There are few signs of an end to the hardening insurance market, based on record second-quarter operating results published by Bermuda-based specialty insurance and reinsurance group AXIS.
“During the quarter, we recorded average rate increases of 14% across our insurance book, which is higher than the previous quarter and on par with the prior-year period – and we remain confident that pricing will remain at or above loss-cost trends well into 2022 and likely beyond, providing a tailwind to ongoing improvements in underwriting profitability,” said Albert Benchimol, president and CEO of AXIS Capital.
Overall, the group reported operating income of $171m, or $2.00 per diluted common share, for the second quarter of this year. This is on the back of an improvement of 2.7 points in the current accident-year combined ratio, excluding catastrophe and weather-related losses, compared to the prior-year period.
During the first six months of this year, the group’s insurance business generated gross written premiums of $2.37bn, up 19.9% on the $1.98bn generated for the same period in 2020.
The insurance business delivered an underwriting profit of $132.3m in the first half of this year, compared with a loss of $88.2m at the same point of 2020. The combined ratio was 89.5%, compared with 107.9%.
The reinsurance book delivered gross written premiums of $2.1bn in the first half, 3% higher than last year. The combined ratio improved from 101.2% to reach 95.2%.
“Our core underwriting results were strong, as evidenced by this quarter’s current year ex-cat combined ratio of 88.7%. Our continued progress in underwriting performance provides tangible proof that our efforts to reposition our portfolio are delivering meaningful improvements,” commented Mr Benchimol.
“Our insurance business is well positioned in the markets experiencing the strongest conditions, leading to 22% growth in gross premiums written to achieve a record level of premium production. Our reinsurance business demonstrated agility and discipline, growing in attractive classes but also holding the line where terms were not deemed sufficiently attractive, and continuing to manage down catastrophe volatility,” he added.
The group said the strong growth in primary insurance business was primarily attributable to increases in professional, property, liability and marine lines, driven by new business and favourable rate changes.