Axis Capital Holdings Limited · NYSE:AXS
Axis Capital — Q3 2020 Earnings Presentation
25 slides from Axis Capital's earnings presentation, Oct 29, 2020
Slide 1: Investor Meetings 3Q-2020
Investor Meetings } 3Q-2020
Slide 2: Safe Harbor Statement
Safe Harbor Statement CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This presentation 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 historic
Slide 3: Vision: Global Leadership in Specialty Risks
Vision: Global Leadership in Specialty Risks Targeting top-quintile profitability with industry average volatility Consistent Commitment Hybrid model – Insurance & Reinsurance to Our Franchise anchored in leadership positions in key markets and distribution relationships Strategy Strong relationship
Slide 4: Leading Specialty Insurer and Global Reinsurer
Leading Specialty Insurer and Global Reinsurer We provide our clients and distribution partners with a broad range of risk transfer products and services, meaningful capacity and solid financial strength AXIS Capital at a Glance 1 Total FY2019 GPW: $6.9 billion Exchange / Ticker NYSE / “AXS” Insuran
Slide 5: AXIS Responds to the Pandemic
AXIS Responds to the Pandemic AXIS is committed to supporting our clients, partners, employees and communities as the COVID-19 situation evolves. The company has been working for a number of years to provide first-class technology platforms to all constituents. Examples of our response: CLIENTS & PA
Slide 6: AXIS: A Profitable Growth Engine
AXIS: A Profitable Growth Engine • Margin Improvement: Major repositioning of the portfolio over the past 3 years should continue to drive improving results • Attractive Market Position: Over 80% of AXIS’ portfolio is in markets seeing the strongest rate improvements including E&S Property, E&S Casu
Slide 7: Pricing Momentum Continues to Accelerate Across the Board
Pricing Momentum Continues to Accelerate Across the Board Insurance: Insurance Rate Improvements by Division1 • Rates were up 16% across the book in 3Q20 vs. 15% 20% in 2Q20 and 10% in 1Q20 • Average rate increases of ~13% for YTD2020 18% • Rate increases seen in almost every line of business and ac
Slide 8: On the Front Foot for Profitable Insurance Growth
On the Front Foot for Profitable Insurance Growth Further pricing momentum as well as improved terms and conditions are reaching nearly every line of business AXIS writes Insurance Segment GPW Changes Targeting Profitable Growth1 $1,200 $1,100 $1,038 $8 $1,000 $968 $962 $941 936 $35 $18 $895 $12 $90
Slide 9: Insurance Growth: Distribution Benefiting Results
Insurance Growth: Distribution Benefiting Results Accessing high quality business through the best distribution channels provides for margin improvement 2020 YTD Insurance Segment: Strategic Distribution S P E C I AL T Y / W H O L E S AL E BIG 3 OTHER GWP Growth Rate Change Acquisition Cost Accelera
Slide 10: Strategic Reinsurance Growth: Where it Matters
Strategic Reinsurance Growth: Where it Matters AXIS has been focused on profitable growth where risk selection and rate adequacy drive sound underwriting decisions As reinsurance rates firm heading into January 1 renewals more growth opportunities will become available Reinsurance GPW Growth 9M20 vs
Slide 11: Executing the Strategy
Executing the Strategy AXIS has positioned itself to excel in the current firming P&C market and the underwriting performance is producing tangible results Group Ex-PGAAP Ex-Cat AY Combined Ratio1 100% 98% 97.6% 97.1% 97.2% 96% 94% 92.4% 92% 90% FY2018 FY2019 9M19 9M20 Margin Improvement from Multip
Slide 12: Group: Underwriting Actions Drive Improving Performance
Group: Underwriting Actions Drive Improving Performance Group Ex-Cat AY Loss Ratio 65% 63% 61.7% 60.6% 60.1% 60% 57.8% 58% 55% FY2018 FY2019 9M19 9M20 Loss ratio improvement driven by: • Enhanced pricing, improved terms/conditions and lower limits drive improved loss ratios coupled with greater stab
Slide 13: Insurance Segment: Underlying Loss Ratio Improvement
