OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa-” of the operating subsidiaries of AXIS Capital Holdings Limited (Pembroke, Bermuda) (collectively referred to as AXIS). Additionally, A.M. Best has revised the outlook to negative from stable and affirmed the Long-Term ICR of “a-” and the existing Long-Term Issue Credit Ratings (Long-Term IR) of AXIS Capital Holdings Limited. (See below for a detailed listing of subsidiaries and Long-Term IRs.)
The ratings reflect AXIS’ balance sheet strength, which A.M. Best categorizes as strongest, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management (ERM) from the group’s risk profile.
The revised outlooks are based on unfavorable trends in the group’s operating performance, particularly from AXIS’ insurance segment. Historically, AXIS’ operating performance ranks among the top of its peer group; however, in recent years these results have trended toward the middle of its cohort. The group’s combined ratio run rate has trended higher, giving AXIS a smaller cushion to absorb shock-losses. Additionally, AXIS’ Accident & Health segment’s organic build-out has contributed to a higher expense ratio and the group is yet to fully realize the benefit. While AXIS has taken measures to address these trends, the current challenging market conditions could impede its effectiveness.
AXIS’ levels of risk-adjusted capitalization remain in the strongest category, even under stress scenarios. The group’s balance sheet assessment also benefits from a favorable amount of financial flexibility and fungibility of capital within operating subsidiaries, but also reflects capital management strategies that have involved consistent common and preferred dividends, as well as share repurchases. AXIS’ financial leverage metrics are elevated when compared with prior years, but this is a largely temporary position due to the timing of refinancing maturing senior notes.
A.M. Best views AXIS’ business profile as favorable and the group consistently ranks in the top half of A.M. Best’s Global Reinsurance Top 50 while also maintaining a well-regarded profile as a specialty writer capable of underwriting complex risks. The group’s ERM is sophisticated and embedded throughout the organization. A.M. Best believes that AXIS’ risk management is appropriate given its complex risk profile.
The FSR of A+ (Superior) and the Long-Term ICR of "aa-" have been affirmed with the outlooks revised to negative from stable 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 Long-Term IRs have been affirmed with the outlooks revised to negative from stable:
AXIS Capital Holdings Limited—
- “bbb” on $400 million 6.875% non-cumulative preferred shares, Series C
- “bbb” on $225 million 5.5% non-cumulative preferred shares, Series D
AXIS Specialty Finance LLC (guaranteed by AXIS Capital Holdings Limited)—
- “a-” on $500 million 5.875% senior unsecured notes, due 2020
The following indicative Long-Term IRs under the current shelf registration have been affirmed with the outlooks revised to negative from stable:
AXIS Capital Holdings Limited—
- “a-” on senior unsecured debt
- “bbb+ on subordinated debt
- “bbb” on preferred stock
This press release relates to Credit Ratings that have been published on A.M. 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 A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
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