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Axis upbeat about PartnerRe merger in face of lower profit

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Axis upbeat about PartnerRe merger in face of lower profit

Axis Capital Holdings Ltd. on Tuesday reported fourth-quarter net income of $163.7 million, off 4.6% from the prior-year period, as the company stressed market discipline in a difficult environment and touted the advantages of its announced merger with PartnerRe Ltd.

Net premiums written declined 14.3% to $555.0 million as investment income declined 31% to $78.6 million.

On a call with analysts Wednesday, Axis President and CEO Albert Benchimol described a “difficult trading environment” in which the company “focused on consolidating our position” instead of looking to expand further, while referring to the “positive contribution to income” by the company's accident and health business.

Primary insurance markets continued to see a “leveling” of pricing overall, Mr. Benchimol said, with the average across all lines off 1% compared with an increase of 1% across lines in fourth quarter 2013.

Fourth-quarter revenues declined 3.9% to $1.04 billion, while the company's fourth-quarter combined ratio improved to 91.5% from 92.5% in the year-ago period.

During the analyst call, Mr. Benchimol stressed the advantages of the proposed merger of Axis and PartnerRe, saying, “This merger takes our franchise to the next level. It should allow us to generate and convert on more opportunities” than Axis could alone as a midsize company.

“We found a combination that is greater than the sum of its parts,” Mr. Benchimol said.

The deal is expected to close in the second half of this year.

For the full year 2014, net income rose 12.7% to $770.7 million. Net premiums written slipped 0.5% to $3.91 billion, while investment income fell 16.3% to $342.8 million. The company's full-year combined ratio deteriorated to 91.6% from 91.0% in 2013.

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