Insurance Segment: Underlying Loss Ratio Improvement 64% 61.3% 60% 3.3% 58.5% 57.8% 57.0% 2.5% 56% 2.3% 3.1% 54.8% 58.0% 1.1% 56.0% 52% 54.7% 54.7% 53.7% 48% 44% 2017 2018 2019 9M19 9M20 Continuing Lines Ex-Cat AY Loss Ratio Exited Lines Impact Portfolio Changes Driving Improving Loss Ratios: • 6.5
Slide 14: Reinsurance Segment: Underlying Loss Ratio Improvement
Reinsurance Segment: Underlying Loss Ratio Improvement 68% 66% 65.6% 64.8% 64.0% 64% 62.3% 62% 61.1% 60% 58% 2017 2018 2019 9M19 9M20 Ex-cat AY Loss Ratio Portfolio Changes Driving Improving Loss Ratios: • 4.5 points of underlying margin improvement since YE2017 • Pricing momentum expected into 1/1/
Slide 15: Executing Expense Management Initiatives
Executing Expense Management Initiatives $420 $404.9 $398.5 $400 $380 $361.6 $360 $340 $320 Note: Dollars in millions 9M18 9M19 9M20 Underwriting G&A Expenses Focused Expense Management: • Achieved our operational and integration savings initiative ahead of targeted timeframe • Tactically managing 2
Slide 16: Significant Reduction in Cat Exposure Reduces Volatility and Enhances Capital Efficiency
Significant Reduction in Cat Exposure Reduces Volatility and Enhances Capital Efficiency 2020 Catastrophe Tower Highlights Southeast Wind Single Event PML’s1 ($ in millions) • In 2020 the lower portion of the PML curve was $800 further reduced to improve earnings stability while improving reinsuranc
Slide 17: Enterprise PML's Have Reduced Across the Curve
Enterprise PML’s Have Reduced Across the Curve AXIS has reduced its PML’s across the distribution to address potential losses from both attritional and catastrophe events 16
Slide 18: Strategic Capital Partners Drive Fee Income
Strategic Capital Partners Drive Fee Income Strategic Capital Partners AUM Growth Strategic Capital Partners Fee Income(1) $2.0bn ($ in millions) $1.5bn $80.3 AUM Growth ($bn) $1.0bn $0.5bn $57.1 $0.0bn 2015 2016 2017 2018 2019 2020 $48.0 Harrington AVRL Other Strategic Partners Alturas Premium Cede
Slide 19: Interest Rates Remain a Headwind to Investment Income
Interest Rates Remain a Headwind to Investment Income $600 $478.6 $438.5 $400 $361.0 $240.1 $200 $0 2018 2019 9M19 9M20 Note: Dollars in millions Net Investment Income • With the 10-Year US Treasury Note yield down ~50%1 since the beginning of 2020 due to the COVID-19 pandemic investment income face
Slide 20: Achieving Significant Progress Across the Platform
Achieving Significant Progress Across the Platform In the past five years, AXIS has implemented significant change to its platform and portfolios Key Drivers of Recent Progress1 Improvement Targets3 vs. FY19 • Sustained pricing improvements Well positioned for profitable growth in all GPW Growth • S
Slide 21: Corporate Social Responsibility at AXIS
Corporate Social Responsibility Corporate at AXIS AXIS has long been a values-based organization and over the past year we have Purpose: significantly scaled up our efforts by launching a formalized corporate social responsibility program with four core pillars: Living our values, Environmental – en
Slide 22: Our Purpose, Strategic Vision and Values
Our Purpose, Strategic Vision and Values In a world filled with risk and uncertainty, we give people and Our Purpose organizations the confidence they need to pursue their goals and (who we are) ambitions. Our Strategic Vision Be leaders in our chosen markets, standing apart for delivering (what we
Slide 23: Conclusion
Conclusion AXIS is a leading specialty insurer and global reinsurer Strong franchise with superior position in chosen specialty markets that are exhibiting the most attractive opportunities Completed repositioning of the portfolio. Pace of underwriting margin improvement should continue given ongoin
Slide 24: Appendix I
Appendix I Note: On October 2, 2017, we acquired Novae. At the acquisition date, we identified VOBA which represents the present value of the expected underwriting profit within policies that were in-force at the closing date of the transaction. In addition, the allocation of the acquisition price t
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