AM Best has affirmed the financial strength rating of A (Excellent) and the long-term issuer credit ratings of “a+” (Excellent) of the operating subsidiaries of Bermudian-based Axis Capital Holdings Ltd.

Additionally, AM Best has affirmed the long-term ICR of “bbb+” (Good) and the indicative long-term issue credit ratings of the parent company.

The outlook of these credit ratings is stable.

The ratings reflect Axis’ balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, favourable business profile and appropriate enterprise risk management from the group’s risk profile.

Axis maintains the strongest levels of risk-adjusted capitalisation, as measured by Best’s capital adequacy ratio, which places its balance sheet strength in the strongest category.

The ratings agency said: “The group’s balance sheet strength assessment is supported by 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.

“During late 2023, Axis strengthened reserves on its casualty book after having evaluated and reviewed claims for accident years 2017 to 2022. Claims experiences for these years were impacted by unanticipated higher social and economic inflation.

“However, prior to 2023, Axis had reported favourable reserve development for about nine of the past ten years, testament to the company’s reserving controls efficiency. Financial leverage is elevated when compared with its peers but remains largely in line with the company’s expectations.

“Axis’ operating performance is assessed as adequate, as its underwriting results over the recent five-year period have been volatile. However, corrective measures implemented over the past two years to mitigate volatility such as exiting the property-catastrophe reinsurance business has resulted in more-stable earnings. These changes have favourably impacted profitably measures with the group’s loss and combined ratios improving significantly.

“AM Best assesses Axis’ business profile as favourable, with the group consistently ranking in AM Best’s Global Reinsurance 50 largest reinsurance enterprises, and in AM Best’s excess and surplus ranking.

“Despite some recent changes to its business mix, the group still retains a well-diversified profile as a specialty underwriter of complex risks with a significant presence in the Lloyd’s market.

“The group’s ERM is sophisticated and embedded throughout the organisation. AM Best believes that Axis’ risk management is appropriate given its complex risk profile.”

The FSR of A (Excellent) and the long-term ICRs of “a+” (Excellent) have been affirmed with stable outlooks for the following subsidiaries: Axis Specialty Ltd, Axis Re SE, Axis Reinsurance Company, Axis Specialty Europe SE, Axis Surplus Insurance Company, and Axis Insurance Company.