Axis Capital Holdings Limited

Good morning and welcome to the Access Capital fourth quarter 2025 earnings call. All participants will be in 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 telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Cliff Gallant, head of investor relations and corporate development. Please go ahead.

The conference is now being recorded.

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Thank you. Good morning and welcome to our fourth 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 Tizio, our President and CEO, and Pete Vo, our CFO. In addition, for the Q&A portion of our call, we'll be joined by Matt Kirk, our incoming CFO. 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. With that, I'll turn the call over to Vince.

Thank you, Cliff. Good morning, and thank you for joining our call. The fourth quarter marked the close of an excellent year for Axis as we built upon our track record of sustained positive results with 13 quarters of increases in diluted book value per share growth and 77% growth over that period. Our performance has been consistent, and our actions have aligned with the core principles that we laid out at our investor day in May of 24. In 2025, this translated to strong results across our key indices as we leaned into attractive specialty markets, drove increased profitable growth that was largely propelled by our new and expanded business classes, and further enhanced our operating efficiencies. I'll share some of the headline metrics for 2025. 18% year-over-year increase in diluted book value per common share at 7720. 18% operating return on equity. Record gross written premiums of $9.6 billion, up 7% over the prior year. And a combined ratio of 89.8, our lowest full-year combined ratio since 2010. We enter 2026. well positioned to advance our momentum and have confidence in our ability to execute. I'll share five key messages that we would like our listeners to take from this call. First, access is built for all seasons. As a specialist, we have an operating model that enables us to leverage our size and speed to pivot as needed across our business lines and geographies, serving as a competitive differentiator in today's changing risk landscape. Second, were points for profitable growth driven by our strategic initiatives. We would point directly to our new and expanded business classes, as well as the growing contributions from our dedicated lower middle market units and our recently introduced access capacity solutions as proof points. Third, disciplined cycle management. Our growth will not come at the expense of bottom line, and we remain steadfast in putting profits above premiums. In recent years, we have instilled a culture of strong cycle management as evidenced by the repositioning of several of our businesses. You may recall the actions taken in primary casualty, cyber, and public D&O as just three examples. Four, our global distribution model. Our multivariate distribution platform is grounded in customer centricity and deep broker partnerships that we've worked diligently to nurture. In our most recent annual broker survey, this was reflected by top quartile net promoter scores and the recognition of Axis in its specialty leadership positions. Five, finally, we've driven a performance culture. We have built a culture that is both results-driven and people-oriented, encouraging exceptional work through our pay-for-performance model. Further, in recent years, we've built a strong and talented team, while providing a favorable workplace environment that has earned AXIS numerous awards and recognitions. In supporting each of these areas, we continue to invest significant resources to our How We Work transformation program, which is driving continued improvements across our business and operating model, leveraging enhanced technology and AI solutions. The investments we are making through our How We Work program are reflective of the commitment we made at our investor day to deploy $100 million to strengthen our operations and how we go to market. We accelerated these efforts in 2025 and indeed raised our investment threshold with an emphasis on scaling our new and expanded lines and integrating a new AI-enabled front end within our organization. We're pleased with the momentum that's coming from these investments. Let's now discuss our segment results. We'll begin with insurance. Our insurance segment produced outstanding results in 2025, including several all-time highs. Record gross written premiums of $7.2 billion, a 9% increase over the prior year. Record new premiums written of $2.4 billion. Record underwriting income of $597 million, a 40% increase over the prior year. Finally, a combined ratio of 86, a three percentage point improvement over the prior year. In North America, we delivered standout performance with gross written premiums up 10%, reflecting the benefits of strategic investments in product and channel expansion, coupled with significant underwriting platform enhancements. These efforts are continuing to unlock new opportunities in our targeted markets. In global markets, Results were strong as we leveraged our lead line product positions and multi-platform solutions, including Lloyd's, while driving a 6% increase in gross written premiums. Key