Axis Capital Holdings Limited

Good morning and welcome to the Access Capital third quarter 2025 conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key, then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. And to withdraw your questions, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Mr. Cliff Gallant. Head of Investor Relations and Corporate Development. Please go ahead, sir.

Thank you. Good morning, and welcome to our third quarter 2025 conference call. Our earnings press release and financial supplement were issued last night. If you would like copies, please visit the investor information section of our website at accesscapital.com. We set aside an hour for today's call, which is also available as an audio webcast on our website. Joining me on today's call are Vince Tuzio, our President and CEO, and Pete Vo, our CFO. In addition, I would like to remind everyone that the statements made during this call, including the question and answer session, 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 our quarterly report on Form 10-Q and other reports the company files with the SEC. This includes the additional risks identified in the cautionary note regarding the forward-looking statements in our earnings press release issued last night. We undertake no obligation to publicly update or revise any forward-looking statements. In addition, our non-GAAP financial measures may be discussed during this conference call. Reconciliations are included in our earnings press release and financial supplement. And with that, I'll turn the call over to Vince.

Thank you, Cliff. Good morning, and thank you for joining our call. In the third quarter, our team once again delivered excellent results as the momentum and our performance further accelerated. The transformation we have undertaken has now demonstrated sustained profitable growth underpinned by an enhanced operating platform with new capabilities, products, and a highly focused team. In the quarter, we delivered a 14% year-over-year increase in diluted book value per common share at $73.82. 18% annualized operating return on equity. 20% increase in operating earnings per share over the prior year quarter at 325. Premiums of $2.1 billion, our highest third quarter ever, up nearly 10% over the prior year, including $670 million in new business. And finally, a combined ratio of 89.4. We are achieving these results in a changing risk landscape, with many different micro markets at play. Our strategy positions us well to compete in this environment. Premium adequacy across our aggregated portfolio is solid. We are actively cycle managing and leaning in where it is prudent. The investments we're making in people, products, and platforms are creating value. Indeed, the further acceleration of our premium growth in insurance is bolstered by our new and expanded lines of business. Additionally, we continue to draw upon third-party capital partnerships while bringing innovative product capabilities to meet the diverse needs of our distribution partners. By example, we launched Access Capacity Solutions, which during the quarter transacted its first deal, a partnership with Ryan's specialty. Through our How We Work program, we are continuing to strengthen all aspects of our operations and how we go to market. In the quarter, we made continued strides in modernizing our underwriting platform while leveraging emerging technologies and AI to drive efficiency, improve decision-making, and support scalable growth. I'll share several examples. We've implemented a highly modern application platform across all business units and functions with very little legacy technology that is improving speed to market, heightening accuracy, and reducing manual effort and cost. We are presently applying AI solutions in all forms, custom and packaged, within applications, on user desktops, and in all cases driving productivity increases. We've deployed the first release of our next generation underwriting platform in North America, advancing how we ingest, route, and review submissions while enhancing our overall efficiency. These advancements reflect the pledge that we made at our investor day to invest $100 million into our operational infrastructure. Capitalizing on our excess capital position, we have been accelerating and expanding these efforts, particularly in supporting our new business lines. We see these investments as a key to advancing our profitable growth ambition. We are also deepening our relationship with our distribution partners. In a broker survey conducted this year, our customers recognized Axis with top quartile net promoter scores while distinguishing our company for its specialty leadership and ranking us ahead of the market for our underwriting knowledge and solutions-oriented approach. None of these results can be achieved without a highly engaged and disciplined team. The Axis culture we've developed and deep commitment of our people is exciting and enabling our progress. During the quarter, we have added talent to our underwriting teams throughout the globe. And on the corporate side, we notably announced Matt Kirk as our future CFO, succeeding Pete. Let's now dig deeper into our segment results. We'll start with insurance. Our insurance segment, again, delivered an outstanding quarter, highlighted by record third quarter premium production of $1.7 billion, or 11% over the prior period, new premium written of $570 million, a current accident year XCAT combined ratio of 83.3, and record underwriting income of $153 million, up 55% over the prior year. In North America, we produced stellar results with premiums up 12% and submission volume up 18% in the quarter. as we continue to capitalize on the investments we've made in expanding our product offerings and in enhancing our underwriting platforms, yielding greater efficiency gains. Our lower middle market strategy is generating sustained acceleration and strengthened value. In our global markets division, results were strong and premiums were up 9%. In the quarter, our growth came from lead product positions in the London market, notably marines, energy, and construction. Importantly, these classes remain premium adequate and have a robust pipeline. With respect to broader market conditions within insurance, we continue to observe an evolving risk environment. But overall, the competitive landscape is disciplined. Let's unpack this further for access. In liability, rates were up 10% in the quarter with 8% growth. We generated a 12% rate increase and 11% growth within our U.S. excess casualty business. Within this business, we continue to lean into the highly premium adequate wholesale lower middle market segment. Our casualty portfolio is well managed, and within wholesale distribution, our excess casualty unit is recognized for its thought leadership and disciplined underwriting. As respects property, we grew our property book 8% with rate changes varying widely across our many classes. Illustrating this, we see greater competition in large account E&S business, but are still observing rate increases in small account business in our international book. We serve customers through eight property underwriting units across the world, which are all seeing differing degrees of competition, and we benefit from the diversity of our customer segmentation in these units. An increasing contributor is our lower middle market property unit, which evidenced continued growth in the quarters. Our property underwriting strategy remains disciplined and enjoys premium adequacy, an average net limit in the low single digits, a well-balanced peril and geographic mix, and is backed by a CAT XOL protection that attaches at $100 million per event. In professional, we grew 18%. The majority of our growth came from transactional liability and E&O. We are encouraged by the increasing contributions that we are continuing to see from our new and enhanced product offerings, including design professional, allied health, and environmental. As respects management liability, we continue to drive reasonable growth within our private D&O business. As respects public D&O, consistent with the last quarter comments, we continue to observe that pricing is flattening out. Within cyber, we observe industry ransomware attacks as increasing, but thus far not being reflected in our claim counts. That said, we are seeing the increased competition of MGAs and surplus capacity have placed unwarranted downward pressure in pricing dynamics. We have maintained our underwriting discipline, which is reflected in our selective approach in the quarter. In addition, we have now completed the reshaping of our delegated cyber book, We are strengthening our capabilities in our cyber risk advisory services, which help policyholders increase their organizational preparedness and resilience. We are focused on strengthening our SME presence globally and notably in the United States through our partnership with Alpha Secure. As respects our reinsurance business, we continue to generate strong bottom line performance with our seventh straight quarter of consistent profitability. Our reinsurance underwriting strategy remains highly disciplined and focused on select specialty lines. In the quarter, we produced 6% premium growth. Specialty short tail lines contributed 91% of our new business premiums, a combined ratio of 92, and underwriting income of $35 million. Reflective of our disciplined approach, we are increasingly vigilant in navigating liability and professional lines. Consistent with past comments, we generally do not view seating commissions nor the rate environment for these lines, particularly in North America, to be in keeping with our return expectations. Taken together, this was another strong quarter for Axis. Across the micro markets of specialty insurance and reinsurance, we see an increasing need for tailored risk solutions. Thus, we see Axis as a very well-positioned to support our customers and importantly, our distribution partners, while at the same time, rewarding our shareholders with sustained and attractive returns. We are building on our momentum. We are leveraging our capital position, the talent of our team, and the support of our distribution partners to lean into our new and expanded lines as well as identifying new avenues to drive profitable growth. We are investing in our infrastructure and operations, embracing technology and AI. We're excited for our future, and we believe the best is yet ahead for Axis. And with that now, I'll pass the floor to Pete for his comments.

