Good day, and welcome to the First Quarter 2025 AXIS Capital Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Cliff Gallant, Investor Relations. Please go ahead.

Thank you. Good morning, and welcome to our first quarter 2025 conference call. Our earnings press release and financial supplement were issued last night. If you would like copies, please visit the Investor Information section of our website at axiscapital.com. We set aside an hour for today's call, which is also available as an audio webcast on our website. Joining me on today's call are Vince Tizzio, our President and CEO; and Pete Vogt, our CFO. In addition, I would like to remind everyone that the statements made during this call, including the question-and-answer session, which are not historical facts, may be forward-looking statements. Forward-looking statements involve risks, uncertainties and assumptions. Actual events or results may differ materially from those projected in the forward-looking statements due to a variety of factors, including the risk factors set forth in the company's most recent report on the Form 10-K or our quarterly report on Form 10-Q and other reports the company files with the SEC. This includes the additional risks identified in the cautionary note regarding the forward-looking statements in our earnings press release issued last night. We undertake no obligation to publicly update or revise any forward-looking statements. In addition, our non-GAAP financial measures may be discussed during this conference call. Reconciliations are included in our earnings press release and financial supplements. And with that, I'll turn the call over to Vince.

Thank you, Cliff. Good morning, and thank you for joining our call. 2025 is off to a strong start for AXIS, as we continue to build on the positive momentum and bottom line focus that has defined our performance over the past two years. As shared at our Investor Day a year ago, we have a strategy and portfolio designed to guard against volatility and seek profitable growth. Even today, as we navigate uncertainty brought on by trade disruption, geopolitical tensions and market volatility, AXIS is well positioned as a specialty underwriter that brings a strong value proposition to its distribution channels. Now more than ever before, our customers are adapting to a dynamic and highly complex risk environment, and AXIS is providing customized and innovative specialty solutions to help them. Our first quarter financial results evidence that we have developed a portfolio that consistently performs even against outsized catastrophe events and changing risk dynamics. Indeed, across our organization, we continue to act with pace and seize profitable growth opportunities while serving our customers' needs. I'll share some of the headline metrics for this reporting period. In the quarter, we produced an annualized operating return on equity of 19.2% and record diluted book value per common share of $66.48. Operating earnings per share of $3.17, represents a 23% increase over the prior year quarter and our highest ever quarterly operating earnings per share, an all-in combined ratio of 90.2%, delivered in a quarter in which natural catastrophe losses, including wildfires, approximated more than $55 billion. AXIS' share of the cat losses was less than 10 basis points. We generated record premiums of $2.8 billion, representing 5% growth, including $738 million in new premiums. Looking deeper, our insurance premiums grew 8% ex-primary casualty and cyber lines that we have mentioned as…

Thank you, Vince and good morning everyone. AXIS had a very strong start to the year. Our net income available to common shareholders was $187 million or $2.26 per diluted common share. And our operating income was $261 million or $3.17 per diluted common share. Producing a 19.2% annualized operating return on common equity. This drove our book value per diluted common share to $66.48 at March 31, an increase of 16.4% over the past 12 months. Let me give you some consolidated company underwriting highlights. Our gross premiums written of $2.8 billion were up 5.3% over the prior year quarter. And we continue to see attractive opportunities across our businesses. Our combined ratio was an excellent 90.2%, despite the California wildfires. And our accident year loss ratio ex-CAT and weather was 56.3%, similar to the prior-year quarter. CAT losses were just $49 million, producing a CAT loss ratio of 3.7%. CAT losses were primarily driven by California wildfires. I'd add that the nature of these losses, were not concentrated in commercial lines but predominantly in personal lines where we are much less exposed. We adhere to our philosophy of wanting to see sustained positive momentum before releasing reserves and we recorded a release of $18 million from the short tail lines with $14 million in insurance, and $4 million in reinsurance. Our consolidated G&A expense ratio including corporate, was 11.9%, down from 13% a year ago. We remain on track to achieve our better than 11% target for 2026. Now let's move on and discuss our segment results, in more detail. Insurance had a strong quarter. Gross premiums written were $1.7 billion, an increase of 5% compared to the prior year quarter. As Vince mentioned, growth was just over 8% excluding the remediation in cyber, which will continue into…

We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Andrew Kligerman with TD Securities. Please go ahead.

