AM Best has affirmed the financial strength rating and long-term credit rating of Axis Capital Holdings Limited’s subsidiaries, which were assigned ratings of “A” (Excellent) and “a+” (Excellent), respectively.

The credit rating agency also affirmed the long-term issuer credit rating of ‘bbb+’ (good) and the indicative long-term issuer credit rating of the parent company. These ratings were affirmed for Axis Specialty Ltd, Axis Re SE, Axis Reinsurance Company, Axis Specialty Europe SE, Axis Surplus Insurance Company and Axis Insurance Company.

The credit rating agency stated that “the group’s balance sheet strength assessment is supported by financial flexibility at the holding company level and within operating subsidiaries, while also reflecting capital management strategies that have included consistent ordinary and preferred dividends, as well as share buybacks.”

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The company added that it had strengthened reserves in its accident book in late 2023 after conducting an assessment and review of claims for accident years from 2017 to 2022, which were affected by higher socio-economic inflation that was not expected.

“However, prior to 2023, Axis has reported favorable reserve developments for nine of the past 10 years, demonstrating the company’s adequate reserve controls. Leverage is higher than peers, but remains broadly in line with the company’s expectations,” according to AM Best.

AM Best rated the company’s operating performance as adequate because the company’s underwriting results over the past five years have been volatile. However, the company also noted that corrective measures implemented in the past two years to mitigate volatility, such as divesting property and casualty reinsurance, have resulted in more stable earnings.

“These changes have had a positive impact on profitability measures with the group’s loss and total ratios improving significantly,” AM Best said.

Axis’ business profile was also assessed as positive due to the way the group has consistently been part of the world’s top 50 reinsurers according to the credit rating agency as well as its surplus and surplus ratings.

“The group’s enterprise risk management is sophisticated and embedded across the organisation,” the credit rating agency said. “AM Best believes that Axis’ risk management is appropriate given its complex risk profile.”

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