Axis Capital Holdings Limited

Good morning and welcome to the second quarter 2023 Axis Capital Earnings Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw from the question queue, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Miranda Hunter, Head of Investor Relations. Please go ahead.

Thanks, Chad. Good morning, and welcome to the Access Capital second quarter 2023 conference call. Our earnings press release and financial supplement were issued yesterday evening after the market closed. If you would like copies, please visit the investor information section of our website at accesscapital.com. Joining me on today's call are Vince Tizio, our President and CEO, and Pete Vogt, our CFO. Before we begin, I would like to remind everyone, the statements made during this call, including the question and answer section, which are not historical facts, may be forward-looking statements. Forward-looking statements involve risks, uncertainties, and assumptions. Actual events or results may differ materially from those projected in the forward-looking statements. due to a variety of factors, including the risk factors set forth in the company's most recent report on the Form 10-K or a quarterly report on the Form 10-Q and other reports the company files with the SEC. This includes the additional risks identified in the cautionary note regarding forward-looking statements in our earnings press release issued last night. We undertake no obligations to publicly update or revise any forward-looking statements. In addition, this presentation may contain non-GAAP financial measures. Reconciliations are included in our earnings press release and our financial supplement. And with that, I'll turn the call over to Vince.

Thank you, Miranda, and good morning. Thank you for joining us. I'm now 90 days in the seat as Access' new CEO, and I'm excited to share our results and priorities as we look to the future, including generating consistent, profitable results and growing book value per share. As reported, the second quarter was very strong across multiple measures. We grew gross premiums written to $2.3 billion, a company record for the second quarter and an 8 percent improvement year over year. This was driven by our specialty insurance business, which produced 15 percent growth, its largest ever quarterly premium volume of $1.7 billion, a record new business of $500 million, and a combined ratio of 86. Our group combined ratio also saw improvement of nearly two points to 91.5. We produced operating earnings per share of 223, making 2023 our best first half operating EPS record on record, excuse me. And finally, Our investment portfolio performed well, producing net investment income of $137 million, up more than 48%. Let's now discuss our second quarter performance in more detail and within the context of the broader market environment. We produced these results in a market that we believe is vibrant and will continue to hold favorable conditions in the near and intermediate term. Some of the key actions we led in advancing our business were bringing more products to our North American market by leveraging our global specialty knowledge, continuing to make investments in our dedicated lower middle market units in wholesale and retail within North America, and, of course, attracting new talent in leadership roles to support our business. These actions are just a start. Across the organization, We are pursuing profitable growth and unlocking new opportunities to meet our brokers and customer needs. Let me now provide more color on the insurance segment. We continue to see generally favorable market conditions across our specialty lines with rates holding at 9%, putting us ahead of lost cost trends. Our wholesale business grew 35% and produced strong growth, particularly in property, and excess casualty, while producing an average rate increase of 17%. Our international business, including our Lloyd Syndicate, grew premiums by 23%, with strong momentum evidenced in marine, aviation, and renewable energy, all the while yielding an overall rate increase of 7%. Within property, we continued to seize upon favorable market conditions. Across our North America, and international businesses, we produced premium growth of 33% and an average rate increase of 22%, unlocking property a bit further. Our wholesale and E&S property business grew 66% while achieving an average rate increase of 28%. Our onshore renewable energy business produced premium growth of 71% and rate increases of 11%. Our London open market property book produced premium growth of 61% and rate increases of 26%. As respects cyber, we delivered premium growth of 5% with rates up 6%. I'll add that with rate increases slowing, we are repositioning our book to de-emphasize the small commercial accounts that may no longer meet our risk or return thresholds. Moreover, our underwriters are practicing discipline in the wake of increased price competition driven by new and existing companies in the market and the recent debate surrounding the LMA's war exclusion wordings. As respects professional lines, premiums were down 9% or $29 million. with rates down just under 3%. As in prior quarters, a key driver was the repositioning and reduction of our U.S. public D&O business, where pricing remains inadequate generally, as well as the reduction of transactional liability opportunities. Looking across are the lines. Our marine and global A&H businesses generated premium growth of around 30% with rates up in both lines in low single digits. For aviation, we delivered premium increases of 59 percent with rates up 14 percent. In liability, we saw premium growth of 7 percent with rates up close to 9 percent. Now, let's turn to our reinsurance segment. We produced $600 million in gross premiums written. This is 7 percent lower than the prior year. However, when excluding exited lines, we grew 4 percent. The second quarter gave us further evidence that our repositioning efforts to shape access-free into a more focused specialist reinsurer are taking hold. Our premium growth within reinsurance was driven by new business writings of $169 million, a 47 percent increase over the prior year. we continued to lean into targeted specialist reinsurance markets, including credit insurity and cyber, to name two. Our operating margins are performing as expected. In particular, our attritional loss ratio increased, but this was more than offset by our market-improved CAT loss ratio. On the pricing front, across our specialty reinsurance book, we saw average rate increases of just over 5%. During the July 1 renewals, which make up about 12% of our reinsurance portfolio, we continue to demonstrate strong retention and new business generation across our targeted specialist lines. Now, when stepping back and looking across all of our businesses during the second quarter, and indeed the first half of 2023, We have demonstrated that we are delivering on our strategy to elevate access as a specialty leader in the specialty underwriting arena. Let me now tell you about how I see our future and why I believe there is ample opportunity to further enhance our business. Key to our success will be to continue advancing underwriting and performance oriented mindsets within access. and a structured design to take advantage of the marketplace dynamics. Let me be clear. We see plenty of opportunity to grow our business in the specialty markets where we have deep expertise and existing leadership positions. How will we get there? Our approach will include leveraging existing product capabilities across more of the geographies that we compete and accessing new customer segments. will deepen our distribution relationships and build upon the strong partnerships that we have in place, enabling our partners to leverage the full breadth of our product capabilities. As noted earlier, we will continue to add talent wherever it is necessary to bolster our specialty proposition and enhance our value proposition generally. We will increase our pace of play and enhance our operating infrastructure and execution so that we can further take advantage of the opportunities in our chosen target markets while benefiting from pricing that, again, is generally ahead of lost trends. By example, we recently launched an internal program called How We Work. The program is focused on enhancing how we operate and how we go to market. Through this initiative, we are increasing our agility and speed to market so that we can better pivot and adapt to shifts in the market addressing changing customer needs. This includes simplifying our operating structure, leveraging our data and digital capabilities, enabling quicker decision-taking, and enhanced collaboration across the company. Further, we are focused on improving efficiencies and monetizing our productivity gains. Internally, our colleagues across Axis are energized by the positive momentum in our business, evidence through the first half-year mark, the progress that we're making toward our strategy, and the future that stands before us. Our team is focused on optimizing Axis' strengths to realize its full potential, and I believe the measure of our success for our shareholders lies in our ability to consistently deliver profitable results and exhibit outstanding cycle management acumen and produce increased book value. In summary, there's a lot to be excited about at Access. We look forward to sharing our progress as we further execute on being a leader in specialty underwriting. I'll now turn the call over to Pete for more color on the financial results.