Hey. Good morning. So I guess the first question is, Vince, you talked about -- I believe you were saying pricing was off about 7% in property across seven divisions. And I'm curious, is -- are we at kind of early innings of pricing reductions? Where do you see pricing going from here in the property lines? It seemed like it was creeping up and then this quarter, pricing really came down hard in property. So maybe a little color on where we're going across the board in property.

Good morning, Andrew. Thanks for the question. In the quarter, just as I said, we were off negative 7.1%. I think that there's a couple of phenomenons to account for. This is much about a geographic performance of rate as much as anything else. Importantly, the construct of our portfolio is global. Secondly, as I indicated, our term condition and limit profile remains largely unchanged, largely unchanged. So when you speak about rate, you have to understand that this is an environment where we have changing TIVs we have a more competitive London market than in the United States. And so I think this is more directed in our Global Market business at the moment, where we're seeing a more precipitous rate change. Within our predominant business in the US, our E&S wholesale business, we're seeing rate moderation to be sure, but not in the same order of magnitude. In terms of where we go from here, I believe that the events of the first quarter, as I estimated more than $55 billion is an important reminder that notwithstanding, the premium adequacy that AXIS enjoys, we're going to continue to make certain that we're cycle managing that business, that the business we retain and attract is meeting our risk-adjusted returns. In that important respect, we feel very good about the outcome globally.

Okay. And Vince, premium, I guess, net-written premium constant currency was up 3%. But I believe either it was you or Pete on the earlier comments, you talked about ex some unusual items, it would have been up closer to 8%. And you also mentioned 21% increase in North America submissions. So what I'm getting at is, how do you see net written premium growth through the year? Can you do upper single-digit? Is that something that's viable? I'm not necessarily asking for guidance, but do you feel like that's something realistic to expect?

Yes. I believe our view is, yes. It is reasonable to expect. Pete detailed, what I would describe as exceptions in this quarter relating to two specific products and our normal run rate, excluding that, we feel comfortable with mid- to high single-digit, net written premium growth for the balance of 2025. And you pointed to submission growth. I would tell you that we feel it's quite robust, quite robust. We represented more than 29% submission increase. This is a robust market. It is highly selective, of course. It is targeted, but that has been our underwriting approach these past several years. Pete, I don't know if you'd like to add additional color.

Yes. The only color I'd add is we did have -- we did buy some extra protection, sideways protection in our cyber book of business in this first quarter. So that's going to provide us with more XOL protection in case an event happens. And all that got pushed through as ceded written in the quarter. So that does – that did cause a bit of an anomaly. And then obviously, I talked a little bit about the pet where we're now sharing more business with a bigger quota share. But in our other areas, Andrew, I'd point out, we mentioned that our cyber quota share, we actually reduced that. So we're keeping more of those writings. Last year, we reduced our quota share on our pro lines. Actually, this 4/1, we renewed our liability quota share. We reduced that a bit. So now we're keeping more of our own liability cooking. So I would even point to the net earned premium growth of 10% in insurance in the quarter and say we really feel good about being able to grow the net written and the net earned as we actually renew some of our treaties, we're keeping more of a very premium adequate book of business.

That was great. Maybe if I could just squeak one last one in. Prior year developments looked great, particularly in insurance. Pete, in your comments, you talked about being “more cautious” in your loss picks. Should I read into that, that the casualty development is good and you're just not -- you're not taking any initiative to release reserves because it's casualty and the environment is unpredictable, but things are trending the way you'd like to see them trend in casualty?

Andrew, this is Vince. Pete's comments were directed to our reinsurance business. More broadly, though, your question cuts across our entire company. So first, we feel very good about our reserve positions in total. We feel very good about our position of reserves and liability. As Pete indicated, in our reinsurance business, not loss driven, we brought more caution across our loss ratios, including our specialty lines, which have been a targeted area of growth, and our team is executing well against its stated product strategies. And so as Pete indicated expressly in his opening remarks, this is more caution driven given the macro environment, the uncertainty of the environment related in that business.

And I guess I'd add on to that, Vince. My comments were very much directed at the first quarter ex cat loss ratio in reinsurance. And that is where we actually put some more caution in our specialty lines, our short-tail specialty lines and move those loss picks up from the run rate we had seen coming out of 2024. On the liability side, Andrew, the loss picks are consistent with where we were coming out of 2024. We feel very comfortable about that book of business. So the casualty books, we actually let -- continued on a very consistent loss ratio from where we left 2024, but we did move up the short-tail specialty lines in an abundance of caution given the current environment. And so that would be our A&H and our agriculture book of business where we actually just moved up some loss picks in the quarter.

Very helpful. Thank you so much.

