Top Marks from A.M. Best for AXIS
A.M. Best Co. this week affirmed the financial strength rating of A (Excellent) and issuer credit ratings of A+ to Bermuda-based AXIS Specialty Limited (AXIS) and its operating affiliates. Concurrently, A.M. Best has affirmed a B+” issuer credit rating to its subsidiary AXIS Capital Holdings Limited. (ACHL). The ratings reflect AXIS’ consistently strong operating performance, excellent risk-based capitalisation, robust enterprise risk management controls and a highly experienced management team. AXIS’ operating strategy has historically emphasised underwriting profitability with a balanced risk profile.
A.M. Best, based in Oldwick, New Jersey issues financial-strength ratings measuring insurance companies’ ability to pay claims. It also rates financial instruments issued by insurance companies, such as bonds, notes, and securitisation products. Founded in 1899, A.M. Best Company is the world’s oldest and most authoritative insurance rating and information.
AXIS, which operates its Bermuda-based operations out of its headquarters AXIS House at 92 Pitts Bay Road, Pembroke, maintains a well diversified book of business, both geographically and by line of business, says A.M. Best.
With an emphasis on short to medium-tail lines, principally specialty insurance lines including property, marine and political risk, along with property catastrophe and other specialty reinsurance coverages, AXIS’ historical operating performance has been strong. With a five-year average combined ratio of approximately percent and a five-year average return on equity in the mid double digit range, it maintains a leadership position among its Bermudian peer group.
In A.M. Best’s opinion, AXIS’ solid performance is attributable to its formalised and integrated risk management controls and strong systems capability. Furthermore, AXIS retains a very strong level of risk-based capitalisation under various A.M. Best stress scenarios. As a result, A.M. Best expects AXIS to continue managing its capital base in a conservative manner within acceptable ranges to support its current ratings. Both financial leverage and interest coverage also are at acceptable levels relative to ACHL’s ratings. A.M. Best anticipates ACHL to maintain total debt-to-capital measures in the mid-teens to low twenties in the near term.
Partially offsetting these positive rating factors is AXIS’ exposure to large catastrophe losses as well as the cyclical changes occurring in the current market environment. AXIS did experience a significant level of realised and unrealised investment losses in 2008, primarily attributable to the disruption of global markets. In 2009, AXIS also sustained losses on specific investments and certain underwriting decisions, which impacted quarterly results; however, these losses were manageable for AXIS and did not represent a capital event.
The FSR of A (Excellent) and ICRs of “A+” have been affirmed by A.M. Best for AXIS Specialty Limited and its following operating affiliates:
- * AXIS Re Limited
- * AXIS Reinsurance Company
- * AXIS Specialty Europe Limited
- * AXIS Specialty Insurance Company
- * AXIS Surplus Insurance Company
- * AXIS Insurance Company
The following debt ratings have been affirmed:
AXIS Capital Holdings Limited—
- – “BBB+” on $500 million 5.75% senior unsecured notes, due 2014
- – “BBB-” on $250 million 7.25% non-cumulative preferred shares, Series A
- – “BBB-” on $250 million 7.50% non-cumulative preferred shares, Series B
AXIS Specialty Finance LLC (guaranteed by AXIS Capital Holdings Limited)—
- – “BBB+” on $500 million 5.875% senior unsecured notes, due 2020
The following indicative ratings have been affirmed under the current shelf registration:
AXIS Capital Holdings Limited—
- – “BBB+” on senior unsecured debt
- – “BBB” on subordinated debt
- – “BBB-” on preferred stock
AXIS Capital Trust I, II & III (guaranteed by AXIS Capital Holdings Limited)—
- — “BBB-” on preferred securities
AXIS Capital was capitalised with approximately $1.7 billion in November 2001 to address the need for quality capacity in the global insurance and reinsurance marketplace following the tragedy of September 11th. In July 2003, the Company decided to go public marking the first major step in its goal of financial flexibility.
By 2004, AXIS Capital had substantially established itself in both the global insurance and reinsurance marketplaces with meaningful presences in Bermuda, Europe and the United States. AXIS Capital has continued to focus on strong organic growth by maximizing opportunities available to the Company globally.
At September 30, 2010, AXIS Capital had shareholders’ equity of $5.8 billion, total capitalisation of $6.8 billion and total assets of $16.8 billion
