Regarding the 25% reduction in reinsurance GWP, driven by casualty non-renewals, what are the trends in ceding commissions and reinsurance rates?

The reinsurance strategy is being executed as planned, maintaining a cautious posture in professional and liability due to unfair ceding commissions and risk outlook. The 25% Q2 reduction is largely due to North American portfolio composition with expiring professional/liability business. For the full year, the YTD reduction is 10%, which is where they expect to end the year. “The reinsurance strategy is being executed exactly as we had foretold in the fourth quarter. As you know, for the last several years, preceding Dan, who runs the segment today, Ann has articulated a cautious posture in respect to professional and liability.”

Is the 170 bps increase in insurance loss ratio due to higher loss experience or increased prudence/uncertainty reserves?

It's not from trend. The 1.7% increase is due to pricing changes beyond expectation, specifically property rates down 17% (E&S property down 22%), which necessitated more conservative loss picks. It's a combination of property and casualty, reflecting caution. “This is not from trend. Let me just be specific. We're talking about 1.7%. I want to go back. We signaled 1 point and change at year-end. In Q1, we said 1 point sounded about right, but we would come back to you if pricing changed beyond expectation. And that's exactly what we happened and seen in this quarter.”

How does AXIS manage MGA relationships in a challenging pricing environment, and are there any plans to curtail relationships?

AXIS has a highly disciplined approach to delegated business, with changes made since 2023. Growth in delegated business was flat YoY in the U.S. and up 5% in London, driven by specific partners like Pet, Surety, and ACS. They have strong governance (claims, underwriting, actuarial) and continuously monitor relationships, particularly as pricing worsens. “We have a highly disciplined approach to delegated. In the U.S., we reported flat growth year-over-year. At the company level, our London market business is not outsized relative to the participants in the London market vis-a-vis delegated. We had a 5% increase in our delegated portfolio in 2Q over 2Q.”

AXS

AXIS Capital (AXS) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Financials· Jul 29, 2026

Source: earnings call transcript

Executive summary

AXIS Capital Q2 FY26 — Strong Profitability Amidst Softening Market and Targeted Growth

AXIS Capital delivered a solid quarter with strong profitability and consistent book value growth, navigating a softening market by focusing on disciplined, targeted growth in specialty lines. The company proactively adjusted loss picks and reduced exposure in competitive areas like reinsurance casualty, while leveraging diversified distribution and new capabilities like ACS to drive profitable expansion.

Highlights

Generated 14.3% annualized operating return on equity.
Achieved 15% year-over-year growth in diluted book value per share, marking the 15th consecutive quarter of growth.
Gross written premiums increased by 6% over the prior year to $2.7 billion, driven by strength in insurance.
Insurance segment delivered a strong 90% combined ratio and $119 million in underwriting income.
Fee income from AXIS Capacity Solutions (ACS) reached $4 million in the quarter, with a full-year target of $17 million.

Concerns

Observed softening market conditions and increasing competition, with property rates down 17% in the quarter.
Absorbed $31 million in losses from the Middle East conflict, classified as a cat event.
Insurance underlying loss ratio increased by 1.7 points year-over-year to 54%, reflecting evolving market conditions and increased prudence.
Reinsurance gross written premiums declined by 25% in the quarter due to cycle management in casualty lines.

Guidance & targets

Category	Target	Timeline	Confidence
Fee income from AXIS Capacity Solutions (ACS)	$17 million medium materiality	FY26	High
Consolidated G&A ratio	11% medium materiality	FY26	High
Effective tax rate	19.2% low materiality	Foreseeable future	Medium
Share repurchases	Continue to be active high materiality	H2 FY26	High
Reinsurance gross written premiums	Double-digit declines medium materiality	Full year · FY26	High
Insurance attritional loss ratio	In this vicinity high materiality	Rest of FY26	Medium