You're welcome.

The next question is from Christian Getzoff with Wells Fargo. Please go ahead.

Hi. Good morning. I had a question on your expense ratio in the quarter. It was a nice drop off year-over-year. And I was just wondering if there's anything particular one-off in the specific quarter, just given the Q1 tends to be typically one of the highest expense ratio, just given incentive comp? And how should we think about the progression from here down to the sub-11% for the full year?

This is Pete. I'll take that. Actually, there was nothing really one-off in the quarter that -- so I would suggest the 11.9% actual is almost a normalized. And so 11.9% is where we are starting the year. We -- as you note, our first quarter does tend to be the highest quarter, and I would expect that again to happen this calendar year. So driven very much by -- you saw actual dollars of expense were down year-over-year. So we continue to lean into how we work. as a way to actually continue to process business at a lower cost. And again, net earned premium was up, again, dollars down. So that expense leverage is what we've been pushing at as an entire organization. And I've got to give my colleagues around the world credit for really looking at how we process differently in this new age to bring our expense ratio under control.

Got it. And then for my second question, the reinsurance underlying loss ratio, the 68.4%, is that kind of a good run rate to think about for the balance of the year, just given your conservatism around the line? Or was there anything that was maybe like elevating the underlying loss ratio in the quarter, maybe like aviation losses or something along those lines that we should be mindful of?

Yeah. This is Pete. I'll take that. I think as we look in today's environment, what we do with the first quarter is a decent view of a run rate for the year for reinsurance. I would point out because we have gotten questions about aviation, we were not -- we did not have any significant aviation losses in the quarter, I would say. So that wasn't impacting loss ratio in either reinsurance or insurance.

Great. Thank you.

Our next question is from Meyer Shields with KBW. Please go ahead.

Great. First question, I guess would be we had decent growth in fiber and political -- I'm sorry credit and political risk in insurance. How should we think about the exposure of that to that specific line to tariffs?

Meyer, good morning, it's Vince. Firstly we have a very strong team. This is a historical business that has been Quite consistent in profit generation strong brand identity. More specifically, the growth from our insurance business and this product that really came from our surety business. That was the principal contribution of the increase of growth in the quarter. Obviously, the tenor of our normal structured credit offerings accounts for a rigorous underwriting approach that accounts for or takes into consideration. Economic outlooks, certainly the obligor and so we feel very good about the leadership of that business. We feel very good about the diversity of our product mix in that business but in the quarter discrete this is more about our surety growth that we enjoyed.

Okay that's helpful. And then on the reinsurance side, you talked a little bit about primary motor rates in the U.K. decelerating post-Ogden. Is that an issue that should impact written premium over the balance of the year as well?

Yes, I'll take that. This is Pete. A lot of that business does renew in the first I'll call it three to four months of the year and so that we don't necessarily see that coming back if that's your question Mayer for the rest of the year. It got very competitive at the 11s% after the Ogden rate increased. For us that was a lot of XOL type treaties out of the UK and so that is going to be the impact for the year and I don't anticipate or we don't anticipate a movement where it could come back to us.

Okay, perfect. Thanks so much.

Thank you.

The next question is from Andrew Andersen with Jefferies. Please go ahead.

Hey good morning. On U.S. primary casualty and excess casualty, still pretty good rate, but I think it was down a bit quarter-over-quarter. Was that kind of reflective of business mix or perhaps a willingness to compete a bit more?

Andrew good morning. This is Vince. I think that the primary casualty story is this is the final quarter of very strong remediation and just kudos to our E&S primary team and leader of North America generally. That was really what drove the final quarter the final mix that we were reshaping and excess casualty we're pleased with the double-digit. There is some mixed influence, of course, but we're confident in what we delivered in the quarter both in the dimension of rate change but equally and importantly, the growth aspiration we have in that very profitable business.

Thanks. And then just on professional lines I think it was up 9% in the quarter after kind of being flattish for the past few periods we've been hearing some commentary about increased competition on liability claims made which is what I would think this is so could you maybe just talk about the growth in that line?

It's a broad SC class reporting class professional so let me let me unpack that. Firstly, this is not a function of public D&O growth as a company we remain unfavored by the rate environment despite the increasing lost landscape in public D&O. Additionally, we've invested a number of classes. So, if you think about allied health if you think about our lower middle market private company D&O efforts these are key contributors to the growth. And further I would also note internationally we had some increase in TL transactional liability, which also formed I think the third prong of the chief growth we evidenced in the professional lines this quarter.