drivers included marine, energy, and construction, lines where we have strong margin and a healthy pipeline. In addition, our investments to establish a footprint in the retail lower middle market space are starting to produce attractive results within the UK property segment, To complement our profitable growth journey, we have continued investing in innovation, including those that extend beyond technology. For example, we're pleased by the early progress of Access Capacity Solutions, otherwise known as ACS. Through ACS, we are tapping into our deep knowledge and experience with third-party capital, bringing innovation to the insurance platform of our company, serving both our open brokerage and delegated businesses. This includes leveraging our underwriting and portfolio management expertise to work in tandem with our strategic partners to develop structured portfolios at scale while producing new business and underwriting fee income as a new stream to access. While it is early days, several transactions have already been completed. Stepping back and looking at the broader insurance market, we continue to see many micro markets influenced by a risk landscape that is being impacted by a number of dynamics, geopolitical tension, economic uncertainty, war, volatility in climate, energy transition, and technological disruption. Against this backdrop, the need for customized insurance solutions is as high as it's ever been, and as a specialist with a diverse product portfolio and robust global platform, Axis is fit for purpose. As noted, we're seeing varying market conditions across our different lines of business. In liability, overall rates were up 10% in the quarter with 6% growth. In U.S. excess casualty, we generated a 13% rate increase and 4% growth. In particular, our wholesale lower middle market segment continues to show favorable margin and sustained positive momentum. Within property, We grew our property book by 12% across our eight underwriting units worldwide, observing different degrees of competitive pressure. Our growth has been bolstered by our highly premium adequate lower middle market units, both in the US and UK, as well as by taking advantage of the innovation we've brought to the market through ACS. Pete will share more detail about property in his comments. In professional, we grew 19% with a rate environment that's virtually flat. The majority of our growth was generated from transactional liability and our new and expanded E&O lines, which by way of example includes allied health, miscellaneous E&O, and enhancements to our design professional offering. As respects management liability, we continue to produce solid growth within our private D&O business. Importantly, the areas where we have grown continue to meet our risk-adjusted return expectations. Within cyber, consistent with our prior observations, we are seeing an escalating risk landscape impacted by increasing ransomware attacks, and the environment is made worse by the potential of AI enabling more effective and sophisticated ransomware threats. This phenomenon, coupled with increasing competition from MGAs, is placing downward pressure on price adequacy. Thus, we will continue to maintain a cautious and selective appetite and do not see cyber as a growth area for the foreseeable future unless a better risk-reward outcome is realized. Moving to our reinsurance business, Access Re has generated positive bottom line results for the last eight consecutive quarters. This financial consistency has been grounded by a clear underwriting strategy centered around selective, profitable growth and strong cycle management. In 2025, Axis reproduced a strong combined ratio of 92.6, underwriting income of $128 million. We produced $2.5 billion in gross written premiums, a low single-digit increase over the prior year period, consistent with prior indications. As respects the 1-1 renewals, the market grew increasingly competitive, and we held our discipline across our casualty lines. For the same reasons we've cited in the past, we maintain a cautious and highly selective stance in professional and liability, and our caution has only escalated, reflecting our view of a misalignment of risk and reward. As we progress into 2026, Access Re's focus is to continue to deliver bottom-line performance. Before I close, I want to take a moment to extend my gratitude to our long-time and long-serving CFO, Pete Vogt, as this will be his last earnings call before he passes the baton to Matt Kerr. On behalf of all of his Access colleagues, we're deeply appreciative to Pete for his years of leadership and important contributions to our multi-year transformation program. I, in particular, am indebted to his assistance during my initial transition as CEO of our great company. In summary, 2025 was an outstanding year for Axis. We are pleased and motivated by the consistent progress and momentum we have achieved. We remain focused on continuing to pursue our specialty leadership ambition while delivering tailored insurance solutions to our customers and producing attractive returns for our shareholders. Finally, I want to extend my appreciation to our Axis teammates worldwide for their many accomplishments and commitment to excellence. With that, I'll now pass the floor to Pete for his comments.

