AXIS CAPITAL HOLDINGS LTD (AXS) Q1 2026 Earnings Call Transcript

Good day, and welcome to the AXIS Capital First Quarter 2026 Earnings Call. Please note that today's event is being recorded. I would now like to turn the conference over to Clifford Gallant, Head of Investor Relations. Please go ahead, sir.

Thank you. Good morning, and welcome to our first quarter 2026 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 Vincent Tizzio, our President and Chief Executive Officer; and Matt Kirk, our Chief Financial Officer. I'd 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 supplement. And with that, I'll turn the call over to Vince.

Thank you, Cliff. Good morning, and thank you for joining our call. Let me begin by welcoming Matt Kirk in his first earnings call at AXIS as our Chief Financial Officer. Matt, we're delighted to have your partnership as we continue to steer AXIS to deliver sustained shareholder value. AXIS is off to a very strong start in 2026 as we continue to build on our positive performance. We are realizing significant benefits from enhancements we've made to our operating model and through our continued investments in products, distribution, technology and talent. We entered 2026 well positioned to benefit from all of the actions we've taken in recent years. Our portfolio remediation efforts are largely behind us. Our book of business is premium adequate, resilient and positioned for targeted profitable growth. We've made strides in widening our global distribution platform to reach new channels, segments and geographies and we believe we can further harvest our expanded classes while penetrating attractive markets where AXIS has historically been underrepresented. We've enhanced our customer value propositions and service model, earning recognition with our highest Net Promoter Scores since we began recording our surveys. And we've made substantial investments in innovations and operations that are helping fuel the momentum in our performance. I'll now share some of the headline metrics for the quarter. 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. Finally, we produced a 10.7% G&A ratio in the quarter, driven by efficiency gains and higher earned premium. Let's now move to our segment results, and we'll begin with Insurance. It was a strong quarter for our Insurance business, highlighted by gross written premiums 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. Gross written premiums in Insurance were up about 20% year-over-year, driven by continued execution in our core business, expanded classes and Access Capacity Solutions, which we will also refer to as ACS. This growth was reflected across three key areas. First, our underlying Insurance portfolio demonstrated modest growth. This reflected rate, retention and disciplined underwriting actions across our established businesses and is fully consistent with our return objectives. Second, our expanded business classes contributed high single-digit growth in the quarter. These units are expected to continue to scale, are largely short-tail and address customer segments in attractive markets. These include wholesale lower middle market, accident & health, pet insurance and specialty offerings such as surety, U.S. marine, specialty E&O, allied health to name just a few. The remainder of the growth came from Access Capacity Solutions, which draws on our experience and ability with third-party capital to develop and structure differentiated portfolios at scale, protecting access downside and creating new sources of revenue. In ACS, two-thirds of the premiums that we booked were in short-tail. We go to market through a variety of distribution channels that are broadly split between open brokerage and select delegated businesses. These structures allow us to access premium adequate business while enhancing our relevance with distribution partners and generating attractive returns and fee income with limited balance sheet volatility. Looking across the broader insurance landscape, we continue to navigate a series of micro markets driven by a changing pricing environment, sustained geopolitical uncertainty and technological disruption. We would observe that while