A.M. Best Co. reiterated the issuer credit ratings ("ICR") of
'bbb+' and all existing debt ratings of
AXIS Capital Holdings Limited
(
AXS
). Concurrently, the rating agency reiterated the financial
strength rating ("FSR") of A (Excellent) and ICR of 'a+' of AXIS
Specialty Limited, its operating unit. The outlook remains
positive.
The ratings affirmation came on the back of strong risk-adjusted
capitalization, continued better operational results and strong
enterprise risk management. AXIS Capital has remained focused on
delivering solid underwriting profitability along with a balanced
risk profile.
With an expanded book of business (short to medium-tail lines of
business with more emphasis on specialty risks including property,
marine and political risk, besides property catastrophe coverages)
and widespread global footprint, the company is well positioned
amidst a weak macro environment in casualty market.
AXIS Capital has substantial exposure to catastrophe losses. This,
along with weak casualty market condition dwarfs the positives.
Also, A.M. Best continues to keep vigilance transition time as the
higher management has been undergoing several changes over time.
Rating affirmations or upgrades from credit rating agencies play an
important part in retaining investor confidence in the stock as
well as maintaining creditworthiness in the market. On the other
hand, rating downgrade adversely affects the business, besides
increasing cost of future debt issuances. We believe strong
scorings with rating agencies will help it write more business
going forward.
Ratings could be revised upward if AXIS Capital continues to post
solid operational results along with maintaining solid
risk-adjusted capital levels.
Rating and/or outlook are subject to downgrade if the company fails
to deliver favorable operational results, incurs massive
catastrophe or investment losses, and experiences considerable
adverse loss reserve development erosion in risk-adjusted capital.
We retain our Neutral recommendation on AXIS Capital Holdings
Limited. The quantitative Zacks #3 Rank (short-term Hold rating)
for the company indicates no clear directional pressure on the
shares over the near term.
ACE Limited
(
ACE
), which closely competes with AXIS Capital, shares a Zacks #3
Rank.
AXIS CAP HLDGS (AXS): Free Stock Analysis
Report
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