Thank you, Vince, and good morning, everyone. Access had an excellent quarter and a phenomenal full year 2025. For the quarter, our net income available to common shareholders was $282 million, or $3.67 per diluted common share. For the full year, $978 million, or $12.35 per diluted common share. producing a 17% return on common equity. This drove our book value per diluted common share to $77.20 at December 31, an increase of 18% over the past 12 months and up nearly 24% when adjusted for dividends declared and share repurchases. Our operating income was $250 million, or $3.25 per diluted common share for the quarter, or just over $1 billion, or $12.92 per diluted common share for the full year, resulting in an operating ROE for the year of 18.1%. Let's look at the consolidated company underwriting highlights. Our gross premiums written of $2.2 billion were up 12% over the prior year quarter, driven by accelerating growth initiatives in insurance. On a net basis, premiums were up 13%. For the full year, gross premiums were $9.6 billion, up 7%. Our quarterly combined ratio was an excellent 90.4, consistent with an outstanding 89.8 for the full year. Cat losses in the quarter were just $30 million, producing a cat loss ratio of 2%. Cat losses were driven largely from Hurricane Melissa, which devastated Jamaica. Our full-year CAT loss ratio was 2.8%. We're pleased to see the benefits of the strategic actions we have executed over the past few years reduce the volatile impact of CATs to our earnings. We adhere to our philosophy of wanting to see sustained positive signals before releasing reserves. We recorded a release of $30 million with $23 million in insurance and $7 million in reinsurance in the court. We remain highly confident in our reserve position, and as is our normal practice at year-end, an independent third-party actuarial firm completed a review of our reserves, and this provided us additional confidence in our reserve position. Our consolidated G&A ratio for the quarter, including corporate, was 13.9% versus 13.7% a year ago. The increase is mainly driven by variable compensation and an increase in headcount in insurance as we have added new teams throughout the year. For the year, the ratio is 12.4% versus 12.6% in 2024. We continue to invest in new technology as part of our How We Work program, and we expect our new hires and investments to drive growth and efficiency. I'd note that the benefit of our G&A ratio from Bermuda's substance-based tax credits were minimal. I would also note that underwriting fees from ILS partners were $14 million in the quarter and $54 million for the year and represent an attractive stream of fee-like earnings delivered from our ILS partners. Insurance had a strong all-around quarter and year. Fourth quarter gross premiums written were $1.9 billion, an increase of 12% compared to the prior year quarter, and $7.2 billion for the full year, up 9%. As Vince detailed in his byline market commentary, we're seeing a wide spectrum of distinct market cycles across insurance products. Our growth has been broad-based across the portfolio, as all classes of business grew, except for cyber. We are focused on the profitability and are pleased with the premium adequacy we continue to see across the portfolio. I will note that specifically in property, a significant proportion of the 12% growth came from the build out of our US and UK lower middle market businesses, as well as new business associated with ACS partnerships. As Vince noted, our property book is quite diverse across both geography and classes of risk. As we look to 2026, given the current insurance market conditions, We reiterate our confidence that we can grow gross written premiums at a mid to high single-digit rate while maintaining premium adequacy at our long-term targets. The insurance combined ratio for the quarter and the year were 86.5% and 86.1%, respectively, improved from 91.2% and 89.1% in the year-ago periods. We've shown remarkable stability in our ex-Kent accident year loss ratios. For the quarter and the year, we were 52.5% and 52.4%, respectively, compared to 52.2% and 52.1% in the comparative periods in 2024. This quarter, we saw an uptick in the loss ratio from the effect of rate and trend, which wasn't fully offset by MIX. Our insurance expense ratios for the quarter and the year were 33.4% and 31.6%, respectively, versus 32.4% and 31.9% in the comparative period in 2024. The increase in the quarter is driven by variable compensation for a very successful year in insurance and the investments we've made throughout the year in hiring teams, as well as technology and operations. Our investments and operations have significantly reduced submission, quoting, and ingestion times, particularly as we employ AI tools, and we are still at the early days of implementation. Turning to reinsurance, gross premiums were up 13% in the quarter. I would stress that 4Q is seasonally our smallest quarter, with only about 10% of the annual GWP generated in the fourth quarter. This quarter, a significant part of the growth was driven by a single large quota share UK motor transaction, which is renewable in Q1 2027 and therefore will not repeat in 4Q 2026. We also saw new business and favorable adjustments in the credit and surety line of business. Full year gross premiums were up 3% and a better characterization of the year's trend. The reinsurance combined ratio is 93.9% in the quarter with an ex-CAT accident year loss ratio of 68 with no CATs and a 1.9 benefit from reserve releases. For the full year, combined ratio was 92.6% with an ex-CAT accident year loss ratio of 68.1, including two-tenths of a point for CATs and one-and-a-half point benefit from reserve releases. The quarters and years acquisition ratios were 23.1% and 22.2% respectively, up from 21.8% and 22% in 2024, reflecting business mix changes. The increase in the G&A ratio for the quarter, up 4.7% from 4.0% a year ago, largely reflected higher variable compensation accruals. For the full year, the ratio was 3.6%, flat versus 2024. Building upon Vince's comments about the January 1 renewals, we held true to our strategy of a bottom-line focus with an emphasis on premium adequacy. We kept a cautious stance in reinsurance liability and professional lines. If we continue to see a challenging reinsurance market as we progress through 2026, we will remain bottom-line focused. Our overall reinsurance gross premiums could be down in 2026, even up to double digits. However, while the volume may be reduced, we remain confident in the portfolio's expected underwriting profitability. We had a strong quarter and year for investment income. In the quarter, investment income was $187 million, and for the full year, investment income was $767 million, up 1% over the prior year, This despite the impact of the LPT transaction, which closed in April. With increasing stability in our underwriting results, we have moved up marginally in our investment risk appetite, with a slightly increased exposure to below BBB rated bonds at year end. We are now at the high end of our stated range of 15% to 20% of the portfolio designated to higher risk at 19%. Our effective tax rate in the quarter was 14% and included a $19 million non-operating income benefit arising from an increase in our Bermuda ETA that was required due to an amendment to the Bermuda Corporate Income Tax Act. We expect an ongoing overall effective tax rate in the 19% to 20% range. We are in a very strong capital position. which enabled us to return substantial capital to shareholders this year through $139 million of dividends and $888 million of share repurchases. We have a current authorization for another $112 million of share repurchases. I would highlight that our priority for capital is to fund organic growth opportunities, which are accelerating in our specialty insurance business. I wanted to take a moment to acknowledge that this will be my last earnings call for Axis. The company has gone through a lot of changes over the years, and I'm pleased to be able to step back when the company is better positioned than it has ever been before, both operationally and financially. It has been a privilege to represent my Axis colleagues to the public markets over the years, and I'm confident that Matt and the rest of the Axis finance team will continue to serve you all well. Thank you. We'd be happy to take your questions.

