
|
2021 |
||||||||||||||||||||
|
Insurance |
|
Reinsurance |
|
Total |
|
Insurance |
|
Reinsurance |
|
Total |
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
(in thousands) |
||||||||||||||||||||||
Gross premiums written |
$ |
1,470,805 |
|
|
$ |
287,891 |
|
|
$ |
1,758,696 |
|
|
$ |
1,315,063 |
|
|
$ |
247,765 |
|
|
$ |
1,562,828 |
|
Net premiums written |
|
886,786 |
|
|
|
209,768 |
|
|
|
1,096,554 |
|
|
|
766,694 |
|
|
|
180,714 |
|
|
|
947,408 |
|
Net premiums earned |
|
830,514 |
|
|
|
509,648 |
|
|
|
1,340,162 |
|
|
|
722,369 |
|
|
|
515,391 |
|
|
|
1,237,760 |
|
Other insurance related income |
|
89 |
|
|
|
2,987 |
|
|
|
3,076 |
|
|
|
227 |
|
|
|
6,806 |
|
|
|
7,033 |
|
Net losses and loss expenses |
|
(439,268 |
) |
|
|
(358,946 |
) |
|
|
(798,214 |
) |
|
|
(383,246 |
) |
|
|
(332,979 |
) |
|
|
(716,225 |
) |
Acquisition costs |
|
(154,859 |
) |
|
|
(120,714 |
) |
|
|
(275,573 |
) |
|
|
(136,172 |
) |
|
|
(116,008 |
) |
|
|
(252,180 |
) |
Underwriting-related general and |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
administrative expenses(8) |
|
(113,106 |
) |
|
|
(24,114 |
) |
|
|
(137,220 |
) |
|
|
(121,505 |
) |
|
|
(18,874 |
) |
|
|
(140,379 |
) |
Underwriting income (9) |
$ |
123,370 |
|
|
$ |
8,861 |
|
|
|
132,231 |
|
|
$ |
81,673 |
|
|
$ |
54,336 |
|
|
|
136,009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net investment income |
|
|
|
|
|
147,085 |
|
|
|
|
|
|
|
128,128 |
|
||||||||
Net investment gains (losses) |
|
|
|
|
|
(42,558 |
) |
|
|
|
|
|
|
20,410 |
|
||||||||
Corporate expenses(8) |
|
|
|
|
|
(50,252 |
) |
|
|
|
|
|
|
(44,105 |
) |
||||||||
Foreign exchange losses |
|
|
|
|
|
(78,989 |
) |
|
|
|
|
|
|
(4,632 |
) |
||||||||
Interest expense and financing costs |
|
|
|
|
|
(16,426 |
) |
|
|
|
|
|
|
(15,543 |
) |
||||||||
Reorganization expenses |
|
|
|
|
|
(9,485 |
) |
|
|
|
|
|
|
— |
|
||||||||
Amortization of value of business acquired |
|
|
|
|
|
— |
|
|
|
|
|
|
|
(771 |
) |
||||||||
Amortization of intangible assets |
|
|
|
|
|
(2,729 |
) |
|
|
|
|
|
|
(3,260 |
) |
||||||||
Income before income taxes and |
|||||||||||||||||||||||
interest in income (loss) of equity |
|||||||||||||||||||||||
method investments |
|
|
|
|
|
78,877 |
|
|
|
|
|
|
|
216,236 |
|
||||||||
Income tax expense |
|
|
|
|
|
(27,341 |
) |
|
|
|
|
|
|
(12,557 |
) |
||||||||
Interest in income (loss) of equity method investments |
|
|
|
|
|
(3,045 |
) |
|
|
|
|
|
|
1,213 |
|
||||||||
Net income |
|
|
|
|
|
48,491 |
|
|
|
|
|
|
|
204,892 |
|
||||||||
Preferred share dividends |
|
|
|
|
|
7,563 |
|
|
|
|
|
|
|
7,563 |
|
||||||||
Net income available |
|||||||||||||||||||||||
to common shareholders |
|
|
|
|
$ |
40,928 |
|
|
|
|
|
|
$ |
197,329 |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net losses and loss expenses ratio |
|
52.9 |
% |
|
|
70.4 |
% |
|
|
59.6 |
% |
|
|
53.1 |
% |
|
|
64.6 |
% |
|
|
57.9 |
% |
Acquisition cost ratio |
|
18.6 |
% |
|
|
23.7 |
% |
|
|
20.6 |
% |
|
|
18.9 |
% |
|
|
22.5 |
% |
|
|
20.4 |
% |
General and administrative expense ratio |
|
13.7 |
% |
|
|
4.7 |
% |
|
|
13.9 |
% |
|
|
16.7 |
% |
|
|
3.7 |
% |
|
|
14.8 |
% |
Combined ratio |
|
85.2 |
% |
|
|
98.8 |
% |
|
|
94.1 |
% |
|
|
88.7 |
% |
|
|
90.8 |
% |
|
|
93.1 |
% |
| 8Underwriting-related general and administrative expenses is a non-GAAP financial measure as defined in SEC Regulation G. The reconciliation to general and administrative expenses, the most comparable GAAP financial measure, also included corporate expenses of |