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Insurance Strong quarter with significant premium generation and underwriting income, driven by expanded classes and ACS. Growth was disciplined, with cycle management in property and cautiousness in casualty lines. North American wholesale remains substantial, with retail showing upside potential. Core insurance portfolio growth: 2%ACS contribution to growth: 8%Expanded classes growth: 5%North American wholesale premiums: 68%North American retail premiums: 19%Delegated business: flat YoY, 13% of premiumsProperty rates: down 17%Liability growth: 8%Liability rates: up 7%US Excess Casualty shrunk: 4%US Excess Casualty rate change: 8%US excess casualty lower middle market growth: 22%Primary casualty shrunk YTD: 8%Primary casualty rate increase: 9%Professional growth: 16%Professional rate increase: 2%Cyber premiums reduced: 5%Cyber rate reductions: 7%	$2.2 billion	15%	—	90% combined ratio, $119 million underwriting income, 84.5% current accident year ex-CAT combined ratio
Reinsurance Executed targeted specialist reinsurance strategy, achieving 10th consecutive quarter of profitability. Significant reduction in premiums due to cycle management in professional and liability lines, particularly in North American portfolio expirations. New business heavily weighted towards short-tail lines. New business: $90 million (94% short-tail)Specialty short-tail lines: 51% of productionCurrent accident year loss ratio: 68.3%Liability rate change: 8.4% (down from 11.9% in Q2 FY25)Professional lines reduction: 58% of total reductionLiability lines reduction: 42% of total reduction	$440 million	-25%	—	94.5% combined ratio

AXS operating KPIs by quarter

AXS operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Mar 2026 Q1 FY26	This call Jun 2026 Q2 FY26	Change vs prior quarter
Combined ratio	89.8% First, an annualized return on average common equity of 17%, a combined ratio of 89.8% gross written premiums of $3.1 billion, up nearly 11% over the prior year, driven predominantly by growth in attractive short-tail lines with short tail lines now constituting 60% of our overall premiums. Source: earnings call transcript	93.1% The combined ratio was 93.1%. Source: earnings call transcript	+3.3 pt
Combined ratio Insurance	86.3% It was a strong quarter for our insurance business, highlighted by premium generations of $1.98 billion, underwriting income of $157 million, representing a 17% increase year-over-year and a combined ratio of 86.3%, a 0.4% improvement over the prior year. Source: earnings call transcript	90% It was a strong quarter for our Insurance business, highlighted by premium generation of $2.2 billion, which was up 15% over the prior year, underwriting income of $119 million, a 90% combined ratio and a current accident year ex-CAT combined ratio of 84.5%. Source: earnings call transcript	+3.7 pt
Combined ratio Reinsurance	92.7% We produced a combined ratio of 92.7% and underwriting income of $30 million and fee income of $20 million. Source: earnings call transcript	94.5% We generated $90 million in new business with 94% coming from short-tail lines, and we produced a 94.5% combined ratio. Source: earnings call transcript	+1.8 pt

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Product announcements

Product	Type	Timeline
AI and Technology Strategy	launch	—
Group COO Role	update	last quarter
How We Work program	update	3 years

Deals & partnerships

Ryan Specialty RAC Re transaction, supporting MGUs

The RAC Re transaction involved liability lines, contributing $21 million and a 10% rate change. AXIS is evaluating the continuance of MGUs supported by this partnership in year 2.

Risks & headwinds

Softening Market Conditions Q2 FY26

Property rates down 17%; E&S property rates down 22%; Cyber rates down 7%

Mitigation:Disciplined and targeted growth towards specialty short lines; cycle management; proactive loss pick adjustments; leaning into diversification of product, customer segments and deep specialty expertise.

Middle East Conflict Losses Q2 FY26 and ongoing

$31 million in Q2 FY26; industry losses $2.5 billion to $3 billion YTD

Mitigation:Close monitoring of exposures; underwriting controls among the most conservative; long-standing profitability in terrorism and marine war specialist classes; supporting long-standing insurers.

Severe Convective Storms (SCS) Q2 FY26 and ongoing

$49 million in Q2 FY26; $18 billion industry cat losses from SCS in Q2 FY26

Mitigation:Losses were well within expectations; portfolio built with premium adequacy; average net limit in low single-digit millions; well-balanced in peril and geographic mix; backed by cat XOL protection at $100 million per event.

