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AC

AXIS CAPITAL HOLDINGS LTD (AXS)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 delivered record profitability with operating EPS $3.29 and an 88.9% combined ratio; GAAP diluted EPS was $2.72 and total revenues were $1.633B .
  • EPS beat Wall Street consensus (Primary EPS) by ~$0.36, while revenue was modestly below consensus; Insurance segment drove the outcome with an 85.3% combined ratio and record $1.9B GPW .
  • Strategic actions: completed the Enstar LPT retroceding ~$2.0B net reserves, tightening volatility and impacting investment asset mix; book yield 4.6%, market yield 5.0% at quarter-end .
  • Management emphasized disciplined underwriting, casualty rate momentum, selective Property posture, continued cyber portfolio reshaping, and AI-enabled “How We Work” execution; full-year tax rate guided to the high teens .

What Went Well and What Went Wrong

What Went Well

  • Insurance segment achieved an outstanding 85.3% combined ratio with underwriting income of $152M and record $1.93B gross premiums written; net premiums written rose 8.1% YoY .
  • Prior-year reserve releases of $20M (Insurance $15M; Reinsurance $5M) and lower cat and weather losses (2.6 pts) supported a 1.5 pt improvement in the combined ratio YoY .
  • CEO on execution: “record profitability… all-time highs in premium volume… operating ROE of 19% and an 88.9% combined ratio,” underscoring sustained profitable growth and AI-enabled operational enhancements .

What Went Wrong

  • Reinsurance combined ratio rose to 92.0% with a higher current accident year loss ratio ex-cat (67.9% vs. 64.2% prior year); underwriting income declined to $38M .
  • Cyber premium decreased due to lower program business; management continues to remediate and expects completion by end of Q3, indicating near-term growth headwinds .
  • Foreign exchange losses were elevated at $94.9M vs. a gain in prior year; NII dipped slightly YoY due to lower fixed maturity assets post-LPT, partly offset by stronger alternatives .

Financial Results

Consolidated Performance vs Prior Year and Prior Quarter

MetricQ2 2024Q1 2025Q2 2025
Total Revenues ($USD Billions)$1.451 $1.522 $1.633
Diluted EPS ($)$2.40 $2.26 $2.72
Operating EPS ($)$2.93 $3.17 $3.29
Combined Ratio (%)90.4% 90.2% 88.9%
Net Income to Common ($USD Millions)$204.4 $186.5 $215.8

Estimates vs Actuals (Q2 2025)

MetricConsensus# of EstimatesActual
Primary EPS ($)2.93*8*3.29
Revenue ($USD Billions)1.638*2*1.633

Values marked with * are retrieved from S&P Global.
EPS beat; revenue slight miss relative to consensus.

Segment Breakdown

MetricQ2 2024Q1 2025Q2 2025
Insurance Net Premiums Earned ($USD Billions)$0.958 $1.010 $1.033
Insurance Underwriting Income ($USD Millions)$115.6 $134.5 $151.6
Insurance Combined Ratio (%)87.9% 86.7% 85.3%
Reinsurance Net Premiums Earned ($USD Billions)$0.346 $0.331 $0.360
Reinsurance Underwriting Income ($USD Millions)$45.5 $28.9 $37.6
Reinsurance Combined Ratio (%)89.3% 92.3% 92.0%

KPIs

KPIQ2 2024Q1 2025Q2 2025
Book Value per Diluted Common Share ($)$59.29 $66.48 $70.34
Annualized Operating ROE (%)19.9% 19.2% 19.0%
Net Investment Income ($USD Millions)$191.0 $207.7 $187.3
Cat & Weather Loss Ratio (pts)3.6 3.7 2.6
Prior-Year Reserve Development Ratio (pts)0.0 (1.4) (1.5)
Weighted Avg Diluted Shares (Millions)85.326 82.378 79.329

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Insurance premium growthFY 2025Mid-single-digit growth (Q1 context) Second-half growth > 6% first-half; remediation headwind fades by end-Q3 Raised second-half trajectory
Reinsurance premium growthFY 2025Not specified priorFlat to low single-digit for full year New formal outlook
Company G&A ratioFY 202611% target reiterated Expect to hit 11% in 2026; Q2 G&A ratio 11.6% Maintained target
Tax rateFY 2025ETR 18.6% in Q1 Full-year tax rate “high teens” Maintained range
Cyber remediationThrough Q3 2025Ongoing remediation ~$20–$25M remaining in Q3; completion expected by end-Q3 Timeline clarified
Share repurchase authorizationAs of quarter-end$160M remaining (Q1) $110M remaining (Q2); opportunistic buybacks Lower remaining capacity
DividendsQ2 2025$0.44/qtr (prior cadence) Declared $0.44 payable July 17, 2025 Maintained rate