| 9Consolidated underwriting income (loss) is a non-GAAP financial measure as defined in SEC Regulation G. The reconciliation to net income (loss), the most comparable GAAP financial measure, is presented in the table above. |
CONSOLIDATED SEGMENTAL DATA
FOR THE YEARS ENDED |
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
2022 |
|
2021 |
||||||||||||||||||||
|
Insurance |
|
Reinsurance |
|
Total |
|
Insurance |
|
Reinsurance |
|
Total |
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
(in thousands) |
||||||||||||||||||||||
Gross premiums written |
$ |
5,585,581 |
|
|
$ |
2,629,014 |
|
|
$ |
8,214,595 |
|
|
$ |
4,863,232 |
|
|
$ |
2,822,752 |
|
|
$ |
7,685,984 |
|
Net premiums written |
|
3,377,906 |
|
|
|
1,885,150 |
|
|
|
5,263,056 |
|
|
|
2,894,885 |
|
|
|
2,031,739 |
|
|
|
4,926,624 |
|
Net premiums earned |
|
3,134,155 |
|
|
|
2,026,171 |
|
|
|
5,160,326 |
|
|
|
2,651,339 |
|
|
|
2,058,511 |
|
|
|
4,709,850 |
|
Other insurance related income |
|
559 |
|
|
|
12,514 |
|
|
|
13,073 |
|
|
|
1,662 |
|
|
|
21,633 |
|
|
|
23,295 |
|
Net losses and loss expenses |
|
(1,785,854 |
) |
|
|
(1,456,556 |
) |
|
|
(3,242,410 |
) |
|
|
(1,514,998 |
) |
|
|
(1,493,785 |
) |
|
|
(3,008,783 |
) |
Acquisition costs |
|
(577,838 |
) |
|
|
(444,179 |
) |
|
|
(1,022,017 |
) |
|
|
(484,344 |
) |
|
|
(437,490 |
) |
|
|
(921,834 |
) |
Underwriting-related general and |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
administrative expenses(10) |
|
(443,704 |
) |
|
|
(106,585 |
) |
|
|
(550,289 |
) |
|
|
(429,282 |
) |
|
|
(107,552 |
) |
|
|
(536,834 |
) |
Underwriting income(11) |
$ |
327,318 |
|
|
$ |
31,365 |
|
|
|
358,683 |
|
|
$ |
224,377 |
|
|
$ |
41,317 |
|
|
|
265,694 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net investment income |
|
|
|
|
|
418,829 |
|
|
|
|
|
|
|
454,301 |
|
||||||||
Net investment gains (losses) |
|
|
|
|
|
(456,789 |
) |
|
|
|
|
|
|
134,279 |
|
||||||||
Corporate expenses(10) |
|
|
|
|
|
(130,054 |
) |
|
|
|
|
|
|
(126,470 |
) |
||||||||
Foreign exchange (losses) gains |
|
|
|
|
|
157,945 |
|
|
|
|
|
|
|
(315 |
) |
||||||||
Interest expense and financing costs |
|
|
|
|
|
(63,146 |
) |
|
|
|
|
|
|
(62,302 |
) |
||||||||
Reorganization expenses |
|
|
|
|
|
(31,426 |
) |
|
|
|
|
|
|
— |
|
||||||||
Amortization of value of business acquired |
|
|
|
|
|
— |
|
|
|
|
|
|
|
(3,854 |
) |
||||||||
Amortization of intangible assets |
|
|
|
|
|
(10,917 |
) |
|
|
|
|
|
|
(12,424 |
) |
||||||||
Income before income taxes and |
|||||||||||||||||||||||
interest in income of equity method |
|||||||||||||||||||||||
investments |
|
|
|
|
|
243,125 |
|
|
|
|
|
|
|
648,909 |
|
||||||||
Income tax expense |
|
|
|
|
|
(22,037 |
) |
|
|
|
|
|
|
(62,384 |
) |
||||||||
Interest in income of equity method investments |
|
|
|
|
|
1,995 |
|
|
|
|
|
|
|
32,084 |
|
||||||||
Net income |
|
|
|
|
|
223,083 |
|
|
|
|
|
|
|
618,609 |
|
||||||||
Preferred share dividends |
|
|
|
|
|
30,250 |
|
|
|
|
|
|
|
30,250 |
|
||||||||
Net income available |
|||||||||||||||||||||||
to common shareholders |
|
|
|
|
$ |
192,833 |
|
|
|
|
|
|
$ |
588,359 |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net losses and loss expenses ratio |
|
57.0 |
% |
|
|
71.9 |
% |
|
|
62.8 |
% |
|
|
57.1 |
% |
|
|
72.6 |
% |
|
|
63.9 |
% |
Acquisition cost ratio |
|
18.4 |
% |
|
|
21.9 |
% |
|
|
19.8 |
% |
|
|
18.3 |
% |
|
|
21.3 |
% |
|
|
19.6 |
% |
General and administrative expense ratio |
|
14.2 |
% |
|
|
5.3 |
% |
|
|
13.2 |
% |
|
|
16.2 |
% |
|
|
5.1 |
% |
|
|
14.0 |
% |
Combined ratio |
|
89.6 |
% |
|
|
99.1 |
% |
|
|
95.8 |
% |
|
|
91.6 |
% |
|
|
99.0 |
% |
|
|
97.5 |
% |