We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you were using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Andrew Kligerman with TD Cohen. Please go ahead.

Hey. Thanks for taking my question, Pete. Great run. Congrats. And I guess the first question I'd like to touch on is the expense ratio. And so, the underwriting related general and administrative expense ratio came in for the year. at 12.4%. And make sure I'm right, please. I think the goal for 2026 would be 11%. So that's 140 basis points down. So that's the part A of it. And the part B of it is the overall expense ratio consolidated was 34.2%. Where does that go over time as well?

So, thanks, Andrew. Thanks for your opening comment, too. This is Pete. I'll take that. And I'll break it into the two pieces when we think about it. The G&A ratio for the year and the quarter were impacted by variable compensation. And if I normalize, and I think that's a good way to look at it, for the year, the G&A ratio, underwriting G&A would be 11.6. And so there was a top-up there for variable comp. And in the quarter, it would have been 11.2. I'd say both those metrics were on our glide path, on our path to 11, as we were planning it from 2024 to 25 to 26. And I'd even say that we spent more money, as Vince indicated, in our IT and operations getting more efficient in 25 by accelerating some spending there than we even thought we were going to do when we set our targets all the way back for the investor day in 2024. So we feel good about our glide path into 2026. And we're holding to our commitment of an 11% G&A ratio as we go into 2026. But I would say we'll always do everything in the best interest of the shareholder. And we look forward to actually being able to deliver on that promise. But that is the glide path we're going on. We feel really, really good about where we are. And we feel good going into 2026. I don't know, Vince, you want to- I would.

Thank you. Thank you, Peter. Good morning, Andrew. I think the other important point that perhaps adds the how to Pete's comments, is that we expect in the 26th year to realize the leverage of the various investments that we've made, Andrew. You'll recall that we mentioned in the third quarter we had accelerated our investments in technology in all facets and forms. We hired a number of teams. We reasonably expect in the operating year of 2026 to start to monetize those investments in efficiency, productivity, and rationalized expenses in our operating model. There's a variety of shapes and forms that that will show itself over the coming quarters, but we remain optimistic as we head toward end of 2026 and representing the goal that we had talked to accounting for, of course, normalized incentive compensation.

That was super helpful. And maybe shifting over to kind of the sustainability of margins as you grow. I mean, 12% net written constant currency unconsolidated was really strong. And I think I heard mid to high single digit growth outlook for insurance and potentially even down double digit and reinsurance. So as you do this, do you feel comfortable with what was, you know, an accident year combined ratio XCAT consolidated of 88.6 for the year and 90.4 for the quarter. Do those numbers feel very sustainable? Do you do closer to the 90.4 or closer to the 88.6 that was for the full year? How should we kind of think about those combines on a consolidated basis?

So, Andrew, this is Pete. I'll take that first. You know, as we think about where we are in the quarter and then leading off into 2026, you know, when we think about the various pieces, as I mentioned, we already talked about the G&A ratio, so I'll let that conversation go, but we feel really good about where we're going there. When we think about the, you know, the cat loss ratios, you know, as I mentioned on the cat side, we really do expect full-year cats to be in the 4% to 5% range. And so, you know, really good year for us in catch this year, really good us handling the volatility that was out there. But I think a normalized year would kind of be in that range. And then when we think about the attritional, we've been actually very much able, especially on the insurance side, you know, as we've talked about, you know, there's been some pressure on the attritional due to rate and trend, but we've been able to offset that by mix. And we've been able to do that all through 2025. As we go into 26th, I think there'll be some more pressure on rate and trend that we may not be able to completely offset by mix as we go into 2026. And that would be the one area where we'd see some pressure. But again, I'd look at the all-in combined, where if we see some uptick in the attritional loss ratio, as we talked about, we're working on bringing the G&A ratio down. And so all-in combined, you know, around that 90 target is a pretty good number for the overall company. And Vince, you want to come in over the top?

I think you're right, Pete. And I think you broke out the component parts of how we get there. But we entered the year I'm feeling very good about the portfolio in terms of the start point of premium adequacy. As Pete indicated in his prepared remarks, we acknowledge some of the intersection of rate trend and mix. We've done a really superb job at redesigning the underwriting portfolio. We're entering the year here, 26, with continued discipline around our cost structure. I mentioned in your prior question some of what will be revealing itself through the investments that we accelerated in the prior year. We've done a really good job in managing our catastrophe exposure, but I think ultimately the range that Pete just expresses in keeping with our own expectations.

That was great. If I could sneak one last quick one in. Sure. You talked about favorable. Thank you so much. You talked about favorable development of 23 million in insurance, seven in reinsurance. You know, Anything you would break out on casualty that was unusual? And with Matt, I don't know if Matt's on the call, but he has consistently expressed confidence in the reserves. I'm curious if, Pete, you're going out feeling still confident, and Matt, how you felt as you looked at the reserves coming in.

Andrew, it's Vince starting off. First, we feel very good about our reserve position for the company. Secondly, in the quarter, we followed the same philosophy that we articulated since our reserve charge. So there's no change in our philosophy of how we manage our reserve position. As relates to the source of where it came, it did not come from long tail lines, as you know. And I'll transfer to Pete now.

Yeah, thanks, Andrew. I guess what I would say is, again, the reserve releases really did come from short tail lines. You'll see it from property on the insurance side, as well as credit surety, and then a little bit from agriculture credit surety and A&H on the reinsurance side. And overall, I'd say when we think about the long-tail lines, there's always some little puts and takes across the accident years, and we'll see that when we have the triangles and the 10K. However, there was nothing significant or material that would give us any positive concern. If there was, we would have taken some action. So we feel good about all that. And to your first question to me, You know, as I sit here at the end and I look at the balance sheet, I feel very confident and feel good about leaving the company in the great hands of Vince and Matt and the rest of the management team and where the balance sheet stands, both from a capital position and a reserve position. And with that, I'll pass it to Matt.

