AXIS Capital(AXS)2025-02-26 21:17Financial Performance - The company's total gross premiums written for 2024 reached 8,356,525 in 2023 and 9.6% from 6,615,584 in 2024, up 7.8% from 5,585,581 in 2022[41]. - The reinsurance segment gross premiums written were 2,215,761 in 2023 but a decrease of 9.1% from $2,629,014 in 2022[51]. Strategic Focus - The company aims to deliver sustained profitable growth and increased shareholder value through its focus on operating return on average common equity (operating ROACE) and adjusted book value per diluted common share (Adjusted DBVPS)[37]. - The company has exited the aviation and catastrophe lines of business, which were significant changes in its operational strategy[50]. - The competitive environment in the insurance segment emphasizes price, service, and distribution, with the company aiming for differentiation through underwriting expertise[46]. Risk Management - The company employs a comprehensive Enterprise Risk Management (ERM) framework to identify, assess, manage, monitor, and report risks affecting strategic, operational, and financial objectives[130]. - The internal capital model is utilized to measure internal risk capital and allocate capital to businesses that provide the best returns, ensuring alignment with the company's defined risk appetite[135]. - The company emphasizes risk diversification as a key component of its business model, aiming to maintain a balanced risk profile without disproportionately large risks[137]. - The risk appetite framework, authorized by the Board of Directors, defines the amount of risk the company is willing to accept in pursuit of strategic objectives, with specific limits established to manage individual risk types[138]. - The Risk Committee of the Board of Directors oversees the integrity and effectiveness of the ERM framework, ensuring that risk mitigation activities align with the company's overall risk strategy[142]. Regulatory Compliance - AXIS Specialty Bermuda is a Class 4 general business insurer licensed under the Insurance Act of Bermuda, incorporated on August 19, 2024[58]. - The Bermuda Monetary Authority (BMA) requires AXIS Capital to submit annual group statutory financial returns and maintain compliance with minimum capital requirements[62]. - The BMA published a revised Insurance Code of Conduct in August 2022, with compliance required by September 1, 2023[63]. - The U.S. Insurance Subsidiaries must file detailed quarterly statutory financial statements with state insurance regulators[70]. - The Dodd-Frank Act includes provisions that affect the insurance industry, particularly through the Federal Insurance Office's limited authority[72]. Operational Changes - AXIS Specialty Limited (Singapore Branch) ceased writing new business effective January 1, 2024, and plans to close the branch[65]. - AXIS Corporate Capital UK Limited ceased providing capital support to Syndicate 1686 on December 31, 2024[99]. - AXIS Corporate Capital UK II Limited provides 100% capital support to Syndicate 1686 effective January 1, 2025[100]. - AXIS Specialty Europe manages the Contessa book of business on a run-off basis following the dissolution of Contessa Limited on April 11, 2024[103]. Employee and Workforce Management - As of December 31, 2024, the company had 1,876 employees, reflecting an approximate 8% decrease in employee count during 2024, with a voluntary turnover rate of 11.9% compared to 10.9% in 2023[125]. - The company is committed to fair pay and conducts regular pay equity audits to ensure equal pay practices[123]. Investment Strategy - The company utilizes third-party investment managers for its investment portfolio, focusing on investment grade fixed maturities to match expected claim payouts[55]. - The company’s investment strategy is overseen by an Investment and Finance Committee, ensuring alignment with overall goals and risk management[55]. - Fixed maturities represent 84% of total investments and 70% of total cash and investments as of December 31, 2024, which may be adversely impacted by changes in interest rates or credit spreads[264]. Cybersecurity and Data Protection - The company is regularly targeted by cyberattacks, which include threats such as viruses, malware, and phishing attacks, necessitating continuous monitoring and enhancement of its cybersecurity measures[281]. - There is a risk of material adverse effects on the company's business and financial condition due to potential cybersecurity incidents, including unauthorized access and data breaches[284]. - The company operates under strict data protection and privacy laws, with non-compliance potentially leading to significant fines and reputational damage[288]. - Data protection laws in Europe, the U.K., and Switzerland impose obligations on companies processing data of citizens from these regions, regardless of the company's location[290]. - The evolving data protection landscape in the U.S. may increase the company's compliance burden as states implement new regulations[291]. Liquidity and Credit Risk - The company manages liquidity risk through a range of policies, primarily generating liquidity from premiums and investment income[193]. - The company maintains cash and cash equivalents and a high-quality, liquid investment portfolio to meet expected outflows, with limits on illiquid assets and a minimum percentage of unrestricted cash and liquid investment-grade fixed maturity securities[195]. - The company faces credit risk from third-party counterparties, including potential insolvency of reinsurers, which could materially affect its financial condition[272]. - The company’s exposure to liquidity risk stems mainly from the need to pay claims on potential extreme loss events and regulatory constraints[269]. - The company may experience losses from policyholders or intermediaries not paying premiums due to insolvency or adverse economic conditions, which could materially impact revenues[275]. Business Continuity and Operational Risks - The company has a robust business continuity plan to address risks from business interruptions and system failures, although it may still be inadequate[279]. - The company’s operational risk management includes a Risk Register to monitor key drivers of risk and a quarterly certification process for control owners[203]. - The company faces heightened operational risks due to changes in processes and systems as it adapts to new ways of working[278]. - The company outsources certain technology and business process functions, which may expose it to operational difficulties and data security risks if third-party providers do not perform satisfactorily[286].