AXIS Capital(AXS) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company achieved a record operating return on equity of 18.6% and a year-end book value of $65.27, reflecting a 20.7% growth compared to the previous year [10] - Operating earnings per share reached a record$ 11.18, marking a 98% increase over the prior year [10] - The combined ratio improved to 92.3%, a 7.6-point enhancement from the previous year [11] - Net investment income was a record $759 million for the year, up 24% [54] Business Line Data and Key Metrics Changes - The Insurance segment reported a combined ratio of 89.1% and generated$ 6.6 billion in premiums, up 7.7% year-over-year [15][48] - The Reinsurance segment produced a combined ratio of 91.8% and premiums of $2.4 billion, growing nearly 8% [18][52] - The company saw a 37% increase in Reinsurance gross premiums in the fourth quarter, with significant contributions from new business [49] Market Data and Key Metrics Changes - The North American Insurance division experienced an 8% growth, with a 25% increase in submission flow year-over-year [16] - Global markets reported a 7.6% growth, despite some non-renewals in the cyber portfolio [16] - The company noted increasing competition in global markets, particularly in property, marine, and aviation units [17] Company Strategy and Development Direction - The company is focused on driving sustained, profitable growth and value creation, with strategic accomplishments including expanding underwriting capabilities and enhancing the operating model [9] - The "How We Work" transformation program aims to build a foundation for long-term profitable growth and improve operational efficiency [34][35] - The company is committed to maintaining a selective growth strategy in competitive markets while leveraging specialty capabilities [21][27] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's positioning for 2025 and beyond, citing strong financial strength and operational improvements [9][58] - The risk landscape remains complex, with ongoing monitoring of trends such as climate risk and social inflation impacting various lines of business [22][24] - The company anticipates continued double-digit rate increases in liability lines for 2025 [62] Other Important Information - The company returned$ 97 million to shareholders through dividends and share repurchases, with $200 million remaining on the repurchase authorization [57] - The effective tax rate for the full year was 13.8%, with expectations for a reported tax rate in the high teens for 2025 [56] Q&A Session Summary Question: What is the outlook for U.S. casualty rates in 2025? - Management confirmed a 29% increase in U.S. casualty rates and expects double-digit rates to persist in 2025 [60][62] Question: How is the company exposed to the recent wildfires in California? - Management indicated that the exposure is not material, estimating a market share of 10 to 12 basis points in California [68][69] Question: Can you provide an update on the Bermuda DTA? - Management expects adjustments to the DTA before 2027, with the current corporate tax rate in Bermuda at 15% for 2025 [99][102] Question: What are the implications of the wildfires for later renewals? - Management stated that it remains to be seen how the market will respond to the recent catastrophes, with no immediate insights available [146]