Casualty Market Competitiveness Q2 FY26 and ongoing

Rate increases in casualty lines not where they need to be; US Excess Casualty shrunk 4%; Primary casualty shrunk 8% YTD

Mitigation:Highly selective and disciplined growth in casualty businesses; shrinking exposure in areas with insufficient rates; focusing on lower middle market and ACS where acceptable pricing is found.

A&H Employer Stop-Loss Business Pressure Q2 FY26 and ongoing

Increased competitive pressures

Mitigation:Cycle management and reduction of the reinsurance book.

What to watch in Q3 FY26

Insurance underlying loss ratio

Rest of FY26

Current 54% (up 1.7 points YoY)

Target Stability or further adjustment based on market conditions

Why it matters

Indicates the company's ability to manage pricing adequacy and loss trends in a softening market.

I would say what we've reported in our attritional loss ratio in the quarter is not a bad barometer of what we expect to see for the rest of the year.

Find out whether AXS delivers this. Inve re-checks your case every morning.

Q&A highlights

Was the 1.7pt increase in insurance loss ratio primarily due to property, or also casualty? Are casualty rates keeping pace with loss costs?

The loss ratio change is largely driven by property, but also continued caution in casualty. While some casualty units (lower middle market, ACS) found acceptable pricing, the larger excess casualty business shrunk due to rate pressure. The change reflects mix shift to short-tail and responsiveness to pricing landscape to maintain premium adequacy.

“The rate -- excuse me, the loss ratio change that we actioned in the quarter is driven in large part by property, but also our continued cautiousness and stance within casualty lines.”

asked by Andrew Kligerman · answered by Vincent Tizzio

2 min read 6 chapters

Detailed narrative

Strategic Focus and Market Conditions

AXIS continues to lean into attractive specialty markets, maintaining premium adequacy despite softening market conditions and increasing competition. The company's strategic focus on short-tail lines is evident, with 57% of total premiums derived from these lines in Q2 FY26, including 59% in insurance and 51% in reinsurance. This disciplined approach allows AXIS to target profitable growth while managing market pressures.

AXIS Capacity Solutions (ACS) Impact

The AXIS Capacity Solutions (ACS) capability is playing a significant role in the company's growth strategy. ACS enables AXIS to write greater gross lines in selected classes that meet premium adequacy standards, while effectively managing its net underwriting appetite. This initiative contributed to insurance growth and generated $4 million in fee income during Q2 FY26, with expectations to reach $17 million for the full year.

Catastrophe and Conflict Losses

During Q2 FY26, AXIS absorbed $49 million in losses from severe convective storms, which was within the company's modeled expectations. Additionally, the company reported $31 million in losses from the Middle East conflict, primarily impacting its terrorism and marine war businesses.

These conflict-related losses are classified as cat events and are believed to be part of a broader industry loss range of $2.5 billion to $3 billion year-to-date.

Underwriting Discipline and Portfolio Management

AXIS is actively cycle managing its portfolio in response to market changes. This includes a 25% reduction in reinsurance premiums in Q2 FY26, primarily in professional and liability lines, which were identified as areas of increased competition. In the insurance segment, property sessions were increased from 30% to 37% at mid-year renewals, demonstrating a proactive approach to protecting the balance sheet and managing exposures.

Talent and Technology Investment

The company is making strategic investments in talent and technology to support its long-term ambition. Recent hires include a Chief Commercial Officer and a Head of AI and Technology Strategy. Through its 'How We Work' program, AXIS is strengthening its operating foundation by simplifying processes, embedding agile methodologies, and piloting AI across underwriting, claims, and operations to translate transformation investments into measurable financial outcomes.

Loss Ratio Adjustments and Market Responsiveness

The insurance underlying loss ratio increased by 1.7 points year-over-year to 54%, reflecting accelerating softening in the property market, where rates were down 17% (E&S property down 22%), and a more competitive environment in casualty lines. Management emphasized that this adjustment is a prudent response to evolving market conditions, aimed at maintaining premium adequacy and ensuring sustainability and predictability in results.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.