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AC

AXIS CAPITAL HOLDINGS LTD (AXS)·Q3 2025 Earnings Summary

Executive Summary

  • Strong quarter with broad-based profitability: combined ratio 89.4% (–3.7 pts YoY), operating EPS $3.25 (+19.9% YoY), and underwriting income $188M (+39% YoY) as Insurance posted an 85.9% combined ratio and Reinsurance 92.2% .
  • Clear beats vs Street: Operating EPS beat by ~$0.33 ($3.25 vs $2.92*) and total revenue beat by ~$0.24B ($1.67B vs $1.44B*). AXS has beaten EPS consensus three straight quarters (Q1–Q3 2025)*. Values retrieved from S&P Global.
  • Capital returns continue with $110M buyback and $0.44 dividend in Q3; new $400M authorization in place, with management reiterating opportunistic stance .
  • Strategic levers: accelerated technology/AI investments (now ~$150M over three years vs $100M prior), RAC Re sidecar/third-party capital ramp beginning 2026, and mix management sustaining loss ratios despite select pricing pressure in property .

What Went Well and What Went Wrong

  • What Went Well

    • Insurance execution: record Q3 GPW $1.7B (+11% YoY) and record underwriting income $153M; current AY ex-cat combined ratio 83.3% . CEO: “our insurance segment again delivered an outstanding quarter… record underwriting income of $153 million” .
    • Mix and discipline offset market pressure: Insurance AY ex-cat loss ratio held at 52.3% as higher short-tail mix offset rate/trend headwinds. CFO: “we can’t control the market, but we can control mix” .
    • Efficient expense trajectory: consolidated G&A ratio 11.7% (–0.4 pt YoY). Company remains “on track” to reach 11% G&A by FY26 .

  • What Went Wrong

    • Property rate competition: Management cites “greater competition” in large-account E&S property and varying competitive intensity internationally; growth focused on lower middle market and disciplined net limits/CAT XOL at $100M attachment .
    • Cyber pricing pressure: Increased MGA/surplus capacity placing “unwarranted downward pressure in pricing”; AXIS responded with selective underwriting and completed reshaping of delegated cyber book .
    • Paid-to-incurred optics: Elevated ratios tied to claims process acceleration and large legacy FI claim payments (> $50M across top three claims in Q3), though reserves viewed as strong .

Financial Results

Headline results vs prior periods and estimates

MetricQ1 2025Q2 2025Q3 2025
Total Revenues ($USD Billions)$1.52*$1.63 $1.67
Net Premiums Earned ($USD Billions)$1.34 $1.39 $1.45
GAAP Diluted EPS ($)$2.26 $2.72 $3.74
Operating EPS ($)$3.17 $3.29 $3.25
Combined Ratio (%)90.2% 88.9% 89.4%
Underwriting Income ($USD Millions)$163.5 $189.2 $188.3
  • Estimates vs Actuals (Q3 2025)
    • Operating EPS: $3.25 actual vs $2.92 consensus mean* → Beat by ~$0.33. Values retrieved from S&P Global.
    • Revenue: $1.67B actual vs $1.44B consensus mean* → Beat by ~$0.24B. Values retrieved from S&P Global.
    • Coverage: EPS est count = 10; Revenue est count = 3*. Values retrieved from S&P Global.

Segment breakdown (profitability and production)

Segment KPIQ1 2025Q2 2025Q3 2025
Insurance GPW ($USD B)$1.66 $1.93 $1.69
Insurance Combined Ratio (%)86.7% 85.3% 85.9%
Insurance Underwriting Income ($M)$134.5 $151.6 $153.3
Reinsurance GPW ($USD B)$1.14 $0.58 $0.43
Reinsurance Combined Ratio (%)92.3% 92.0% 92.2%
Reinsurance Underwriting Income ($M)$28.9 $37.6 $35.0

Key KPIs and capital

KPIQ1 2025Q2 2025Q3 2025
Book Value/ Diluted Sh. ($)$66.48 $70.34 $73.82
Annualized Operating ROACE (%)19.2% 19.0% 17.8%
Net Investment Income ($M)$207.7 $187.3 $184.9
Share Repurchases ($M)$440 $50 $110
Common Dividend/ Sh. ($)$0.44 $0.44 $0.44

Notes:

  • Asterisk values (*) are from S&P Global; Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Insurance portfolio growth (ex sidecars)2026Mid–high single-digit growth (qualitative trajectory Q1/Q2) Mid–high single-digit growth, with RAC Re potentially lifting to double digits Raised with sidecar context
RAC Re impact (fees and retention)2026–2029N/ARetain ~1/3 of gross; fees contra G&A; underwriting-year ramp; de minimis fees in 2026 New disclosure
G&A expense ratioFY 2026“Sub 11% by 2026” reiterated Reaffirmed path to ~11% G&A by FY26 Maintained
Technology/AI investment3-year plan~$100M (Investor Day) Accelerated to ~$150M over three years Increased
Effective tax rateNear-termHigh-teens (Q1 commentary) Q3 effective tax rate 18.9%; Bermuda substance-based credits possible from 2025–26 (TBD mid-Dec) Maintained (color added)
Capital returnOngoingOpportunistic buybacks; $400M new authorization (Q2) Q3 buyback $110M; $400M authorization in place; remain opportunistic Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
AI/technology and “How We Work”Emphasis on expense leverage and productivity; 11.9% G&A in Q1; Investor Day $100M plan Accelerated to ~$150M/3yrs; underwriting platform rollout; early productivity proof points Investment accelerated; benefits scaling
Property market dynamicsQ1: –7% rate across global property; more competition in London; maintain discipline and limits/CAT protection Greater comp in large-account E&S; continued small-account rate; disciplined CAT XOL attaches $100M Competitive intensity up; selective growth
Liability rate/ growthQ1: U.S. excess casualty +16% rate; primary casualty remediation completed Liability rates +10%; U.S. excess casualty +12% rate, +11% growth Sustained strong pricing
CyberQ1: reshaping delegated book; increased reinsurance protections Downward pricing pressure from MGAs/surplus capacity; selective writing; delegated reshaping complete Discipline maintained; headwind persists
Reserves/ paid-to-incurredQ1: cautious reinsurance loss picks; reserves strong Elevated paid-to-incurred due to claims acceleration and legacy FI payments; top three paid >$50M; reserves viewed strong Optics noisy; fundamentals steady
Third-party capital (RAC Re)Q2: Launched AXIS Capacity Solutions / RAC Re Retain ~1/3; fee income; underwriting-year ramp 2026–2029; pipeline interest New earnings stream building
G&A ratioQ1/Q2: trajectory to <11% by FY26 Consolidated G&A ratio 11.7% in Q3; path reaffirmed On track
Regulatory/tax—Potential Bermuda substance-based credits under consultation; update expected mid-Dec Potential tailwind (TBD)

