Axis Capital NYSE: AXS reported second-quarter results marked by higher insurance premiums, continued profitability in its reinsurance business and an increased focus on underwriting discipline as specialty insurance market conditions soften.
Net income available to common shareholders was $251 million, or $3.38 per diluted share, producing an annualized return on equity of 17%, Chief Financial Officer Matt Kirk said during the company’s second-quarter 2026 earnings call. Operating income totaled $211 million, or $2.84 per diluted share, for an annualized operating return on equity of 14%.
President and Chief Executive Officer Vince Tizzio said the company delivered a 93% combined ratio and an 89% current accident-year combined ratio excluding catastrophe losses. Gross written premiums rose 6% year over year to $2.7 billion, with growth concentrated in specialty short-tail insurance lines.
Insurance Growth Offset by Reinsurance Pullback
Insurance segment gross written premiums increased 15% to $2.2 billion, while underwriting income reached $119 million. The insurance segment recorded a 90% combined ratio and an 84.5% current accident-year combined ratio excluding catastrophe losses.
Tizzio said core insurance business contributed roughly 2 percentage points of insurance premium growth, while AXIS Capacity Solutions, or ACS, contributed about 8 points and expanded classes added about 5 points. ACS matches AXIS underwriting capabilities with third-party capital, allowing the company to write larger gross lines while retaining its desired net exposure. Fee income from ACS was nearly $4 million in the quarter, and the company expects approximately $17 million for the full year.
In North America, 68% of insurance premiums came through wholesale distribution channels, while retail represented nearly 19% and delegated business accounted for about 13%. Delegated premiums were flat year over year, although Tizzio said the company’s delegated portfolio increased 5% companywide, driven largely by previously announced partners in pet and surety business.
Property gross premiums increased 21%, supported substantially by ACS. However, net property premiums declined 15% as AXIS increased property treaty cessions. The company raised property cessions at midyear renewals to 37% from 30%, while maintaining its $100 million catastrophe excess-of-loss attachment.
Property rates declined 17% during the quarter, including a 22% decline in excess-and-surplus property pricing, according to Kirk. He said the faster-than-expected softening prompted AXIS to adopt more conservative loss picks.
Liability premiums rose 8%, primarily reflecting a 7% rate increase. U.S. excess casualty premiums declined 4% despite an 8% rate change, while the company’s lower-middle-market excess casualty unit grew 22%. Primary casualty premiums declined 8% year to date, with a 9% rate increase. Professional lines grew 16%, supported by errors-and-omissions business and expanded classes, while cyber premiums declined 5% amid a 7% rate reduction.
Higher Loss Picks Reflect Softer Pricing
The company’s underlying insurance loss ratio was 54%, up 1.7 percentage points from the prior-year quarter. Kirk said AXIS had previously anticipated about a one-point year-over-year increase tied to business mix and loss trends, but updated its view as market pricing weakened more rapidly than expected.
“This is not from trend,” Kirk said in response to an analyst question, adding that the change reflected a combination of property and casualty considerations. He said the company remains cautious in casualty because rate increases are not at levels AXIS believes are needed.
Tizzio said AXIS is selectively pursuing opportunities in casualty rather than broadly expanding its exposure. The company did not grow its larger excess casualty franchise during the quarter, but it continued to find acceptable pricing in lower-middle-market business and selected ACS-related opportunities.
AXIS recorded a $15 million net reserve release in the quarter, including $12 million in insurance and $3 million in reinsurance. Kirk said releases came from short-tail lines, with about half of the first-half releases tied to 2023 property business and the remainder spread across more recent years.
Reinsurance Premiums Decline as AXIS Cycle-Manages Liability
Reinsurance gross written premiums fell 25% to $440 million in the quarter, reflecting AXIS’ decision to reduce writings in casualty and professional lines. The reinsurance segment generated its 10th consecutive profitable quarter and posted a 94.5% combined ratio.
More than half of reinsurance production, or 51%, came from specialty short-tail lines, while 94% of $90 million in new business came from short-tail classes. Tizzio said professional lines accounted for 58% of the premium reduction and liability accounted for 42%.
For the first half, reinsurance premiums were down 10%, which Kirk said is broadly consistent with the company’s expectation for the full year. AXIS cited continued pressure in accident-and-health employer stop-loss business, where the company is seeing heightened competition.
Tizzio said the company expects to remain highly selective in long-tail reinsurance lines because of what it views as unfavorable ceding commissions and uncertainty around loss development costs.
Catastrophe Losses, Investment Income and Capital Returns
Catastrophe losses totaled $80 million, or 5.3 points on the combined ratio. Severe convective storms in the U.S. accounted for $49 million, while the remainder related to the Middle East conflict. AXIS reported $31 million of losses associated with the Iran conflict, primarily in terrorism and marine war coverage.
Tizzio said the company believes industry losses from the conflict range from $2.5 billion to $3 billion. Kirk said the situation remains fluid, but losses currently appear modestly below AXIS’ market share. The company also said it is receiving additional premium from marine war policies, which can be written on short durations and priced dynamically during the conflict.
Investment income was $182 million, compared with $187 million a year earlier. Fixed-maturity investment income increased 9%, supported by stronger cash flow and a higher book yield, while alternative-investment returns were modest but within expectations.
AXIS returned $122 million to shareholders during the quarter, including $33 million in dividends and $89 million in share repurchases. The company had $263 million remaining under its repurchase authorization at quarter-end and expects to remain active in buybacks during the second half of the year.
Kirk said AXIS is targeting a full-year general and administrative expense ratio of approximately 11%, compared with 10.9% in the second quarter. He added that the company would continue to invest in talent, technology and other opportunities that it believes can support long-term shareholder value.
About Axis Capital (NYSE:AXS)
AXIS Capital Holdings Limited, through its subsidiaries, provides various specialty insurance and reinsurance products in Bermuda, the United States, and internationally. It operates through two segments, Insurance and Reinsurance. The Insurance segment offers professional insurance products that cover directors' and officers' liability, errors and omissions, employment practices, fiduciary, crime, professional indemnity, medical malpractice, and other financial insurance related coverages for commercial enterprises, financial institutions, not-for-profit organizations, and other professional service providers; and property insurance products for commercial buildings, residential premises, construction projects, property in transit, onshore renewable energy installations, and physical damage and business interruption following an act of terrorism.
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