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025, Q4 2024)Current Period (Q2 2025)Trend
AI/technology, “How We Work”Operating model enhancements; lower G&A; efficiency gains AI-powered underwriting services, automated clearance, data-enabled decisioning; continued modernization Expanding deployment
Macro/trade/tariffsCaution on tariffs/geopolitics cited Market uncertainty (trade disruption, tariffs, geopolitical tensions) acknowledged; disciplined growth Ongoing caution
Property pricing/competition2024 CATs elevated; selective stance Flat to low-single-digit growth; 11% rate reduction overall; selective growth (Renewables, U.K. Property) More competitive
Casualty rate momentumPortfolio repositioning; improving profitability U.S. primary +12.5%; excess casualty +14% rate/growth; premium adequacy emphasized Stronger momentum
Cyber portfolio reshapingLower program business; decreased premiums Delegated cyber book reduced $35M; analytical investments; finish remediation by end-Q3 Nearing completion
Reinsurance liability stanceSelectivity; prior reserve actions in market Cautious stance; specialty short-tail 37% of book; expect flat to LSD growth; loss picks held Conservatively managed
Regulatory/taxBermuda tax DTA in Q4/Q1 Effective Bermuda 15% tax; ETR high teens; DTA amortization consistent Stabilizing framework

Management Commentary

  • CEO: “record profitability… operating ROE of 19% and an 88.9% combined ratio… records for first half underwriting income and production,” highlighting specialty leadership and AI-enabled efficiency .
  • CFO: “Insurance combined ratio was an outstanding 85.3%… Property rate pressures; held the line with 1% growth; expecting second-half insurance growth higher than 6% first half… Reinsurance second quarter typically ~25% of annual premium volume; full year flat to low-single-digit growth” .
  • CEO on casualty and portfolio adequacy: “pricing well ahead of trend… portfolio remains highly premium adequate… treaty protection attaches at $100M per event” .

Q&A Highlights

  • Reinsurance loss ratio: Team will “probably hold around the 68%” loss ratio through 2025; consistent cautious stance given social inflation and portfolio progress .
  • MGA strategy: Highly selective and disciplined; ~30% of premium via MGAs, ~14% in North America; unwilling to compete on price where not commensurate with risk .
  • Paid-to-incurred movement: Elevated due to older-year claim payments and California wildfire payments; notable impact in Marine & Aviation and Professional Lines .
  • Capital allocation: Opportunistic buybacks; $110M remaining authorization; continued investments in technology/data and underwriting teams .
  • Property-cat stance: No intent to re-enter cat reinsurance even if market hardens; opportunity to pursue via insurance (E&S) channels .
  • UK-Russia aviation ruling: No impact; AXIS writes all-perils, not contingent war market .

Estimates Context

  • EPS: Q2 Primary EPS consensus $2.93* vs actual operating EPS $3.29 (beat) .
  • Revenue: Q2 revenue consensus $1.638B* vs actual $1.633B (slight miss) .
  • Coverage: 8 EPS estimates, 2 revenue estimates*.
    Values marked with * are retrieved from S&P Global.

Key Takeaways for Investors

  • Insurance is the profit engine: 85.3% combined ratio, underwriting income at record levels; casualty rate momentum supports premium adequacy despite Property competition .
  • Reinsurance remains steady but conservative: short-tail focus, cautious liability exposure, flat to LSD growth outlook; expect sustained discipline in loss picks .
  • Quality of earnings improved: lower cat/wx losses, reserve releases, and reduced share count boosted per-share metrics; book value per diluted share rose to $70.34 .
  • LPT reduces balance-sheet volatility: post-Enstar retrocession reshaped asset mix and NII trajectory; book yield 4.6%, market yield 5.0% provides headroom .
  • Near-term catalysts: completion of cyber remediation by end-Q3, second-half insurance growth acceleration, continued AI-enabled productivity gains .
  • Capital returns remain opportunistic: $110M buyback authorization and $0.44 quarterly dividend sustained; management views buybacks as attractive .
  • Tax normalization: Bermuda 15% corporate tax and DTA amortization embedded; full-year ETR guided high teens .
Sources: Q2 2025 8-K and press release, investor financial supplement, and earnings call transcript.