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KBW Issues A Warning Premium Growth For AXIS Shareholders

KBW Issues A Warning Premium Growth For AXIS Shareholders

KBW Issues A Warning Premium Growth For AXIS Shareholders

KBW Issues A Warning Premium Growth For AXIS Shareholders

Keefe, Bruyette & Woods (KBW) analysts have cautioned that the rise in reinsurance premiums could leave AXIS Capital shareholders dissatisfied in the coming year.

ALSO, READ KBW Forecasts Decline In Specialty Reinsurer Loss Ratios

The company announced in a fresh, eleven-page note that it has lowered its target price from $63 to $60 and downgraded the company’s shares from “outperform” to “market perform.” It said that the price drop reflected expected limited improvement in the core insurance combined ratio and perhaps impacted premium growth for reinsurance in 2023.

KBW wrote: “We expect Reinsurance premium growth during the upcoming January 1 reinsurance renewals and quarterly core underwriting margins to disappoint investors over the course of 2023, likely limiting book value growth and multiple expansion relative to reinsurers still writing catastrophe reinsurance.”

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KBW Issues A Warning Premium Growth For AXIS Shareholders

It added: “We think [the company] faces a competitive disadvantage, as several competitors leverage their still-available catastrophe capacity (which is in very short supply) to obtain bigger shares of other reinsurance lines at better terms.”

The firm also said that it expected to see limited core insurance combined ratio improvement next year, which it said would reflect rising reinsurance rates and falling ceding commissions. It also observed that AXIS Capital’s withdrawal from property and catastrophe reinsurance implied smaller reserve releases, given that such reserves had been a relatively consistent source of favorable development.

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Earlier this year, AXIS Re said it was shifting its focus to become a specialist reinsurer with a commitment to casualty, specialty, A&H, and credit lines.

The firm also announced that Steve Arora, current CEO, is to leave and be succeeded by Ann Haugh. The current moves form part of a multi-year plan from the company to increase profitability, lower volatility and strengthen its portfolio.

Other actions taken by the firm include the appointments of Vince Tizzio as CEO of specialty insurance and reinsurance, and Linda Ventresca as head of digital, exiting the property reinsurance business, reducing exposure to catastrophe risk, and employing a new global CUO.


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