Thank you, Vince, and good morning, everyone. Axis had another excellent quarter. Our net income available to common shareholders was $294 million, or $3.74 per diluted common share. And our operating income was $255 million, or $3.25 per diluted common share, producing a 17.8% annualized operating return on common equity. This drove our book value per diluted common share to $73.82 at September 30th. An increase of 14.2% over the past 12 months and up 16.9% when adjusted for dividends declared. I'll start with consolidated company underwriting highlights. Our gross premiums written of $2.1 billion were up 9.7% over the prior year quarter, driven by accelerating growth initiatives in insurance. On a net basis, premiums were up 9.5%. Our combined ratio was an excellent 89.4%, and our accident year loss ratio ex-CAT weather was 56.3%. CAT losses were just $44 million, producing a CAT loss ratio of 3%. CAT losses were driven by a combination of a $24 million impact, primarily from severe convective storms in the United States, and $20 million of losses related to the Middle East conflicts which hit our marine and terrorism lines. We adhere to our philosophy of wanting to see sustained positive signals before releasing reserves, and we recorded a release of $19 million with $15 million in insurance and $4 million in reinsurance in the quarter. We continue to believe we are strongly reserved, and we rely upon a great deal of data and analysis to reach our conclusion. For example, from a high level, statistics like IB&R to total reserves are holding steady, continuing to give us confidence. Our consolidated G&A ratio, including corporate, was 11.7%, down from 12.1% a year ago. We continue to execute on our How We Work program, including investing in our business with new technology and adding underwriting teams. The investments we're making give us increased confidence that we will manage costs, grow the premium base, and hit our full-year 2026 target of an 11% G&A ratio. Now let's move on and discuss our segment results in more detail. Insurance had a strong quarter. Gross premiums written were $1.7 billion, a record third quarter for insurance, and an increase of 11% compared to the prior year quarter. The strongest driver has been the continued momentum of our new and expanded initiatives. These initiatives contributed nearly 70% of the growth in the quarter. The growth was broad-based, across the portfolio, as all classes of business grew, except for cyber. In property, where we grew 8%, North America E&S grew 12.5%, as our lower middle market initiative continues to grow, and we continue to attract new business at rates above our long-term target returns, even in the midst of the changing market landscape. Pro lines, as Vince mentioned, we had 18% growth, and I would reiterate that the growth was driven by a number of new and expanded products. The growth in A&H continues to be driven by our pet product, and in credit and political risk, the new Shuri initiative continues to grow. In cyber, as Vince noted, market dynamics remain a challenge. Therefore, excluding the remediation work, which we completed this quarter, the rest of the portfolio was essentially flat year over year. Net written premiums were up 11%, and as we've signaled, we're keeping a little bit more of our well-priced portfolio. In insurance, we are gaining momentum from our recent growth initiatives. As we sit here today, 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 RACRI. But a lot of that depends on what happens in the shifting landscape, and as always, our priority is underwriting profitability. With respect to RAC RE, we are excited about the new vehicle which builds upon our strong relationship with Ryan Specialty. We expect to retain about a third of the gross premiums written generated by the facility, which we expect to produce strong combined ratio business. In addition, we will earn fees on seeded earned premiums. The total volume will be a function of the growth rates of the underlying underwriting entities And I would stress that this transaction is done on an underwriting year basis, which means a slow buildup of revenues in 2026. The insurance combined ratio was an outstanding 85.9%. The quarter included 3.9 points of CAT and weather-related losses and 1.3 points of reserve releases from short tail lines. Now let's move on to the reinsurance segment. where the business has continued to deliver stable, consistent, and strong profitability. We grew 6% as we found opportunities to grow in credit and surety lines, as well as the agriculture business. In liability, we continue to be cautious, but this quarter benefited from a higher level of positive premium adjustments versus the prior year. The reinsurance combined ratio is 92.2%, with an ex-CAT accident year loss ratio of 67.9. CATs were just three-tenths of a point, with just over a point of benefit from the reserve releases. As we have done all year, we are taking a cautious stance to booking our reinsurance loss ratio while continuing to deliver consistent profitability. We had a very good quarter for investment income at $185 million. Our outlook for investment income remains favorable, as we continue to generate excellent operating cash flow, which was $674 million in the quarter, and is driving growth in our asset base, with a market yield of 4.8% and above our 4.6% book yield as of September 30. Our effective tax rate of 18.9% in the quarter reflects the geographic mix of our profits, as we continue to generate outstanding results in our U.S. operations. We remain in a very strong capital position. We have returned substantial capital to our shareholders this year as we have completed $600 million of share repurchases and declared $105 million in common dividends. And we recently passed a new repurchase authorization for $400 million. I would reiterate that our priority use for capital is to fund profitable growth and to invest in the business. Our excellent financial results continue to demonstrate the hard work and commitment of our team to make us the leading specialty insurer in the world. We're tremendously excited for the future. And with that, operator, we'd be happy to take questions.

Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad If you're using a speaker phone, please pick up your handset before pressing any keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. And our first question today will come from Andrew Krugerman with TD Cowan. Please go ahead.

Hey, good morning. I guess the first question would be around the really nice growth in property. And Vincent Peete, you gave really good color on property. on how it broke down. Notably, you know, North American ENS up 12.5% and then overall up 8%. But I was kind of interested, you mentioned, you know, it's hitting your long-term targeted returns. So if I look at the loss ratio, and I don't know how you would kind of put in a cat load, but, you know, we all know pricing is coming down. So how does the the combined ratio or loss ratio, whichever way you want to look at it, line up with where you're coming in presently? Because I'm kind of curious as to how that's going to trend as you grow the business. And it sounds like it's a great opportunity. In the lower middle market, I'm hearing really good things.

Yeah. Andrew, good morning, Andrew. This is Vince. I'll start, and then Pete will come over the top. Please allow me as well to express on behalf of access to all those in the path of Hurricane Melissa, our best wishes and speedy recovery as we are watching that obviously with good care. But direct to your question, you know, we had eight odd percent growth in our property line in the quarter. As you indicate, Pete and I detailed, it's important to play some context around this growth. We're letting you know that this growth, in our judgment, comes from an extremely solid starting point of premium adequacy. Second, a well-constructed portfolio with respect to limits, peril mix. Importantly, in our insurance business, 40-odd percent of our property business is non-critical CAT, and our lower middle market growth was exceptional in the quarter. All of these have a different gearing effect. against what you point to on the rate change, which in and of itself really doesn't address the start point of our premium adequacy. As you know, we've been working very hard over the past several years at reducing the cap profile of our company generally, and within insurance, I think that we've shown that ability. And so taken together, that is exactly how we're able to produce the kind of results that we are. I'll finally note that Recall, please, that we go to market in property through eight different entities around the world, and we're attracting different customer segmentations, industry groupings, and obviously geographic dispersion. And so we feel great confidence in the integrated approach that we're taking with our actuarial team, our claims team, and certainly our underwriting leadership principally led with Mike and Sara in our insurance business where this growth is occurring. Pete, I don't know if you want to add to that.