pricing pressure is evident in several lines, terms, conditions, and limits are generally holding, and we are seeing premium adequacy across the vast majority of our business. Our average net policy limits remain largely unchanged. In markets facing the greatest competitive pressure, including property and cyber as two notable examples, we are seeing more compression. With respect to geopolitical disruption, certain lines of business have changing demand needs from our buying population, including lines such as marine war, energy and political violence to name three. In the Middle East, we continue to actively support our customers. While information is continuously developing, we are practicing vigilance and are very closely monitoring our exposures in the region. We are supporting our customers in managing emerging technological risks, including intensifying cyber threats brought on by AI, new data privacy concerns and the interconnected nature of operational and supply chain risks. These unfolding dynamics are creating new exposures and opportunities for us to provide specialty solutions. Taken together in this transformational risk environment, our customers are seeking tailored solutions to address their evolving needs. And as a specialist leader, AXIS is well positioned. Let me comment now on what we're observing across our lines of business. In Property, pricing was down 13% in the quarter. This downward pressure on pricing follows an eight-year period where we've had compounded rate increases of nearly 80%. On an absolute basis, the business we're putting on our books today continues to meet our underwriting return expectations for the class. Additionally, we maintain a diversified portfolio with an average net limit in the low single-digit millions that is well balanced in peril and geographic mix and is backed by Cat XL protection that attaches at $100 million per event. In Liability, rates grew 9% in the quarter, and growth was 11%, and we leaned into opportunistic growth in our international liability businesses, which helps provide diversification from the social inflation phenomenon in the U.S. casualty market, and we exhibited a disciplined stance in U.S. casualty. In fact, in U.S. Excess Casualty, total writings were down 2% with positive rate change of 12% ahead of trend. Primary casualty volume was down 28%, with positive rate change of 9%, again ahead of trend. In Professional, we are encouraged with rates turning positive especially across transactional liability and pockets of commercial D&O and financial institutions within our North American businesses. In the quarter, $45 million of our growth came from transactional liability, where rates were up 4%, and from E&O, where we are delivering on our risk-adjusted return expectations. Consistent with our past comments, we observed a flattening in the public company D&O market and remain cautious while selectively evaluating opportunities. Within Cyber, consistent with prior quarters, we maintain a cautious underwriting stance as the industry navigates a dynamic market impacted by both the rating environment and the exposure gained by AI. The market remains competitive and rates were down 6% in the quarter. We deployed capacity selectively between our cyber insurance and reinsurance platforms, managing our exposures and steering our capital towards the best returns. In the quarter, at a group level, our cyber growth was down 7%. In our Insurance portfolio, we were virtually flat with $6 million in premium growth. Please be reminded that we've been signaling caution with cyber for the past few years. For context, at year-end 2023, AXIS produced $649 million in cyber insurance production, representing 10.6% of our total Insurance portfolio. At year-end 2025, that number was $473 million, representing 6.6% of our portfolio. Nonetheless, if the rate environment and our view of the market improves, we will draw on our skilled team, capital and grow more fulsomely. Stepping back, we're clearly observing varying conditions across our lines of business. We have demonstrated our ability to strongly cycle manage with an approach that is highly responsive to shifts in the environment. By