AM Best


AM Best Downgrades Credit Ratings of AXIS Capital Holdings Limited and Its Operating Subsidiaries


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Jim Peavy
Director, Public Relations
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FOR IMMEDIATE RELEASE

OLDWICK - MAY 05, 2020 08:53 AM (EDT)
AM Best has downgraded the Financial Strength Rating to A (Excellent) from A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) to “a+” from “aa-” of the operating subsidiaries of AXIS Capital Holdings Limited (Pembroke, Bermuda), collectively referred to as AXIS. Additionally, AM Best has downgraded the Long-Term ICR to “bbb+” from “a-” and the existing indicative Long-Term Issue Credit Ratings (Long-Term IR) of AXIS Capital Holdings Limited. The outlook of these Credit Ratings (ratings) has been revised to stable from negative. (See below for a detailed listing of subsidiaries and indicative Long-Term IRs.)

The ratings reflect AXIS’ balance sheet strength, which AM Best categorizes as strongest, as well as its adequate operating performance, favorable business profile and appropriate enterprise risk management (ERM) from the group’s risk profile.

The downgrades reflect a deterioration in AM Best’s view of AXIS’ operating performance. While AXIS still maintains positive overall results and has taken corrective measures, particularly in its insurance segment, to improve its earnings profile, AM Best believes that the group’s operating performance is no longer in line with companies with a strong operating performance assessment or its own historical results. This is evident by the group’s five-year average return-on-equity and combined ratios, which fall short of AM Best’s strong operating performance benchmarks.

AXIS continues to maintain levels of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), that place its balance sheet strength in the strongest category. The group’s balance sheet assessment also benefits from a favorable amount of financial flexibility at the holding level and within the operating subsidiaries, but also reflects capital management strategies that have included consistent common and preferred dividends, as well as share repurchases. Reserves have consistently run off favorably, and appropriate measures have been implemented quickly when deficiencies have been identified. However, like most of the industry, AXIS has seen a decline in favorable reserve releases over the past five years. Additionally, AXIS’ financial leverage metrics are elevated when compared with most peers and has had an increase in intangible assets in recent years, largely attributed to the acquisition of Novae.

AM Best categorizes AXIS’ business profile as favorable, as the group consistently ranks in the top half of AM Best’s Global Reinsurance 50 largest reinsurance enterprises, while also maintaining a well-regarded profile as a specialty underwriter of complex risks with a significant presence in the Lloyd’s market. In terms of innovation, AXIS has benefited from its investment in technology across functional areas, with a strong focus on data and analytics. The group’s ERM is sophisticated and embedded throughout the organization. AM Best believes that AXIS’ risk management is appropriate given its complex risk profile.

Rating factors that could lead to positive rating actions are a demonstration of long-term, consistently strong operating results coupled with superior risk-adjusted capitalization through various market cycles at the operating and holding company level. Negative rating pressure could result from outsized insurance or investment losses. Negative rating pressure also could result from a material decline in risk-adjusted capitalization.

The FSR has been downgraded to A (Excellent) from A+ (Superior) and the Long-Term ICRs downgraded to “a+” from “aa-” for the following subsidiaries of AXIS Capital Holdings Limited. The outlook of these ratings has been revised to stable from negative.


  • AXIS Specialty Limited

  • AXIS Re SE

  • AXIS Reinsurance Company

  • AXIS Specialty Europe SE

  • AXIS Surplus Insurance Company

  • AXIS Insurance Company

The following indicative Long-Term IRs under the current shelf registration have been downgraded, with the outlook revised to stable from negative:

AXIS Capital Holdings Limited—

— to “bbb+” from “a-” on senior unsecured debt

— to “bbb” from “bbb+” on subordinated debt

— to “bbb-” from “bbb” on preferred stock

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.


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