Hey, Andrew, and great to be here and speak to you all. I would just reiterate, I've been here for three months in a very well planned out transition plan. Much of that time has been spent working with the reserving team, working with Pete. And overall, I'm quite comfortable with where the reserving is at right now. And I agree with what Pete said. We have a strong balance sheet and a strong capital position.

Great to hear. Thank you.

The next question comes from Yaron Kinnar with Mizuho. Please go ahead.

Thank you. Good morning. And before my questions, Pete, just want to wish you well as you embark into retirement. I guess going back to the expense ratio, so I understand this quarter part of the increase in the expense ratio is variable comp, which I think was also true elsewhere in the year. And obviously it's a good problem to have because you have strong performance. But as you expect to build momentum, isn't that going to remain a headwind in the future in 26 and beyond?

Yeah, as we think about going forward, you know, the annual targets that we use, you know, are reflective of what we think the environment is, Jeroen. So, you know, this year we had a great year across a number of dimensions. But as we look forward, you know, we're constantly adjusting our annual plans, and that moves our targets forward. So, you know, I do hope it'll always be a headwind. And I think as a headwind, if we have some variable comp because we've performed tremendously great for the shareholders in a particular 12-month period, you know, if we have to put up some variable comp due to that, you know, if we go above 11 because that's the reason, I think that would be, I'll call it agreeable to the shareholders given that it would be good financial performance that they'd be receiving.

And, Yaron, this is Vince. Welcome back. It's good to hear your voice. Please don't underestimate the leverage that I pointed to in Andrew's question inside the operating model. The number of persons that will be required to execute our financial plan, the increased productivity from the resources and the numerous teams that we brought into the organization, the reshaping of our general cost structure that extend beyond personnel costs, the increased fee income that's resulting from our various sources of underwriting fee income, both in our reinsurance and more recent in our insurance business. The mixed shift that has dramatically taken fold with respect to the insurance versus reinsurance contribution and the continued portfolio reshaping going on in that business, will it be an earnest effort? Everything's been earnest at Axis. We've been leading quite a bit of a transformation. We're focused on the objective that we set forth. If we ever course correct, we'll certainly announce you, but we are focused on our 11% in the manner that we described. And we feel very good, again, about the ability to monetize the numerous investments that we took in our operating platform, which has had a bearing certainly in our GA ratio in the reported results of year-end 2025.

Thank you, and thanks for the welcome. It's good to be back. Just to confirm, though, on the expense ratio, we are also seeing, I think, a lot of talent movement right now, and I think there's also maybe a bit of an increase in what talent is being paid right now. I just want to confirm, if you see the opportunity to grow in a geography or a line by investing more in personnel, you'd be willing to jump on that even if it means that the 11% target may be delayed by a bit, even with the leverage and the other efficiencies that you mentioned?

Yes.

Okay. And one final quick one, the combined ratio, Pete, you said that you still feel comfortable with the 90%. That is reported, right, not underlined?

Yeah, so, you know, you look at the fourth quarter at 90.4, you know, as we look going forward into 2026, you know, somewhere in that range is, you know, what we would expect given the puts and takes that we'll have as we go into the year, but still comfortable in that range.

Okay, thank you.

The next question comes from Christian Trost with Wells Fargo. Please go ahead.

Uh, hi, good morning. Um, going to, uh, the high single digit, uh, mid to high single digit growth guide for insurance. Um, can you maybe just give a little bit more color on the path to getting there? Just given, maybe you could provide some assumptions on the, on the rate environment as well as the expected growth uplift from some of your new and improved product offerings. And then just sticking with that, um, any early insights into how the Rackery vehicle is performing and did that have any growth impact in the quarter?

Christian, I'll start out and then, uh, Pete will come over the top. So as I mentioned in the third quarter, our insurance business enters 2026 without any material reshaping going on. Obviously, as a specialist, we'll always have pruning. Additionally, we indicated that we entered this year with a premium adequate portfolio. We have further leaned into our new and expanded lines, which we've been talking about now for the last couple of quarters, and continue to realize material inroads. In fact, if you were to look at the growth in our insurance segment in the fourth quarter discrete, about $150-odd million of our growth came from the new and expanded classes. We view these classes in the aggregate as premium adequate. And what they've done for access is create new revenue streams in terms of products, forms of distribution, and customer segmentation. We have optimism around the runway that exists to continue executing the growth that we have produced in keeping with the range of estimate that Pete mentioned. As it relates to ACS, Pete, I'll ask that you come over the top in terms of the contribution, but it was not a substantial volume contributor in the fourth quarter.

Yeah, overall ACS, this was the first quarter we booked any gross written premiums to ACS in the quarter. You know, it came in just around $20 million for insurance. Very little net earned in the quarter, quite frankly, because it's going to earn over a long period of time. So it's just getting started. And again, we expect, as we've talked about in the last call, when you think about the RAC redeal, you'll see most of the written come in over 26 and 27 and 28 because of the way that deal is structured. And again, the net earned is going to come in over 26, 27, 28, and 29 because of how that's going to earn. So it's a really good deal. We're excited about it, and it's just started in this fourth quarter.

