AXIS To Close Australia Retail, Cut 100 Jobs
AXIS Capital Holdings Limited announced they ”will wind down its retail insurance operations in Australia” and as a result of this, the Company anticipates a workforce reduction of approximately 100 positions.
Albert Benchimol, President and Chief Executive Officer of AXIS Capital, said: “We are fully committed to the hybrid model under which insurance groups have both primary insurance and reinsurance activities because this approach provides flexibility, balance and diversification in opportunities and risks, leading to more stable growth and profitability.
“We are confident of our ability to deliver increasing shareholder returns through the pursuit of high-return growth opportunities, including attractive external growth prospects where appropriate.
“In 2014, we announced several important initiatives designed to enhance our profitability and drive the future growth of AXIS Capital, on which we have already reported in earlier communications.
“These include investments in greater resources to support improved data and analytics, and we have seen improvements already, notably in professional lines and property insurance. We have also established significant strategic IT sourcing relationships, which have and will continue to increase productivity and efficiency across our businesses over time.”
The company said, “AXIS Capital has reviewed its operations to assess where and how it could accelerate profitable and sustainable growth. The Company identified those markets where its positioning would not allow it to generate appropriate and sustainable returns.
“Accordingly, the Company will wind down its retail insurance operations in Australia and continue to serve the Australian market through its international wholesale insurance and global reinsurance platforms. The Company has also initiated organizational changes that will efficiently support profitable growth in a demanding global marketplace.
“As a result of these initiatives, the Company anticipates a workforce reduction of approximately 100 positions, primarily in its corporate and select insurance operations. These reductions are consistent with the Company’s previously announced effort to reduce its expense level and position itself to more effectively deliver greater value for its customers, brokers, and shareholders.
“These actions will result in a pre-tax reorganization charge of approximately $51 million, or $0.51 per share during the third quarter of 2015, with anticipated annual run-rate pre-tax cost savings of approximately $30 million to be substantially realized in 2016.
“This charge in the quarter includes staff severance and related costs, the write-off of certain information technology assets, and lease cancellation costs. In addition, the Company recognized an impairment of certain customer-based intangibles following the closure of its retail insurance operations in Australia.
Mr. Benchimol continued: “Integral to creating shareholder value is a 21st century capital management strategy. We intend to match risk with the most appropriate form of capital, and access a broad range of capital to complement our own balance sheet.
“This supports the delivery of significant capacity, innovation, and tailored solutions to our clients, provides a valuable product and service to the investment community, and generates stable fee income for the Company.
“We look forward to continuing our success to date in delivering solutions to our clients in partnership with third party capital providers and to carrying forward our track record of managing our shareholders’ capital responsibly, returning excess capital through dividends and share repurchases.”
On August 3, 2015, the Company announced a $300 million accelerated share repurchase program that is expected to be completed by December 31, 2015. The Company’s Board of Directors plans to review its share repurchase and dividend policy at its December 2015 regular meeting.
Mr. Benchimol concluded: “The refinements announced today are about strengthening the Company’s focus, and moving resources to where they can provide the greatest value to brokers and clients – ultimately driving profitable book value per share growth over the longer term.”