example, our discipline is evidenced in recent years by our actions in primary casualty, public D&O and cyber and most recently, by the caution we are exercising in our U.S. casualty and London market property lines. In parallel, we are reallocating capital into attractive markets through our expanded classes which over several years have grown from a nominal base into 17% of our total Insurance portfolio in the first quarter and nearly two-thirds of the business is short-tail. Let's now move on to our Reinsurance segment. In the quarter, we continued to drive selective growth in our specialty product set with short-tail lines growing from 50% to 61% as compared to the prior year period. We drove $1.1 billion in gross written premiums. This includes $180 million of new business with 70% coming from short-tail specialty lines. We produced a combined ratio of 92.7% and underwriting income of $30 million and fee income of $20 million. Leveraging our deep specialty expertise, we generated healthy growth in targeted lines like A&H and credit and surety where we leaned into strong relationships with existing cedents exhibiting the transactional excellence of our team. Consistent with our comments in past calls, we continue to actively manage the cycle in casualty lines. In the quarter, we reduced writings by over $130 million, or 24%, as the market remains competitive and risk-adjusted returns are not meeting our expectations. Switching gears. Within our How We Work program and specifically in relation to emerging technology and AI, I'll speak briefly to some of the advancements we are making. We have several objectives that ground our AI strategy: create efficiency, enhance productivity and ultimately deliver risk insight to help enable profitable growth. Our AI investments are contributing to expense ratio efficiency by redesigning and streamlining end-to-end workflows. This is shifting routine manual processing work to technology-enabled task transfer and automation in underwriting and operations while allowing us to hire purposefully into greater-value roles rather than scale headcount broadly. Underpinning our efforts is the advancement we are driving within our operations function. This includes our early progress in leveraging AI and data and analytics to enhance how submissions are triaged, analyzed and prepared, and we are focused on identifying opportunities to utilize AI to drive increased automation in how operations supports our underwriting and claims teams while, of course, further reducing manual work. I'll share some of the specific examples of how we're leveraging AI. We're seeing tangible productivity and efficiency gains through two examples. First, where we have introduced auto ingestion, the time to clear, register and route submissions to our underwriters has improved by over 65% in our initial rollout. Second, we've spoken with you in the past about our end-to-end next-generation underwriting platform. Progress continues. The platform has proven to reduce quote cycle time by up to 30% in the initial areas where we have deployed the new systems. Within Claims, we are progressing in tapping into the promise of AI. By example, we're building new functionality to enable our claims team to utilize a generative AI to process, by way of example, first notice of loss data to improve speed and ensure consistency and accuracy. As respect to our broader AI strategy, we see people at the core of our approach, not only in terms of responsible adoption, but in respect to innovation and imagination, and we are investing in upskilling our teams and recruiting AI-ready talent. Finally, I'll conclude my opening remarks by pointing to the same key takeaways that I shared with you during my year-end remarks. We believe AXIS is built for all seasons. We are positioned for continued profitable growth aligned to our strategic initiatives. We've instilled a disciplined underwriting culture that puts profits ahead of premiums. We've built a global multi-varied distribution platform that is grounded in customer centricity and we've grown a culture that prioritizes both performance and people. With that, I'll now pass the floor to Matt for his comments.