Thank you.

You're welcome.

[Operator Instructions] The next question is from Charlie Lederer with BMO. Please go ahead.

Hey, thanks. I guess, my first question, I'm wondering given some of the moving pieces you guys called out in insurance whether we should expect the underlying loss ratio and the acquisition cost ratio to move here from mix just as the remediation impact and liability goes away and maybe property growth continues to moderate? Thanks.

Yeah, I'll take that Charlie. This is Pete. I would think for the rest of the year while we don't give guidance, the loss for the ex-CAT loss ratio, I'll call it an insurance will probably still be in that 52% to 53% range. I mean the mix is not going to change materially through the rest of the year. It may change by a couple points, but I would still think that we'll call it 52.5%-plus or minus range for the remainder of the year.

Got it. Thanks, and Vince you made some interesting comments on tariffs impacting lost costs and top line. Can you unpack in which lines you think AXIS would feel that and there have been a lot of headlines in the last couple of days about import pull forwards. Is there growth opportunity in the short-term because of that maybe in marine and trade credit?

But we have a diverse product portfolio that that's global and in my prepared remarks, I certainly pointed to how we're assessing the potential impact of tariffs as; a, if they're sustained and executed. So we pointed to property, we pointed to cargo explicitly. We did not point to auto physical damages. That is not a material portfolio for the AXIS organization. We equally as you infer in the latter part of your question do see opportunities that continue to emerge and we do think that we're well-positioned geographically with the product breadth that we have to meet that potential need as well. And so I think we have a very prudent approach and how we're accounting for tariffs. We certainly don't have a crystal ball on the outcome. It remains highly fluid, but our organization is agile and being responsive to a number of scenarios including the potential impact of lost costs in our company.

Thanks. And one last one I don't know if you guys call this out, the pet insurance dynamic impacting the net to gross premium ratio in insurance, should that impact last throughout the year or does that lap at some point in the next few quarters? Thanks.

Hey, Charlie this is Pete. That really started up in the second half of last year, so it'll really impact more the first half of the year than the entire year.

Thank you.

The next question is from Josh Shanker with Bank of America. Please go ahead.

Yeah. Thank you for taking my question. Good morning. Looking at the buyback, you guys did $440 million this quarter, which was about 10%, 11% of the daily volume in the stock. I'm just trying to understand the dynamic of how that's achieved. Also I know you knew you had some capital being freed up from the Enstar deal, but I mean this pace obviously you like your shares here but it's not sustainable. Can you, sort of, frame how we should think about the first quarter's buyback, and what that means for the remainder of the year?

Yeah. Hi Josh, this is Pete. I'll handle that. I'd remind you that one of the things we talk about, always talk about when we think about buybacks is, we're going to do it opportunistically based upon where we think we're trading at the current moment. In the quarter, opportunistically we had a large shareholder come to us. And so, $400 million of the $440 million was actually done on two transactions that were not done on open market activity. That's how we were able to actually execute $400 million of the $440 million without dealing with the necessary as you point out trying to get that done and push it through the market. For the remainder of the year, we've got $160 million left in our authorization. I'll tell you we're going to continue to be opportunistic as we deploy that $160 million. As I mentioned in my prepared remarks, we still think our shares are undervalued, so we do anticipate some buyback during the year, but we don't have a set plan in place that I would actually articulate to you.

Okay. I mean, not I'm not quibbling. It just is I think the Q1 says open market but it totally makes sense that they weren't done in the open. I mean look at the statement of cash flows there for what it's worth, but it totally makes sense. And in terms of the capital freed by the NSTAR deal is this sort of already contemplated or is this incremental to how you view the capital return potential for the year?

Yeah, hey Josh, again, the LPT transaction completed, so we're really excited about that. We did contemplate the impact of that when we went to the board and asked for the $400 million authorization back in February. We're already seeing the benefit on our balance sheet at year end because we'd already moved a lot of fixed income assets into cash and so the capital charges associated with the asset side were already coming down. And so I'd say already somewhat contemplated in what we've asked the board for.

All right, fantastic, thank you for the information.

You're welcome, Josh.

This concludes our question and answer session. I would like to turn the conference back over to Vince Tizzio for any closing remarks.

Thank you all for joining today's call. I again express my deep appreciation to our AXIS teammates and to our value trading partners and customers. This completes our first quarter call and we look forward to reporting our continued progress as we pursue our specialty ambition. Thank you.

The conference has concluded. Thank you for attending today's presentation. You may now disconnect.