| 10Underwriting-related general and administrative expenses is a non-GAAP financial measure as defined in SEC Regulation G. The reconciliation to general and administrative expenses, the most comparable GAAP financial measure, also included corporate expenses of |
| 11Consolidated underwriting income (loss) is a non-GAAP financial measure as defined in SEC Regulation G. The reconciliation to net income (loss), the most comparable GAAP financial measure, is presented in the table above. |
NON-GAAP FINANCIAL MEASURES RECONCILIATION (UNAUDITED) OPERATING INCOME AND OPERATING RETURN ON AVERAGE COMMON EQUITY
FOR THE QUARTERS AND YEARS ENDED |
|||||||||||||||
|
|
|
|
|
|
|
|
||||||||
|
Quarters ended |
|
Years ended |
||||||||||||
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
||||||||
|
(in thousands, except per share amounts) |
||||||||||||||
|
|
|
|
|
|
|
|
||||||||
Net income available to common shareholders |
$ |
40,928 |
|
|
$ |
197,329 |
|
|
$ |
192,833 |
|
|
$ |
588,359 |
|
Net investment (gains) losses(12) |
|
42,558 |
|
|
|
(20,410 |
) |
|
|
456,789 |
|
|
|
(134,279 |
) |
Foreign exchange losses (gains)(13) |
|
78,989 |
|
|
|
4,632 |
|
|
|
(157,945 |
) |
|
|
315 |
|
Reorganization expenses(14) |
|
9,485 |
|
|
|
— |
|
|
|
31,426 |
|
|
|
— |
|
Interest in (income) loss of equity method investments(15)
|
|
3,045 |
|
|
|
(1,213 |
) |
|
|
(1,995 |
) |
|
|
(32,084 |
) |
Income tax expense (benefit)
|
|
(8,397 |
) |
|
|
1,849 |
|
|
|
(23,177 |
) |
|
|
14,166 |
|
Operating income |
$ |
166,608 |
|
|
$ |
182,187 |
|
|
$ |
497,931 |
|
|
$ |
436,477 |
|
|
|
|
|
|
|
|
|
||||||||
Earnings per diluted common share |
$ |
0.48 |
|
|
$ |
2.31 |
|
|
$ |
2.25 |
|
|
$ |
6.90 |
|
Net investment (gains) losses |
|
0.50 |
|
|
|
(0.24 |
) |
|
|
5.33 |
|
|
|
(1.57 |
) |
Foreign exchange losses (gains) |
|
0.92 |
|
|
$ |
0.05 |
|
|
|
(1.84 |
) |
|
|
— |
|
Reorganization expenses |
|
0.11 |
|
|
|
— |
|
|
|
0.37 |
|
|
|
— |
|
Interest in (income) loss of equity method investments
|
|
0.04 |
|
|
|
(0.01 |
) |
|
|
(0.02 |
) |
|
|
(0.38 |
) |
Income tax expense (benefit)
|
|
(0.10 |
) |
|
|
0.02 |
|
|
|
(0.28 |
) |
|
|
0.17 |
|
Operating income per diluted common share |
$ |
1.95 |
|
|
$ |
2.13 |
|
|
$ |
5.81 |
|
|
$ |
5.12 |
|
|
|
|
|
|
|
|
|
||||||||
Weighted average diluted common shares outstanding |
|
85,655 |
|
|
|
85,591 |
|
|
|
85,669 |
|
|
|
85,291 |
|
|
|
|
|
|
|
|
|
||||||||
Average common shareholders' equity |
$ |
3,941,666 |
|
|
$ |
4,822,856 |
|
|
$ |
4,475,283 |
|
|
$ |
4,803,175 |
|
|
|
|
|
|
|
|
|
||||||||
Annualized return on average common equity |
|
4.2 |
% |
|
|
16.4 |
% |
|
|
4.3 |
% |
|
|
12.2 |
% |
|
|
|
|
|
|
|
|
||||||||
Annualized operating return on average common equity(16) |
|
16.9 |
% |
|
|
15.1 |
% |
|
|
11.1 |
% |
|
|
9.1 |
% |
|
|
|
|
|
|
|
|
||||||||
| 12Tax expense (benefit) of |
| 13Tax expense (benefit) of |
| 14Tax expense (benefit) of |
| 15Tax expense (benefit) of $nil for the quarters and years ended |
| 16Annualized operating return on average common equity ("operating ROACE") is a non-GAAP financial measure as defined in SEC Regulation G. The reconciliation to annualized ROACE, the most comparable GAAP financial measure is presented in the table above, and a discussion of the rationale for its presentation is provided later in this press release. |
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of section 27A of the Securities Act of 1933 and section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts included in this press release, including statements regarding our estimates, beliefs, expectations, intentions, strategies or projections are forward-looking statements. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in