Thank you, Vince, and good morning, everyone. AXIS had a strong first quarter. So let me step you through our results. Our net income available to common shareholders was $247 million, or $3.29 per diluted common share, resulting in an annualized ROE of 17%. Our operating income was $257 million or $3.42 per diluted common share, resulting in an annualized operating ROE of 18%. Starting with our group underwriting highlights. Our gross written premiums of just over $3 billion were up 11% over the prior year quarter driven by accelerated growth initiatives in Insurance, which I will detail shortly. On a net basis, premiums were up 9%. As Vince mentioned, but worth repeating, we reported a combined ratio of 89.8%. Cat losses were $48 million, producing a cat loss ratio of 3.2%. Cat losses were largely driven from extreme winter weather in the U.S. and approximately one-third came from losses related to the conflict in the Middle East. We recorded a reserve release of $18 million with $15 million in Insurance and $3 million in Reinsurance for the quarter. We are maintaining the AXIS philosophy of being deliberate to acknowledge favorable trends while quickly assimilating the adverse. Our release continues to be from short-tail lines. As Vince mentioned, our consolidated G&A ratio for the quarter, including corporate, was 10.7% versus 11.9% a year ago as dollar spend on G&A was essentially flat year-over-year. We're pleased to have achieved the target level we presented to you two years ago. For the full year, we are still targeting 11%, and I would remind you that as we discussed on the fourth quarter call, we will continue to make attractive investments when opportunities arise and reward our high performers. I would note at this juncture, we incurred a below-the-line charge of $23 million for expense and restructuring actions taken during the quarter, largely in Reinsurance as well as for the planned departure of two members of our senior leadership. Underwriting fees were $23 million, including both Insurance-related and other income, and offsets the G&A. Today, this attractive stream of fee income largely stems from our ILS investments, but we expect a growing contribution from ACS. Insurance had a strong all-around quarter with gross written premiums of almost $2 billion, up 20%, driven by several factors. Let me provide you some detail. As Vince discussed, our underlying Insurance book grew at low single digits, while expanded products and initiatives accounted for growth in the high single-digit range. Additional growth of approximately 10 points came from our innovations of ACS. You are familiar with the Ryan deal, which is performing as expected. ACS also struck funds at Lloyd's or FA transactions accounting for approximately half of the 10 points. These are one-on-one incepting annual renewable transactions where we provide capacity to other syndicates at Lloyd's in a capital-efficient manner. We are gaining exposure to products, geographies and distributions that would not have been easily accessible to AXIS, adding to our portfolio diversification. Finally, ACS included the strategic use of reinsurance vehicles. These transactions enable us to align interest with our key distribution partners to expand our gross insurance lines, earn fee income while managing our net appetite and exposures through cessions to third-party vehicles. In the first quarter, we employed this capability primarily in the premium adequate property classes. Our net written premium growth of 24% was higher than our gross growth due to a number of factors, which will normalize as we progress through the year. These include business kept net, a change in our quota share for pet and some year-over-year quarterly timing distortions. Our underlying loss ratio in Insurance was 53.3%, a point higher than the prior quarter and in line with our forecast in the fourth quarter. We have not changed the range of our expectation for the year. Turning to Reinsurance. Gross written premiums were down 2%, and we grew 20% in short-tail lines led by credit and surety, which we do not expect to continue in future quarters, although we will remain actively engaged in evaluating new opportunities. Long-tail lines were down 24% as we continue to have a cautious stance in these areas. The cycle management in long-tail lines will persist as we progress through the year, and I will echo our fourth quarter comment that we expect Reinsurance premiums could be down double digits in 2026. The Reinsurance combined ratio was 92.7% for the quarter and in line with our expectations. Stepping back, what you are seeing this year is active portfolio repositioning at work. We are intentionally leaning further into Insurance and being more selective in Reinsurance. We are using third-party structures and vehicles to enhance our relevancy to clients and distribution partners to sustain top line momentum, protect our net exposure and generate fee income. This is disciplined cycle management in action. We are making these moves deliberately and decisively, and we remain confident in our ability to manage through the cycle profitably. Turning to investments and capital. Investment income was $185 million, similar to the level of the fourth quarter as our book yield remained largely flat. From a total portfolio return perspective, much of this was offset by unrealized losses in the period, a result of market fluctuations in rates and spreads and a headwind to book value per share growth in the quarter. We remain in a very strong financial position, allowing us to return capital to shareholders through dividends and share repurchases, while prioritizing organic growth opportunities. During the quarter, we returned $93 million to shareholders through dividends of $33 million and share repurchases of $60 million. At quarter-end, $53 million remained on our 2025 $400 million authorization. And during the quarter, management presented and the Board approved an additional $300 million authorization. Our operating cash flow in the quarter was a strong $590 million, up from $309 million a year ago, a reflection of our premium growth and expense discipline. I'm pleased to start my tenure at AXIS on such a strong foot. We will remain focused on managing our exposures to bring consistent and predictable earnings to shareholders. I look forward to working with you to create shareholder value for us all. Now we'd be happy to answer your questions.