Got it. Thank you. And then for my follow-up, just switching to paid and incurred trends, they were a bit better sequentially, and they did improve year over year when you adjust for CATS, but it is still a bit elevated in the low 90s. And I know previously you've pointed out business mix, but can you maybe provide some more color of like what we should expect to see going forward as we continue to see that mix shift and any other drivers that could potentially improve those metrics?

Christian, consistent with what we've indicated in the past, we've had as a company in the midst of an underwriting transformation, there's been a substantial set of changes related to both what you pointed out on the mix. Our claims organization has has had substantial investment in resources, capabilities. We've had some acceleration with respect to large payment claims. We look at this indication really in combination with many other factors in and of itself. It's really not dispositive of anything that is alarming to us. We feel very good confidence around our reserve position. We did have, as you indicated, a decrease in the outcome of that ratio. And even if you were to compare the prior year, same quarter discrete, it's explainable by catastrophe losses. In 4Q 2024, we paid out, I believe, $80-odd million. And so you see the material difference here in 4Q 2025. And so we are attentive to this issue. We are not dismissive about it. We place it in a broader context, and from our judgment, we're pleased with how we're managing the overall outcome of our underwriting results, the resolve we have in our reserve position, and the continued integration of our underwriting model that takes together the insights of our claims organization, our actuarial function, and underwriting, making certain that we are as observant to our bottom line aspiration as possible.

Got it. Thank you. And if I could just sneak one more on the GNA, is it safe to assume, I mean, obviously it sounds like you will do opportunistic hiring if it arises, but is it safe to assume that we should have a more normalized, I guess, hiring pattern in 26 versus 25? Because it sounds like there was a lot of upfront investments on some of these new underwriting teams. Is that a safe assumption?

I think we want to reserve the right to remain very strategic in how we go about hiring teams. We have some scheduled for the 2026 year. I don't really want to reveal how many or in what lines of business, but suffice to say, my business leaders are certainly active. Access as brand is sought after, and we're going to use great discretion in making certain that we can optimize the productivity, enhance the alignment to our distribution strategy, that has worked substantially well for our organization, and make certain that it's aligned to our overall underwriting strategy.

Great, thank you, and good luck to you, Pete. Thank you.

The next question comes from Meier Shields with KBW. Please go ahead.

Hi, good morning. This is Jean for Meier. Thank you for taking my question. My first question is on growth. You've mentioned like low middle market growth throughout the 2025, which significantly contributed to the property growth in 4Q2. Can you add more details of driving the sustained momentum? And also, could you update us on the competitive landscape there? Thank you.

Yeah. Good morning to you. The lower middle market continues to be for access a dedicated and new customer segment that we've been pursuing for the last couple of years. Kindly recall that we've brought in chief most of our product set from our wholesale division, including our professional liability classes. We've been executing a strategy that has been both wholesale and retail distribution source. We're pleased with the continued proposition development that our North American team has created. bringing customized solutions to this customer segment that has varied meaning and definition, but in the aggregate is really a transaction risk profile, a lower complex risk profile. We're pleased with the sustained growth. The runway remains fairly long. And the competition, of course, it exists. This is a known customer segment that has good margins. It has the potential to be sticky, but we're pleased with what the channel that we're going through, the partnerships that we have formed, the product design, and finally, and critically importantly, the investments that we've taken in technology to enable a heightened pace of straight-through processing, enhanced quoting productivity, both by individuals and therefore in the aggregate. We're pleased with the momentum, and we do not see any reason why we cannot sustain the growth Uh, in this segment and the, the submission volume in this, in this area of our company is just substantial. It's just substantial.

Thank you. That's very helpful. My second question will be on the core loss ratio. I know you mentioned the takeout because rate and trend, um, isn't fully aligned. Could you like unpack where you're seeing the loss trends running ahead of pricing?

I would say, you know, this is Pete. I'll come in and I'll ask Vince to then come over the top. But I'd say, you know, where we're seeing probably the most significant pricing would be in some of our property books where, you know, E&S property and global property, specifically in London, we've had some, you know, that's where their pricing pressure is probably most acute. I'd say one thing we're really happy about would be on the long tail lines, we continue to see rate in excess of trends. That's given us some confidence in there. And I think that's why Vince is currently and always characterize the current market as kind of a changing market, not necessarily a soft market because of the different puts and takes.

Yeah, Pete, I think that that's right. We continue to have strong observation management control over the long tail lines where we have acute watchfulness around trend. We continue to leverage our short tail versus long tail portfolio composition, which has obviously different trend assumptions. We have a vigilant accounting of trend quarterly with our actuaries, our claims organization, our underwriting organization. And as you know, over the last several years, this portfolio has shifted increasingly toward our short tail lines. And finally, within the new and expanded classes, you'll recall we estimated some 60-odd percent of our new and expanded classes were coming from the short tail lines. And so that's how we would respond to you. Thank you for your question.

No, thank you.

The next question comes from Josh Shanker with VOA. Please go ahead.