Yeah, very much appreciate the color on property, and I think that gets to your question there, Andrew. I think also inherent to your question is as you're looking at the insurance loss ratio of 52-3 and how is that kind of staying nice and consistent given what is some pricing pressure out there. I think what I would note is Vince has said this many times, you know, we necessarily can't control the market, but we can control mix. Underlying that, I would say we've seen our underwriting loss ratios by our lines of business and business classes. We've actually shown the effect of rate and trend there where we've seen some increase in the underlying loss ratios, but that has actually been offset by mix. If I look year to date, especially year over year, we've got a higher proportion of the short tail lines of business, which tend to have a smaller, a lower loss ratio. Underlying, we are reflecting rate and trend and what we're seeing in the markets in our underlying classes of business in the loss ratio. But the mix of business has changed such that that's kind of offsetting the pressure we've seen. And that has allowed the loss ratio in the XCAT loss ratio in insurance to stay very consistent.

Great. Thank you for the color. And then maybe shifting over to third-party capital access capacity solutions, that first deal with Ryan, seemed very exciting, very promising. Could you talk a little bit about the potential for more deals like that? Are you looking at a lot of them? Is there a pipeline out there that you're seeing?

Yeah. Andrew, I'll start. This is Vince again. Thank you for your question. Access capacity solutions we formed earlier this year really in recognition of an emerging trend that we've observed in wholesale distribution relating to cross-class, cross-geographic opportunities. And in the case of Ryan Specialty and specifically RAC-RE, this was an illustrated example where Axis participated on about a third of the MGUs within the Ryan Specialty organization. We had the opportunity to curate and participate on the select remaining MGUs that come to market from that very strong partner of ours, We agreed to do so with some careful deliberation around the portfolio makeup, the underwriting terms and conditions. At the same time, we assisted in the facilitation of a sidecar with the strength and belief on the prior comments we've made in any instance relating to delegated to work as hard as we can to align economic interests. We believe that the sidecar was a perfect example wherein access receives a fee from the sidecar And the profitability trigger for Ryan's specialty is only satisfied after the profitability of the underlying business is met. And so we thought this was an appropriate transaction for us to lean into an existing channel of distribution that we have, a recognition of the underlying portfolio, an alignment of economic interests, an ability to have our hand in the claims control of the underlying business, and to ensure that we have transparency in the information. As it relates to the second part of your question, this transaction has no doubt spawned increasing interest from a variety of partners around the world. And yes, there is a pipeline. And critically important to Pete and myself is that we maintain the underwriting adherence from the lessons we learned in our own reserve charge relating to the delegated book that we had back in December of 23. We are leaning into the principles that we've previously outlined for when we engage in delegated underwriting authority. And most importantly, we have satisfied ourselves on the alignment of interests, which is critically, critically important to us.

Very helpful. Thanks, Vince and Pete.

You're welcome. Thank you, Andrew. The next question will come from Elise Greenspan with Wells Fargo. Please go ahead.

Hi, thanks. Good morning. My first question, I wanted to go back to go to, I guess, the insurance world comments. Pete, I think you said mid to high single digit growth, like excluding, you know, sidecars like RACRI. I believe RACRI could add like 150 million on a net basis. So does that mean if we kind of lump that in there that next year could get to double digits? I'm just trying to, you know, bring all the guidance together for the insurance segment?

Yeah, Lise, thanks for the question. And I specifically bifurcated the two because of exactly that. So I do think, you know, with the agreement we've got with Ryan's specialty, whatever comes in for RAC REIT could actually put us into double digits for next year. Obviously, that's, you know, going to be dependent upon the underwriting platforms underneath and what they see in the markets, as I mentioned. But you know, with RACRI, with given what we've already got going on in our own core book with the expanded and new initiatives, we could be into double digits next year.

And then my second question is, you know, on the GNA ratio, right? So the fees, right, on the RACRI are contra, right, to GNA. And I believe, right, that wasn't contemplated when you guys told us, you know, sub-11 next year. So could you help us, I guess, kind of think through, like, the tailwind, you know, relative to the G&A guidance? I know it takes time for that to earn in, but I still think that there would be some tailwind expected in 26, right?