Forward-looking statements contained in this press release may include, but are not limited to, information regarding our estimates for catastrophes and other weather-related losses, including losses related to the COVID-19 pandemic, measurements of potential losses in the fair market value of our investment portfolio and derivative contracts, our expectations regarding the performance of our business, our financial results, our liquidity and capital resources, the outcome of our strategic initiatives including our exit from catastrophe and property reinsurance lines of business, our expectations regarding pricing and other market and economic conditions including inflation, our growth prospects, and valuations of the potential impact of movements in interest rates, credit spreads, equity securities' prices, and foreign exchange currency rates.
Forward-looking statements only reflect our expectations and are not guarantees of performance. These statements involve risks, uncertainties, and assumptions. Accordingly, there are or will be important factors that could cause actual events or results to differ materially from those indicated in such statements. We believe that these factors include, but are not limited to, the following:
COVID-19
- the adverse impact of the ongoing COVID-19 pandemic on our business, results of operations, financial condition, and liquidity;
Insurance Risk
- the cyclical nature of the insurance and reinsurance business leading to periods with excess underwriting capacity and unfavorable premium rates;
- the occurrence and magnitude of natural and man-made disasters, including the potential increase of our exposure to natural catastrophe losses due to climate change;
- actual claims exceeding loss reserves;
- the failure of any of the loss limitation methods we employ;
- the effects of emerging claims, coverage and regulatory issues, including increasing litigation and uncertainty related to coverage definitions, limits, terms and conditions;
- the failure of our cedants to adequately evaluate risks;
- the adverse impact of inflation;
Strategic Risk
-
losses from war including losses related to the Russian invasion of
Ukraine , terrorism and political unrest, or other unanticipated losses; -
changes in the political environment of certain countries in which we operate or underwrite business, including the
United Kingdom's withdrawal from theEuropean Union ; - the loss of business provided to us by major brokers;
- a decline in our ratings with rating agencies;
- the loss of one or more of our key executives;
- difficulties with technology and/or data security;
Credit Risk
- the inability to purchase reinsurance or collect amounts due to us from reinsurance we have purchased;
- the failure of our policyholders or intermediaries to pay premiums;
- general economic, capital and credit market conditions, including fluctuations in interest rates, credit spreads, equity securities' prices, and/or foreign currency exchange rates;
- breaches by third parties in our program business of their obligations to us;
Liquidity Risk
- the inability to obtain additional capital on favorable terms, or at all;
Operational Risk
- changes in accounting policies or practices;
- the use of industry models and changes to these models;
Regulatory Risk
- changes in governmental regulations and potential government intervention in our industry;
- inadvertent failure to comply with certain laws and regulations relating to sanctions and foreign corrupt practices; and
Risks Related to Taxation
- changes in tax laws.
