Best’s News & Research Service - July 08, 2021 09:51 AM (EDT)
AM Best Affirms Credit Ratings of AXIS Capital Holdings Limited and Its Operating Subsidiaries
- July 08, 2021 09:51 AM (EDT)
Oldwick //BestWire// - AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a+” (Excellent) of the operating subsidiaries of AXIS Capital Holdings Limited (Pembroke, Bermuda), collectively referred to as AXIS. Additionally, AM Best has affirmed the Long-Term ICR of “bbb+” (Good) and the existing indicative Long-Term Issue Credit Ratings (Long-Term IR) of AXIS Capital Holdings Limited. The outlook of these Credit Ratings (ratings) is stable. (See below for a detailed listing of subsidiaries and indicative Long-Term IRs.)
The ratings reflect AXIS’ balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, favorable business profile and appropriate enterprise risk management (ERM) from the group’s risk profile.
AXIS maintains 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 strongest balance sheet assessment benefits from a favorable amount of financial flexibility at the holding company level and within the operating subsidiaries, while also reflecting capital management strategies that have included consistent common and preferred dividends, as well as share repurchases. Although reserves have consistently run off favorably, like most of the industry, AXIS has seen a decline in favorable reserve releases over the past five years.
AXIS’ operating performance is categorized as adequate by AM Best, given the level of volatility in the company’s underwriting results over the most recent five-year period. While AXIS has taken corrective measures to address and reverse these trends, the impact of these initiatives will take some time to materialize.
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. 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.
Further deterioration in the group’s underwriting performance and failure to execute improvement initiatives could result in negative rating action, as could a material decline in risk-adjusted capitalization.
The FSR of A (Excellent) and the Long-Term ICRs of “a+” (Excellent) with stable outlooks have been affirmed for the following subsidiaries of AXIS Capital Holdings Limited:
- 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 has been affirmed with stable outlooks:
AXIS Capital Holdings Limited—
— “bbb+”(Good) on senior unsecured debt
— “bbb” (Good) on subordinated debt
— “bbb-” (Good) 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 London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.