You know, I think the real important thing that you've got there, Elise, is the comment where it's going to take some time to earn in. The deal with RACRI is actually done through our Lloyd Syndicate, So the announcement was basically on an underwriting year basis. So when we think about that from, I'll call it SEC GAAP gross written premium, we would expect to see the written premium actually come in over a three-year period. So that'll be coming in 26 to 28. Given its underlying cover holders, you got to think about the underlying as a risk attaching basis. So the earned premium's actually going to be pretty much over a four-year period. You're thinking 26 to 29. And so it'll ramp up slowly. So as we think about calendar year 26, the impact from the fees are going to be pretty de minimis in that very first year because the seeded earned will take that same time to ramp up.

And then one last one, capital. Is the Q3 buyback a good run rate level in any current color you can give us on your excess capital position today?

Yeah, I'll ask Vince to chime in on that. But we did buy back $110 million in the third quarter. Again, our philosophy is we are going to look at growing the business first. We do want to see organic growth, and we're going to invest in our platform. As Vince talked about, we've been doing a lot on the technology side with regard to improving ourselves as we go to market with our distribution partners and clients. Having said that, I would not look at $110 million in a quarter as any kind of run rate. As we've said, we're going to be opportunistic on our buybacks. We're not going to be held to any specific number quarter to quarter. We have a new $400 million authorization, and we'll look to use that as we go forward based upon how we look at the business, where we see the growth coming from, as well as where we think we're trading on any given quarter. And with that, I'll ask Vince to chime in also on that.

Sure. The only thing I would come on over the top with, Pete, is Elise, you know that we'll continuously evaluate our capital position, assuring ourselves that it's aligning shareholder interests with balancing the prudent risk management approach that we've taken. You know the chief source of using our capital will be inside the operating model. We expressly indicated an acceleration of expenditure in our technology and data analytic infrastructure. The continued hiring of persons in the quarter discreet We hired over 140-odd persons into the organization. And so we continue to invest. We're very pleased with the assimilation of our new colleagues that are supporting the growth that you're evidencing from us. So we'll maintain our course. We're not going to sort of guide on the order of magnitude of buybacks. We will use them opportunistically, as Pete has said. We've shown that through this calendar over $600 million, or approximately $600 million, just in this operating year, so I'll leave it there.

Okay. Thank you.

Thank you, Elise. Thanks, Elise.

The next question will come from Josh Shanker with Bank of America. Please go ahead.

Yeah. Good morning, everyone. Thanks for taking my call. I want to talk a little about paid to incurred ratios. Obviously, they remain pretty high. You have a lot of growth ambitions in what some people are calling a soft market generally. you're already growing faster than the industry, which usually depresses paid to incurred. Can we talk about where paid to incurred is right now, but also with an eye on what to expect? If you are growing as fast as you think that you might be able to, that should be depressing paid to incurred ratio. And is that what we should expect going forward?

Josh, this is Vince. I'll start out. Thank you for your question. You know, we commented last quarter, the first instance that you saw a pay to encourage in an elevated state, that we look at this indice really over a continuum of time. And I thought it really appropriate this quarter to unpack sort of our point of view and our learnings of what this ratio really means. We think, frankly, it is only one of many points that you look toward in terms of the confidence in the health of the portfolio, the health of our reserves. And we think there's a few points Underlying factors that you'll continue to see evidence in the Axis journey. You know, Josh, when we indicate going on a transformation, we talk about the mixed shifts in our underlying portfolio. Long tail versus short tail. You're seeing Axis with more than 50% in short tail. You see large losses from time to time arise inside a specialty organization. though decreasing in the last few years here at Access. From time to time, we'll evidence some of them. Third, you see timing differences between when we're paying some of these large losses and when they were originally case reserved. And finally, and perhaps most critically from my learned point of view, whenever you undertake transformation and you make changes in your claims organization, including not only numbers of persons, the skills of those persons, the creation of newer capabilities in the form of complex claims organizations, shared service organizations, you invariably will get some form of acceleration. And so taken together, I would tell you expressly on behalf of Axis that we're very comfortable with what we're observing. We would not be surprised to see if there are additional quarters reported where paid to incurred seems elevated. And overlaid with some of the statistics that Pete shared with you that we look at equally and importantly with a critical eye, we feel very comfortable. Nonetheless, we appreciate the interest in the question. And you also referred to this notion of growth. Again, you know, we're happy to unpack where the growth is coming from, what the line of business distinction is in terms of short tail versus long tail. what size customer it is, and what kind of profit profile we believe it holds out. With that, I'll ask Pete if you'd like to come over the top with any additional comments.