Readers should carefully consider the risks noted above together with other factors including but not limited to those described under Item 1A, 'Risk Factors' in our most recent Annual Report on Form 10-K filed with the
We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.
Rationale for the Use of Non-GAAP Financial Measures
We present our results of operations in a way we believe will be meaningful and useful to investors, analysts, rating agencies and others who use our financial information to evaluate our performance. Some of the measurements we use are considered non-GAAP financial measures under
Underwriting-Related General and Administrative Expenses
Underwriting-related general and administrative expenses include those general and administrative expenses that are incremental and/or directly attributable to our underwriting operations. While this measure is presented in the 'Segment Information' note to our Consolidated Financial Statements, it is considered a non-GAAP financial measure when presented elsewhere on a consolidated basis.
Corporate expenses include holding company costs necessary to support our worldwide insurance and reinsurance operations and costs associated with operating as a publicly-traded company. As these costs are not incremental and/or directly attributable to our underwriting operations, these costs are excluded from underwriting-related general and administrative expenses, and therefore, consolidated underwriting income (loss). General and administrative expenses, the most comparable GAAP financial measure to underwriting-related general and administrative expenses, also includes corporate expenses.
The reconciliation of underwriting-related general and administrative expenses to general and administrative expenses, the most comparable GAAP financial measure, is presented in the 'Consolidated Segmental Data' section of this press release.
Consolidated Underwriting Income (Loss)
Consolidated underwriting income (loss) is a pre-tax measure of underwriting profitability that takes into account net premiums earned and other insurance related income (loss) as revenues and net losses and loss expenses, acquisition costs and underwriting-related general and administrative expenses as expenses. While this measure is presented in the 'Segment Information' note to our Consolidated Financial Statements, it is considered a non-GAAP financial measure when presented elsewhere on a consolidated basis.
We evaluate our underwriting results separately from the performance of our investment portfolio. As a result, we believe it is appropriate to exclude net investment income and net investment gains (losses) from our underwriting profitability measure.
Foreign exchange losses (gains) in our consolidated statements of operations primarily relate to the impact of foreign exchange rate movements on our net insurance-related liabilities. However, we manage our investment portfolio in such a way that unrealized and realized foreign exchange losses (gains) on our investment portfolio, including unrealized foreign exchange losses (gains) on our equity securities, and foreign exchange losses (gains) realized on the sale of our available for sale investments and equity securities recognized in net investment gains (losses), and unrealized foreign exchange losses (gains) on our available for sale investments recognized in other comprehensive income (loss), generally offset a large portion of the foreign exchange losses (gains) arising from our underwriting portfolio, thereby minimizing the impact of foreign exchange rate movements on total shareholders' equity. As a result, we believe that foreign exchange losses (gains) in our consolidated statements of operations in isolation are not a meaningful contributor to our underwriting performance, therefore, foreign exchange losses (gains) are excluded from consolidated underwriting income (loss).
Interest expense and financing costs primarily relate to interest payable on our debt. As these expenses are not incremental and/or directly attributable to our underwriting operations, these expenses are excluded from underwriting-related general and administrative expenses, and therefore, consolidated underwriting income (loss).
Reorganization expenses include compensation-related costs and software asset impairments mainly attributable to our exit from catastrophe and property reinsurance lines of business, part of an overall approach to reduce our exposure to volatile catastrophe risk, announced in
Amortization of intangible assets including value of business acquired ("VOBA") arose from business decisions, the nature and timing of which are not related to the underwriting process, therefore, these expenses are excluded from consolidated underwriting income (loss).
We believe that the presentation of underwriting-related general and administrative expenses and consolidated underwriting income (loss) provides investors with an enhanced understanding of our results of operations by highlighting the underlying pre-tax profitability of our underwriting activities. The reconciliation of consolidated underwriting income (loss) to net income (loss), the most comparable GAAP financial measure, is presented in the 'Consolidated Segmental Data' section of this press release.
Operating Income (Loss)
Operating income (loss) represents after-tax operational results exclusive of net investment gains (losses), foreign exchange losses (gains), reorganization expenses, and interest in income (loss) of equity method investments.