Yeah, good morning, everyone. Thanks for taking my question, and I'll circle the Pete bandwagon. You're a real one, man, so I appreciate it. Thank you. Thank you, Josh. All right, so tough question time. Third-party underwriting or outside underwriting from partners How big do you expect it to get as a percentage of the whole in 2026? And you can go wherever you want, but in terms of the way you segment the business, not by class, what percentages will see the biggest surge or I should say biggest percentage coming from third-party underwriters? And if you could compare the expense and acquisition ratios, of third-party business versus in-house business, that would be wonderful.

Josh, good morning, and let me try and unpack your question. Your use of third-party underwriting, okay. So with respect to what we call delegated, let me provide some context, and I'll try and address each of the elements of your question directly and hopefully responsibly. So firstly, at the end of 2025, Delegated across our insurance platform represent approximately 32% of the volume of what we produced in the company. Importantly, there are four delegated relationships that have substantial contribution to that 32%. We've spoken about these areas in prior calls. They involve, of course, our pet delegated relationship, our surety delegated relationship, Our transactional liability book, which is an increasing focus, of course, in this changing risk landscape. And finally, our portfolio solutions group out of London, where we are a so-called smart follow market. And you know the lexicon in London. That is a term of art. Third, with respect to the difference in acquisition costs, I can tell you that they're contemplated in our overall estimates They're approximately, it's difficult because of the profit sharing agreements to give it a fine point. I'll ask Pete to help me on that. And then finally, in terms of sizing, I don't think that the delegated book will become smaller for access. I think staying in the 30-odd range. Please note in the North American component, it is only 14% of our total volume in distribution for delegated. And as you would reasonably expect from a London Lloyd's market, we have a substantial percentage of our business coming from a variety forms of delegated. Hopefully that answers your question.

Nothing short of an excellent answer. Thank you very much. And in terms of looking forward into 26, 27, 28, beyond, Are you thinking the industry's changing in a way that delegated underwriting is going to be an increasingly large proportion of the portfolio? Or is this a soft market strategy that will invert in 2029 when the markets change?

You know, if I have this approximately right, it would be great. But look, instinctively, there is structural change. change that has gone on in the delegated space. And in particular, if you look at the order of investment that has been made within our strongest set of partnerships, U.S. wholesale distribution, a considerable investment has been made in the MGU entities within those organizations. I think that has staying power. I do think that there'll be a consolidation of lines of business changes that will emerge. I can't be perfectly prescriptive about which lines of business driven MGAs are going to fold. I would point to the environment that we're competing in is quite different than three years ago with respect to margin. And the underwriting acumen that has to be shown by these entities will be critically under examinations. I think particularly those that are private equity owned. I do think in contrast, the wholesale dedicated MGUs have staying power. As you'll recall, Josh, when Pete and I executed the reserve charge, we redefined the role and purpose of MGAs and delegated authority inside our organization. It was a painful set of lessons that we had to take. We're very pleased with what Mike and Sara have done in executing the change in our underwriting strategy. We're more concerned about the controls that we have in place, which has resulted from substantial investment in data and analytics. And more importantly, the economic alignment of interest that we've created through the profit-sharing agreements and where we, RACRI in particular, if you just go back to the notes that we conveyed, it shows convincingly how we have changed the dynamic of how we interact in the MGU arena. I'll leave it there. If there's any further questions, we're happy to take it. Thank you.

The next question comes from Andrew Anderson with Jefferies. Please go ahead.

Hey, good morning. Pete, I think last quarter you were saying within the insurance segment RACRI could push growth into double digits, but now you're kind of pointing to mid to high single digits. So is there kind of a change in expectation on either organic growth or on RACRI into next year? No.

You know what, Andy, I am very consistent with what I said in the third quarter. Yeah, I think Vince came in over the top of there, but mid to high single digits would be excluding RAC RE as we look at 2026. RAC RE, you know, given what our expectations are, you know, could push, you know, would push the insurance into the double digits.

Okay, thank you for that clarification. And then, on reinsurance kind of pointing to the potential for double-digit down, I suppose, on a gross basis. I do think maybe half of that segment, 40% to 50%, is what could be short tail or specialty lines. Is that kind of more of a flattish expectation there, or could we break apart the casualty and specialty within reinsurance, how you're thinking about that?

This is Vince. I think if you want to talk about The portfolio construct, you should reasonably expect in the long tail lines for us to continue the reshaping that we've been talking about these past couple of years. A continued focus within our specialty lines. There's a variety of makeup between and among our definition of specialty reinsurance lines as respects short tail or longer tail, but not long tail. But the bumper sticker that I hope you take is while volume may change, be less than year-end 2025. We feel very good about the margin contribution of underwriting profitability that will be generated from our reinsurance business, and we continue to see substantial alignment between the reward of our distribution partners and the capability set of our specialist reinsurance teammates. And so I'll leave it there.

Thank you, and congrats, Pete. Thank you very much, Ed.

The next question comes from Charlie Litterer with BMO. Please go ahead.

Hey, thank you. Good morning, and congrats, Pete, and best of luck to you. Look forward to getting to work with you, Matt. Maybe just going back to Christian's question on the attritional loss ratio and insurance, appreciate the new and expanded classes are rate adequate. I guess when we think about the increasing contribution from professional liability and the the rates of siding and property. Can you just talk about how that mixed shift should impact the attritional loss ratio from those two lines as we progress through 26?