Yeah, I think I would. Josh, you know, a couple things just to point out. One, appreciate the question. Getting to the heart of some of the question, we do want to say we're very comfortable in the strength of our insurance reserves. And we do review a multitude of metrics each and every quarter to give us confidence in those reserves. So it's not only paid to incurred, but we are looking at, as I mentioned, IBNR to total reserves, paid to ultimate factors, incurred to ultimate factors. And we look at these all by line of business as well as by duration. And then looking specific to this quarter, when we look at the paid to incurred ratio, a couple of things we're seeing is, one, we're having significant improvement in our claims organization in North America. Because as we've talked about through how we work, it's all across the company. And in our claims organization and insurance in North America, we've actually seen an improvement where our closing ratios that's paid to new claims has actually improved from 98% last year to 118% this year. So we're getting after more of the claims. We've seen some of the courts open up. We've closed some claims. Most importantly, those paid claims we paid in the quarter and some were material, especially in the FI book. And these are all pre-2019 claims. They were fully reserved for, so there's been no surprises on the reserve front that we've seen. So overall, we feel really good about where our claims organization is improving and evolving to, and we feel very good about the level of the reserves on our balance sheet.

Let's get Pete some water to clear us through.

Thank you, Josh. The next question will come from Mac Carletti with Citizens. Please go ahead.

Hey, thanks. Good morning. I just had a small cleanup question on the reserves. Pete, you talked about the, it wasn't a huge number, but I think the $19 million of favorable in the quarter, $15 in insurance, $4 in reinsurance. Can you just talk a little bit about where that came from, just with a more short tail, long tail, and were there any bigger moving pieces behind the scenes, or was it just pretty, you know, kind of nothing to see here and just a broad, you know, small favorable?

Yeah, thanks for the question. All coming from the short tail lines. When we look at insurance, it actually came from property, credit and insurity, as well as A&H. On the reinsurance side, it came from agriculture. You know, 2024 continues to perform really well. So all from the short tail lines. And in the background, you know, always a little bit of movement when you look across the accident years looking backwards. but nothing material or notable, and so still feel very good about the reserves in totality as well as across the accident years.

Great. Thank you. Appreciate it.

Thank you.

The next question will come from Charlie Lederer with BMO Capital Markets. Please go ahead.

Thanks. Pete, you mentioned the favorable impact of mix. on the underlying loss ratio and insurance? I guess just based on the accelerating breadth of growth in that segment that we saw in the quarter, how do you see, you know, that written growth impacting the XCAT loss ratio as those premiums burn in?

Yeah, that's a great question, Charlie. As we look forward to next year, obviously it's going to be very dependent upon what we see in the markets and where rate and trend goes from here, as well as, you know, Right now, we have really good in property in the quarter, but we've also seen really good growth in our long tail line. So as I look forward to next year, I wouldn't necessarily want to give a number for next year, but we feel really good about where we are in insurance. But as the mix changes, that will impact the loss ratio next year. Again, overall, we look at the combined ratio. Some of our longer tail lines have really good acquisition costs associated with them. So we're feeling really good about the overall insurance segment as we go into next year.

Thanks. And then just on the G&A expense ratio, I know you mentioned you're still very confident in getting below 11%. I guess, you know, last year you had a large catch-up in 4Q, thanks to some really strong ROEs. I guess, should we be thinking about the same kind of dynamic this year, just given it's been a white cat year?

Yeah, Charlie, this is Pete. Appreciate the question. You know, as we sit here through nine months, We've done really, really well for our shareholders and got to compliment the Axis team for all the work they've been doing, not only with white cats, but as we think on an ex-cat basis, they're still able to grow the underwriting income and a really good ROE as we look at the ROE year to date at about 18.2%. As we think about the end of the year, given we still think really good and we're very confident about the fourth quarter, My expectation is, you know, we could be some reward for our teams as we go into the fourth quarter. So you may be looking at, like, what we did last year as consistent with what we might be doing this year. But really, really appreciative of the team overall for all the great work they've put in to create the results we've got this year so far.

Thanks. The next question will come from Jane Lee with KBW. Please go ahead.

Good morning. Thank you for taking my question. My first question is on McAllister renewal rights. I'm guessing that it plays a role in the solid professional line growth. Like, can you provide an update on how is the possibilities of that acquired book comparing to your underwriting expectation?

Good morning, Ming. This is Vince Tizio. We had about six odd million dollars from the Markel renewal rights transaction in the quarter discreet. We're pleased with the underwriting of that business. It's access led and it is meeting our expectations in terms of limit, remit, scope of terms and conditions. And thus far, we're pleased with the sort of the trade of what we expected through the renewal rights to except versus that which we've non-renewed. And finally, we're very pleased and appreciative of our distribution partners for the support that they've lent in this transition from Markel to Axis.

Got it. Thank you. Just a follow-up on that. So what's kind of the renewal retention rate being there and how that's surprising on those renewals compared to the back book?

I have data on the latter part of the questions. On the former, I have to search and see if I have the exact retention because, again, this is a renewal rights transaction. It wasn't part of our renewal base in the prior period. In terms of the acquisition or the hit ratio of what is coming over for potential retention, it's probably around half of the total, which would be in keeping with our expectation. We wouldn't expect reasonably to accept every renewal that's coming over. In terms of pricing, it is aligned with our expectations within the broader FI portfolio, which is a very strong portfolio for access, well-managed and historical for us. We've been in the business a long time.