And today's first question comes from Andrew Kligerman with TD Cowen.

First question is around reserve development. It looks like you had a favorable development of $15 million in Insurance, $3 million in Reinsurance. Some of your competitors have reported some unfavorable developments in the 2021 to 2024 underwriting years. Could you give any color on the developments from 2021 to 2024 and how that's playing out?

Andrew, Matt, thanks for the question. I think overall, we're comfortable with our loss reserve position. I mentioned our philosophy that we are going to be slow to recognize good news and very deliberate when we have concerns. So let me just talk about the quarter: $8 million almost all came from short-tail lines. I wouldn't get into the specific years right now, predominantly on the Insurance side with a few million on Reinsurance.

Andrew, this is Vince. Just to come over the top. We have discussed with you and others over the last several years the actions that led ultimately to the reserve charge that we took back in December of 2023. The assumption sets that we put forward, the exhaustive list of considerations that we had shared with you have continuously served us well. In our quarterly reviews, the number of tools that we've attached both from additional claims insights and enhanced actuarial insights remain ongoing and give us comfort — that is not to say that we've taken our eye off this with any passing relief, which is to say we've demonstrated a cautious underwriting stance in the casualty classes generally and across both platforms. We've spoken often about our caution in Reinsurance, and you've seen that reflected in the rate of growth, which has actually not occurred. And you've seen that deliberately here on the Insurance platform where in the quarter, both of our casualty platforms in the U.S. were downsized. So we have caution, but we're comfortable with our picks. And we're going to maintain an active stance in managing our reserve position.

Great. And my follow-up, Vince, in your remarks you mentioned that Property pricing was down 13%, but the business that you wrote met your return expectations. It sounds like some of your ACS business through Lloyd's was property as well. So I'm wondering, could you talk a little bit about your return expectations in the property business that you've written in Insurance, including the ACS stuff?

Andrew, I'll take the liberty to expand my answer more broadly as well, if you permit me, which is we have indicated over the past several years a mid-teens return on equity expectation in our portfolio. You know directly from our Investor Day, we grounded ourselves in measuring effectiveness and success against diluted book value per share growth. And so as you know, we're an underwriting-led organization. We will not grow for growth's sake. We acknowledge and we certainly are witnessing the repricing of the Property market, but you're speaking to AXIS. AXIS has had nearly 80% of compounded rate improvement over the last several years against a portfolio that has about 40% ex-cat in its overall makeup, a low single-million dollar limit profile, and the ability, with the support of our reinsurers importantly to note, to provide $100 million per event cover. So we're not living in a different reality. We are acknowledging that the order of returns is coming down. But at this point in time, it still meets our risk-adjusted returns. And I would just, as I said before, take the liberty to expand a bit, the growth that you're witnessing from AXIS is very much aligned to the fourth quarter remarks that Pete and I shared. And I'll remind you as you've been with us throughout this journey, some years ago, three years ago specifically, we signaled a transformation effort. This transformation effort was first focused on our balance sheet, bringing strength to our capital position, the reserve charge, the LPT, the additional actuarial insights, building capabilities in our claims and operations, bringing new talent and yes, expanding and creating new propositions, admittedly with very low start points. If you were to look at the North American build-out that Mike and his team have executed against our start points in classes like environmental, allied health, E&O generally, they are rather small businesses that are growing. And so their order of percentages feel substantial. But I'll remind you and all of our investors importantly, that our start point is coming from a very strong place in terms of mix. Our premium adequacy guidelines are explicit, our underwriting tools and the provision of tiering and many others, the coordination between claims and actuarial is very strong. And so I take the liberty of expanding my answer to your direct question on Property, but I'm happy to take additional questions.

And the next question comes from Rob Koh with Goldman Sachs.

So AXIS is generating really strong growth in the core franchise. And I think the company has a relatively substantial position in Lloyd's relative to peers. So I'm just curious what made the funds at Lloyd's opportunity so attractive at this time? And if we should be thinking about this as an opportunistic trade to capture healthy margins for 2026? Or will this be a more sustainable part of the portfolio going forward?

Rob, it's Matt. Let me cover that. First, not everyone is familiar with these types of transactions. In this case, we provide capacity in a structured format more like pro rata reinsurance to a syndicate at Lloyd's. These are one-on-one deals and they would not be repeated in the quarter. So you're seeing most of our premium, if not all, written upfront, roughly about $60 million, and that will earn across this year and next. I think what's important is these are sale transactions where AXIS is gaining exposure to products and geographies that we would not otherwise be easily accessible to. These products are niche specialty lines that require specialty underwriting expertise. We think these lines of business provide attractive profitability and they're really an efficient use of capital. What makes it a little unique on these transactions is that our downside is capped to our committed lines, and that's modest compared to our premium. So overall, something new to AXIS. I would say we're really selective. We did a handful of these transactions in the quarter. Those won't be available to us until this time next year, should we choose. They are standard in the industry, but we view this as just another mechanism to be able to tap into specialty expertise.