Management Commentary

  • “In the third quarter, our team once again delivered excellent results… 18% annualized operating ROE… operating EPS $3.25… premiums of $2.1 billion… combined ratio of 89.4.” — Vincent Tizzio, CEO .
  • “We are presently applying AI solutions… driving productivity increases… first release of our next generation underwriting platform in North America… advancing how we ingest, route, and review submissions.” .
  • “We believe that going into next year we will be able to construct a portfolio that remains premium adequate and that can grow at a mid to high single-digit growth rate excluding any impact from new sidecars such as RAC Re.” — Pete Vogt, CFO .
  • “We expect to retain about a third of the gross premiums written generated by the [RAC Re] facility… we will earn fees on ceded earned premiums… underwriting year basis, which means a slow buildup.” — Pete Vogt, CFO .
  • On paid-to-incurred: “We are very comfortable… improvements in our claims organization… closing ratios improved from 98% last year to 118% this year… top three [FI] claims had in excess of $50 million worth of pay in the quarter.” — CFO .

Q&A Highlights

  • Property growth and profitability: Management emphasized premium adequacy, limit discipline, and diversified property go-to-market across eight entities, supporting results amid competitive pockets .
  • RAC Re pipeline and economics: Interest building; alignment of interests emphasized; RAC Re expected to add fees (contra G&A) and profitable retained business, but ramps slowly (2026–2029) .
  • Expense trajectory: Sub-11% G&A by FY26 reaffirmed; RAC Re fees tailwind to G&A will be minimal in 2026 as earnings ramp starts .
  • Capital returns: $110M Q3 buyback not a run-rate; opportunistic with new $400M authorization; capital prioritized for growth/technology .
  • Reserves optics: Elevated paid-to-incurred due to claims acceleration and large legacy payments; reserve releases confined to short-tail lines; reserves viewed strong .

Estimates Context

  • Q3 2025: Operating EPS $3.25 vs $2.92 consensus mean* (beat); Revenue $1.67B vs $1.44B consensus mean* (beat). EPS estimates: 10; Revenue estimates: 3*. Values retrieved from S&P Global.
  • Q2 2025: Operating EPS $3.29 vs $2.93 consensus mean* (beat). Revenue $1.63B vs $1.64B consensus mean* (in line). Values retrieved from S&P Global.
  • Q1 2025: Operating EPS $3.17 vs $2.69 consensus mean* (beat). Revenue $1.52B vs $1.83B consensus mean* (miss, given investment markets/other dynamics). Values retrieved from S&P Global.
QuarterPrimary EPS Consensus Mean*Actual Operating EPSRevenue Consensus Mean* ($B)Actual Total Revenue ($B)
Q1 20252.69*$3.17 1.83*$1.52*
Q2 20252.93*$3.29 1.64*$1.63
Q3 20252.92*$3.25 1.44*$1.67

Notes:

  • Asterisk values (*) are from S&P Global; Values retrieved from S&P Global.

Key Takeaways for Investors

  • Quality underwriting persists: Insurance combined ratio sub-86% for the third straight quarter, with disciplined property posture and strong liability pricing underpinning margins .
  • Estimate momentum: Three consecutive EPS beats reflect operating execution and mix management; revenue variance driven in part by investment/FX and accounting dynamics earlier in the year* . Values retrieved from S&P Global.
  • Expense leverage runway: “How We Work” plus tech/AI investments (now ~$150M/3yrs) should support the path to ~11% G&A by FY26 .
  • Emerging fee/earnings flywheel: RAC Re adds fee income (contra G&A) and profitable retained business; expect gradual 2026–2029 ramp .
  • Capital deployment optionality: Strong capital position, $400M buyback authorization, and opportunistic approach provide flexibility while funding growth .
  • Reserve stance conservative despite optics: Elevated paid-to-incurred tied to claims acceleration and legacy FI payments; reserve releases confined to short-tail; management asserts reserve strength .
  • Near-term watch items: Property competitiveness (esp. large-account E&S), cyber pricing pressure, Bermuda substance-based tax credits outcome in December, and RAC Re pipeline conversion .

Citations:

  • Q3 filings and financial supplement:
  • Q3 earnings call transcript:
  • Q2 press release:
  • Q1 earnings call:
  • Additional press items (context):
  • Estimates: S&P Global via GetEstimates (asterisked values). Values retrieved from S&P Global.