Got it. Thank you so much.

You're welcome. The next question will come from Andrew Anderson with Jefferies. Please go ahead.

Hey, good morning. Just looking at the A&H growth within insurance, it's been doing really well for a couple of years now. Could you maybe just help us think about kind of how you're achieving that level of growth, whether it's kind of pricing, distribution, product breadth, and maybe why that's a little bit different from the growth levels within reinsurance?

Hey, good morning. This is Vince. I We're very pleased with our A&H business. It is predominantly driven by our pet business, which is a partnership business with Fetch. That was the predominant driver of growth in the quarter and will be for the year. Additionally, you know, we've spoken in prior quarters about measures we were taking to support our other companion divisions within A&H, notably out of London Markets and Lloyd's. We have a very strong group there. that is performing well, continuing to grow, double-digit, performing profitably. Further, we've reshaped our access group benefits business over the last several years. It's been repositioned. It's in the phase of really executing its new underwriting strategy. There again, it demonstrated growth. But off of the total of basis, it's really driven by PET. The outlook for PET for us remains consistent. Favorable, though Pete would describe because of what he detailed in the first or second quarter, I can't quite recall the reinsurance change, that level of GWP growth will dissipate, but the net will continue to be strong for access. And certainly, most importantly, we like the profit outlook of that business.

Yeah, Andrew, this is Pete. Just to add a little bit of color. About a year ago, I know we mentioned that in our agreement with Fetch, we became the sole provider of the program. And that really helped because we were only 50% provider beforehand. So that has helped the pet growth this year really drive A&H through the first nine months. We started being the sole provider, and we got to the fourth quarter of 24. So when we go to the fourth quarter of 25, that growth rate is going to normalize a bit. And I would expect A&H, while it was up 35% in the third quarter, I would expect it to be more up just into the double digits when we get to the fourth quarter, where that will actually normalize. If you like to look at the growth rate overall, you remember I mentioned net written premium was actually negative in the first quarter. That's what was causing some anomalies. And that was because while we took over all the gross, we were ceding 50% of that pet business. to the other partner that Fetch had. So all of that will normalize in the fourth quarter. So the gross growth will actually slow down. But if you're looking at the net earned premium that you can see in the queue, that's been kind of normalized all year. That's probably a better metric to look at.

Thanks for that. And then just on the technology spend, I think you talked about the $100 million that you laid out at the investor day. Could you kind of level set where we are relative to that $100, and could we be seeing some benefit to the expense ratio in the next couple of years as that spend levels off?

Yeah. We noted expressly that we've accelerated the expenditure. That number certainly in the period that we talked about will probably approximate 150-odd million over the three years. In terms of its efficiency, no doubt you should see efficiency gains on the expense ratio. In the quarter discrete, just looking at North America, we're pleased with the early insights that shows improving quotes that are up about 27% year-over-year discrete 3Q25 versus 24. Binds are up about 19%. And so in the businesses that have had the effectuation of our technology enhancements. We are seeing individual productivity gains. We think that's going to continue to get stronger. The partnership between our How We Work organization, led by Anne Ha and Mike McKenna, who leads North America, will only get better over time. We're seeing a number of proof points, whether it be between the operations relationship with underwriting, the insights from actuarial being made more quickly into the underwriting, These are all going to show increasing propensity of bind and efficiency in how we go to market. So we're pretty optimistic.

Thank you.

You're welcome. The next question will come from Brian Meredith with UBS. Please go ahead.

Yeah, thanks. A couple here for Pete. First one, Pete, will access qualify or will there be benefit from the substance-based tax credits that Bermuda announced recently? I believe in September.

Yeah. Hi, Brian. This is Pete. You know, we're keeping our eye on that. You know, right now it's always a bit early to tell. I'm going to mention that on the quantum. But we should be getting some benefit. But, I mean, the consultation paper is out. You know, we've submitted comments back to the government. You know, we worked with the industry to do that. We should get some substance-based tax credits. To see what they are, it's going to depend upon what the final legislation is. We should expect to see that mid-December or so. So we'll obviously have more to say about that on our fourth quarter call. If you recall, or if you've looked at it, there's kind of a transition timing on that too. So it may be some benefit in 25. It'll go into 26. But we should get some associated with that. Obviously, our footprint on the island is not as big as others. And so, you know, our benefit, it will be beneficial to us, but hard to say what the quantum is today.

Great. Thanks. And I'm assuming that's a benefit to your G&A expense ratio.

Yes. That would actually flow through G&A, because that actually would show up as tax credits against the payroll. So it definitely would go through G&A on the substance base, yes.

Great. Second question, and just, I don't want to bring this up again, but the pay to incurred loss ratios. You mentioned some large claim payments. right, they kind of eschewed it maybe the last quarter or two in the insurance segment. Is there any way to kind of ballpark what those were and maybe it gives us a better kind of a run rate, pay to incurred ratio when we strip out those large claims activity?