And Rob, this is Vince. Just coming over the top with a couple of comments. Firstly, AXIS enjoys an outperformance designation in our Lloyd's syndicate. We have a number of leading propositions. We also, in our global markets business, report our global businesses through Global Markets. And so in terms of sizing, we are a confident and a strong Lloyd's market participant. And as Matt detailed, this is just one of the strategic capabilities that we leaned into in the first quarter in support of our global strategy, with a lot of help from our active capacity teammates.

That's very helpful. And I just want to follow up on the underlying loss ratio. So it picked up 100 basis points in the quarter, which was in line with comments for 2026 expectations. How should we think about some of this new business coming on from funds at Lloyd's, but also the other items, and how might that affect the underlying loss ratio going forward?

Yes. I would say the point is a good barometer. We did guide that in Q4, and that's what we're seeing. And it will be around that for the year, and we will guide if that's different. But that's what we're seeing. Ryan Specialty, which we signed up for last year, was well within our estimations when we came up at that point. And these Lloyd's deals are no different. We are not taking different loss picks or different expectations. They need to meet our pricing hurdles. So I would say these should not change or would not change our overall estimation of where we're headed with our loss ratio.

And if Rob, if you look at the core components of the growth, of course our core portfolio and our expanded classes, that's nearly ten-ish percent of the growth in the quarter. Six-ish percent of it is short-tail. We have a very good composite of what our loss ratio performance is — we have the analytics to support that, the integrated underwriting model between claims and actuarial gives us confidence around that. But I think Matt is exactly right. I think what we guided to in the fourth quarter is where we'll end up at the end of 2026 in Insurance ex-cat.

And our next question comes from Elyse Greenspan with Wells Fargo.

My first question is just on the premium growth, away from ACS. Within Insurance, I think you were guiding mid- to high single digits. I think it came in at high single digits, maybe even a little bit above. So how do you see the core growth trending during the year relative to your prior guidance?

Elyse, it's Matt. I don't think we're going to change anything. We guided on our underlying portfolio to low single digits, and that's what we're seeing. And we said our expanded lines would take us to high single digits. So at least no change to that. I think what we've highlighted is the ACS capability, which we also said would take us into the double digits, and that's still the case. And obviously, we have the FAO transactions, which is new this quarter, so we wanted to give guidance on that. But on the underlying, no changes.

Elyse, obviously I agree with Matt. And we reserve, of course, the ability to come back in the course of the year if we see material changes against our assumption sets, not only in rate, but also in the widening of terms and conditions or expectations on limit grant that we find unreasonable. You have seen and we have evidence to you and others an ability to reshape our portfolios comprehensively, thoughtfully and with a high degree of execution — and I don't need to recount for you the number of portfolios that we've reshaped over the last three years. But I think that's exactly right. With what we see today, we like the words that we guided in the fourth quarter, prevailing at the end of the first quarter of this year.

And then my second question is on capital. Buybacks did slow in the quarter. Obviously, growth did pick up, but how are you balancing your view on growth versus potential share repurchases from here?

Yes, Elyse, great. And as you know, I'm passionate about capital allocation. You hit it with one of your comments there. We are still growing — we're comfortably growing and our capital is going to first support that. From a share repurchase perspective, let me just reframe: we came out of 2025 with a really great opportunity to do some block trades returning $888 million. That was somewhat unusual. I would say our returns will normalize this year, but let me just call out in the 2025 repurchase program, we have capacity left that we're using now. Management also brought to the Board and received authorization for another $300 million. And I would say the $60 million that you've seen in Q1, I would not assign that to be a run rate; we're going to be opportunistic, and you could see that tick up through the year. Finally, and this is just my personal view, where we're trading, I think, is a really great value opportunity to repurchase shares. And so it's something that we're going to obviously lean into once we first support our organic growth.

The next question is from Rowland Mayor with RBC.

Just to quickly follow up on Elyse's question on buybacks. Was there anything that restricted buybacks in January? I was a bit surprised to see that month close to zero. I guess, Matt, you commented not to be a run rate, but what February and March run rate would be a better way to think about it?