Although the investment of premiums to generate income and investment gains (losses) is an integral part of our operations, the determination to realize investment gains (losses) is independent of the underwriting process and is heavily influenced by the availability of market opportunities. Furthermore, many users believe that the timing of the realization of investment gains (losses) is somewhat opportunistic for many companies.
Foreign exchange losses (gains) in our consolidated statements of operations primarily relate to the impact of foreign exchange rate movements on net insurance-related liabilities. However, we manage our investment portfolio in such a way that unrealized and realized foreign exchange losses (gains) on our investment portfolio, including unrealized foreign exchange losses (gains) on our equity securities, and foreign exchange losses (gains) realized on the sale of our available for sale investments and equity securities recognized in net investment gains (losses), and unrealized foreign exchange losses (gains) on our available for sale investments recognized in other comprehensive income (loss), generally offset a large portion of the foreign exchange losses (gains) arising from our underwriting portfolio, thereby minimizing the impact of foreign exchange rate movements on total shareholders' equity. As a result, we believe that foreign exchange losses (gains) in our consolidated statements of operations in isolation are not a meaningful contributor to the performance of our business, therefore, foreign exchange losses (gains) are excluded from operating income (loss).
Reorganization expenses include compensation-related costs and software asset impairments mainly attributable to our exit from catastrophe and property reinsurance lines of business, part of an overall approach to reduce our exposure to volatile catastrophe risk, announced in
Interest in income (loss) of equity method investments is primarily driven by business decisions, the nature and timing of which are not related to the underwriting process, therefore, this income (loss) is excluded from operating income (loss).
Certain users of our financial statements evaluate performance exclusive of after-tax net investment gains (losses), foreign exchange losses (gains), reorganization expenses, and interest in income (loss) of equity method investments to understand the profitability of recurring sources of income.
We believe that showing net income (loss) available (attributable) to common shareholders exclusive of after-tax net investment gains (losses), foreign exchange losses (gains), reorganization expenses, and interest in income (loss) of equity method investments reflects the underlying fundamentals of our business. In addition, we believe that this presentation enables investors and other users of our financial information to analyze performance in a manner similar to how our management analyzes the underlying business performance. We also believe this measure follows industry practice and, therefore, facilitates comparison of our performance with our peer group. We believe that equity analysts and certain rating agencies that follow us, and the insurance industry as a whole, generally exclude these items from their analyses for the same reasons. The reconciliation of operating income (loss) to net income (loss) available (attributable) to common shareholders, the most comparable GAAP financial measure, is presented in the 'Non-GAAP Financial Measures Reconciliation' section of this press release.
We also present operating income (loss) per diluted common share and annualized operating ROACE, which are derived from the operating income (loss) measure and are reconciled to the most comparable GAAP financial measures, earnings (loss) per diluted common share and annualized return on average common equity ("ROACE"), respectively, in the 'Non-GAAP Financial Measures Reconciliation' section of this press release.
Constant Currency Basis
We present gross premiums written and net premiums written on a constant currency basis in this press release. The amounts presented on a constant currency basis are calculated by applying the average foreign exchange rate from the current year to the prior year amounts. We believe this presentation enables investors and other users of our financial information to analyze growth in gross premiums written and net premiums written on a constant basis. The reconciliation to gross premiums written and net premiums written on a GAAP basis is presented in the 'Insurance Segment' and 'Reinsurance Segment' sections of this press release.
Pre-Tax Total Return on Cash and Investments excluding
Pre-tax total return on cash and investments excluding foreign exchange movements measures net investment income (loss), net investments gains (losses), interest in income (loss) of equity method investments, and change in unrealized gains (losses) generated by average cash and investment balances. We believe this presentation enables investors and other users of our financial information to analyze the performance of our investment portfolio. The reconciliation of pre-tax total return on cash and investments excluding foreign exchange movements to pre-tax total return on cash and investments, the most comparable GAAP financial measure, is presented in the 'Investments' section of this press release.
View source version on businesswire.com: https://www.businesswire.com/news/home/20230125005746/en/
Source:
FAQ
What is AXIS Capital's net income for the fourth quarter of 2022?
How much did AXIS Capital's gross premiums increase in Q4 2022?
What was the combined ratio for AXIS Capital in 2022?
What was the annualized return on average common equity for AXIS Capital in Q4 2022?
What is AXIS Capital's book value per diluted share as of December 31, 2022?