Yeah. One, I would say a lot of them were central to our FI book, you know, really, and they were actually coming from 2019 and prior. When we look at how big they were, there were a couple that were in there on a gross basis, Brian, in excess of $20 million. So when we look at it in total, just that line of business, the top three claims had an excess of $50 million worth of pay in the quarter. So that actually skews it a bit. And then last year, actually, interestingly, Q3 last year, it just happened that in the quarter, we got about $20 million of recoveries from our reinsurers in the quarter, which depressed the number last year in the quarter. But overall, I think what's really important as we think about the paid to incurred especially, a lot of improvements in our claims organization. Megan Watt and her team are really embracing how we work and putting better processes into place. So in North America insurance, where we're seeing actually the close to new claims being at 118%, you know, that's really quite good, especially since we're closing these claims within any reserves we had already been putting up.

Gotcha. And then I guess, I guess last one too, maybe this more for Vince, you know, the RAC read deal, um, Maybe give us a little bit of color on kind of what you think the margin profile of that business is going to look like and the kind of, you know, makeup of kind of the business you're expecting to receive since it's just Lloyd's of London type business.

Well, the mix of line is in keeping with our broader portfolio. You know, property will be a meaningful participation in And then there's some niche specialty lines within construction and professional and marine where we have strong confidence in the underlying margin of the business and now what is going to be through these MGU. So I would say it's in keeping with our overall profit profile of insurance that we've spoken about in the historical past. I don't see anything untoward affecting that.

Great. Thank you.

You're welcome.

Your next question will come from Robert Cox with Goldman Sachs. Please go ahead.

This is Jack on for Rob here. I was wondering, when you talked about the mid-single-digit to high-single-digit growth in 26, can you just give us any type of color and what lines you're expecting that growth to come from in 26 or kind of how you're building up to that overall growth rate?

I think what we'll say in this regard is – One, we're not going to lay out our playbook of exactly where the lines are coming from, but suffice to say we have great confidence in the continued growth trajectory of our new and expanded initiatives. In the quarter, discreetly, they contributed meaningfully against the $165 million of our overall insurance growth. You know from our prior disclosures, we are a market leader in marine and energy and segments of professionals, certainly within the wholesale excess casualty marketplace, the property marketplace, and increasingly in the lower middle market. And so taken together alongside our niche, highly defined delegated relationships in surety and in pet, we think that there's ample growth within these lines to reveal itself in 26.

Got it. And when I look on an external basis, it looks like on a net premiums earned property and some of maybe the lower loss ratio lines, credit, property, cyber, we're a little bit less of a grower in mix for the quarter relative to the first two quarters. I'm just trying to work through the business mix impacts on a net premiums earned basis that's supporting kind of the underlying margins. Is there anything you can think of on like a subclass basis or a better way to look at that from an external perspective?

Yeah, this is Pete. So I would tell you that if we look to your point, if we look year to date, the short tail lines are up 60% versus 57 last year. But in the quarter, it was 59 versus 58. So very close, but down a little bit as we think about it on an earned basis. But the other thing that's also going on is we are seeing some adjustments within SEC classes, for example, in the political and credit risk where we're writing more surety business, which has a lower loss ratio. So it's going to be hard to see overall, but as that mix ebbs, and if we do write, as you note, more long-tail business that might have a higher loss ratio, again, I'd point to the combined ratio we'll look at, because some of those lines have lower acquisition costs associated with them, and we feel good about the combined ratio going into next year. That's kind of why I pointed that out.

Thank you.

The last question of the day is a follow-up from Charlie Lederer with BMO Capital Markets. Please go ahead.

Hi, just a quick one. I think this is the first quarter with the new LPT fully in place for the whole quarter. I think you guys were expecting some deferred gain amortization to come from that deal over time. I know smaller dollars, but was there any of that in the quarter? And I guess should we expect that to be a small benefit next year? Hey, Charlie, this is Pete.

Yeah, there was a deferred gain in the quarter. It actually runs through other income. My recollection is that number was about $1.6 million in the quarter. That will adjust over time as we get further out in the duration. But yeah, that will actually come through in 2026. Don't have the exact number for 2026 in front of me, but it is a very small number that will come through next year also through that line. Thank you.

This concludes our question and answer session. I would like to turn the conference back over to Mr. Vince Tizio, CEO, for any closing remarks. Please go ahead, sir.

Thank you for joining today's call. We continue to be encouraged by the sustained positive momentum in our performance and have confidence in our future. I want to extend my deep appreciation to all of our ACCESS teammates worldwide for their outstanding work that they deliver day in and day out. This concludes our third quarter call. We look forward to updating you on our continued progress in the quarters ahead. Thank you very much.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.