Look, I don't know if I'll answer it in the lens that you raise it, but I'll give you, I think, a more helpful answer to the broader part that I take from your question. Firstly, the growth in professional was substantially driven by transactional liability in our new and expanded E&O classes with some complement of contribution from our design professional business. Second, we've constructed a portfolio that has leveraged, of course, a lot of growth expectancy from the new and expanded. And if you look at the last couple of quarters, you'd certainly have a consistent proof point. We've introduced a capability in the form of access capacity solutions, that is really addressing unique needs from our customers and utilizing third-party capital. When you put in context Pete's remarks around the headwinds, obviously the pressure on our ex-cat attritional ratio, ex-cat attritional, that's a tongue twister, excuse me, ex-cat attritional loss ratio will be shown in the 26th year. We don't think it's in an outsized manner. If it's about a point, that would be in keeping with what I would reasonably expect with the information we have today, but it's certainly not something that's going to maturely move. The influence of a short-tail portfolio, a balanced approach in our long-tail lines gives us confidence in the overall outcome of our loss ratio performance. Pete, I don't know if you want to come over to the top or clean anything up.

Yeah, I think you kind of hit it there, Vince. You know, we've had actually a real benefit of mixed change this year. As we go into next year, depending upon where the markets go, we may not get the exact same benefits that we've been getting on mix. And so, you know, we do think that, I think Vince said it right, you know, somewhere around a point would be an expectation on the insurance side.

Thanks, guys. And you mentioned the prioritization of organic growth over buybacks in your prepared remarks. Obviously, appreciate that buybacks were a little bit elevated this year. Just wondering, I guess, if you get an average CAT year and you hit your top line, you know, targets, how we should think about the capital return profile for an axis, just given the mixed shift and the evolution?

Yeah, this is Pete and Andy. Again, we're going to continue to be opportunistic with the share buyback. We do still believe that our current market price were undervalued, and so we did a fair amount of share buyback in the fourth quarter. But our number one, as we said in our prepared remarks, is organic growth. And, you know, with the opportunities we have in front of us with who we've been dealing on, we think we'll have good opportunities for growth in this year in our insurance specialty side. And then based upon, you know, the earnings profile that we have, you know, we'll look to put capital to use, still continuing to build out our data and analytics and our platforms. But then, you know, we'll look to share buyback in an opportunistic manner. Wouldn't give it a specific number, you know, per quarter or anything like that.

Thanks, guys.

The next question comes from Roland Mayer with RBC Capital Markets. Please go ahead.

Thank you. And I need to be faster on the star one. I wanted to quickly ask on the reinsurance growth. I assume that the down up to 10% or up down double digits includes the motor renewal. And am I thinking about it correctly that that effectively renewed twice in 2025?

It did not renew twice in 2025. So that's a good question. It was a brand new product, really, that we did in the fourth quarter. It just happens to be, I'll call it a 15-month product. And so it's going to come up for renewal in the first quarter of 27. That does have a bit of an impact because it was a large quota share. But I think our comments are more around our feeling about where the current market is in the long tail lines, the casualty lines, especially in reinsurance. and how we're seeing the market dynamics play out there. I don't know, Vince, if you want to add anything else.

I think you answered it great.

Yeah, thank you. And then I guess on the next one, going back to Charlie's question on the buyback, 2025 was just, it was very lumpy with all the stone point deals. Is the right way to think about it should be a bit smoother next year? And I mean, the payout ratio this year was 100%. I assume that won't happen again. There was some elevation because of just the stone point opportunity.

Yeah, this is Pete. I'll come in over the top on that. One of the things that did elevate the payout ratio in the year was, remember, we did the NSTAR LPT transaction, which actually gave us a real benefit to our capital position in the year and allowed us to do what I would call more share buyback as a percent of income than we would normally see in a normal year. I would say it was a bit lumpy in 2025. Again, that was the opportunistic nature of our share buyback. So I still would say that we're going to be opportunistic through 2026. could be lumpy depending upon what we see happening in the markets as well as our needs for growth.

All right, perfect. Thank you and congrats.

Thank you.

There is a follow-up question from Yaron Kinnar with Mizuho. Please go ahead.

Thanks. Back for more. Just maybe pounding a little more on this capital deployment issue. Your premium surplus is still below one. You are growing, but, you know, with the growth targets you're offering, and the lines of business in which you're growing, which I think are probably a bit more capital light. You've moved away from cat exposures. Is it reasonable to think of the payout ratio sustaining above, call it the 60% range, even when you're growing?

So, Jeroen, this is Pete. I would say if you're looking at a payout ratio that high, that would be including what is a very good common dividend. I would say that sounds a bit... high side to me. So I would actually, if you're thinking about modeling, I would be modeling below that number.

Yeah. And I think the assumption on some of the capital use in certain of our specialty lines is perhaps larger than you're on accounting for. But I think that's an important point. We can talk further about it, but yeah.

Okay. Yeah, we can take that offline. Thank you.

Thank you.

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

Thank you for joining today's call. As we look to the future, we believe Axis is very well positioned in the marketplace and poised to continue to build on its positive momentum. We look forward to updating you on our continued progress in future quarters. Thank you very much.

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