Rowland, I'm going to start and ask Matt to come on top. Look, if you think about our prepared remarks, we're navigating the company in fairly turbulent environments in all manners of what that word can note. We're going to continue to execute with the stated buyback strategy that we've had, opportunistic. Matt and I have brought a more strategic focus to the order of opportunism. And I think if you were to look for a run rate, we wouldn't have gone to our Board for authorization if we had conviction that we were fully valued or thought that we couldn't sustain the profitable growth journey that we've been on. But we're going to remain disciplined. We're going to remain opportunistic, but we're also going to be mindful of all the different levers that we've been pulling. And I think when Matt detailed what we did in 2025, it's a pretty good barometer of how we can execute, how we can mobilize — and yes, of course, I agree that it was outsized. Matt, I apologize. Go ahead.

No, nothing more to add, Rowland. I think we hit it right there. So stay tuned, and we'll remain opportunistic.

I appreciate that. I just wanted to pivot to the credit and surety reinsurance growth. It was up 50% year-over-year, and that sounded like several years of really strong growth there. Where is it growing now? And can you talk maybe a bit about the exposure in that business?

That's a great performing business for AXIS. It's historical, as you know. We have incredible teammates that have been leading that business. They are well tenured. Here, we simply grew share with existing cedents. This was structured transactions that we are very adept at. The good news is they come from cedents that we know and with whom we have historical loss experience and portfolio experience. So we're very comfortable. I would not look at what they produced in the first quarter as the run rate for the full year. This is an outsized level of growth in the quarter. This group will continue to grow in 2026, but simply not at this order of magnitude.

The next question is from Joshua Shanker with Bank of America.

Hope you're having a good day. I want to frame the question on capital return a little bit differently. In the budget for 2026, how much capital are you thinking you're going to need to deploy into the business in order to support the growth?

Yes. I mean, tough to give really tight guidance there. But I'd say round numbers, let's just call that about 50% supporting our growth.

Fifty percent of earnings generated this year will be needed to support the growth you're going to generate?

Yes. I mean we don't — that's broadly in line. Yes.

And looking out into the future, you do have many of your plans, obviously we don't know what market conditions are going to be a year from now. But with your partners, you have commitments that are not just on a one-year basis. Depending on market conditions, does that mean we should think over a three-year period that normally you're going to need to be putting about 50% of what you're generating into the business? Or in 2027, could it be that you won't grow anymore and you might be able to return 100% of capital?

Josh, I'd love to be more explicit for you. Unfortunately, we're not going to be able to. The number of factors that are accounted for in our capital strategy, you can only imagine. And so when you think about 2026 and you think about our capital position, we're using a lot of our extra capital to grow the business. You've seen where we're growing it, how we're growing it. We have capital that's being allocated to our investments in technology and other capabilities. What I think Matt said is a good benchmark for 2026. I don't think we want to get into the three-year plan and all of the component parts — we can unfold more of that as the year shows itself. But we're going to remain agile. We're going to remain shareholder focused and most importantly, bottom-line focused.

And the next question comes from Charles Lederer with BMO Capital Markets.

So the operating leverage in Insurance came through in the G&A ratio in a big way this quarter. Wondering if we just look at the absolute dollars there was flattish. Given some of the AI initiatives that you laid out, Vince, I'm assuming there's some increased tech spending. Just wondering what's offsetting that, if that's correct or if there's some other moving pieces in there?

Yes. Look, it's Matt. I think it's a good question. We are pleased with where the expense ratio came in at 10.7%, and we're guiding again to 11% for the year. You're absolutely right, expenses year-over-year are relatively flat, and that does show the benefit of all the investments we've made in technology, including AI, and where we're able to write a lot more high-quality business on the same expense base. So we've talked about it, and Vince has been talking about this for a couple of years — investing in our people, investing in our technology. We've been saying this is going to come through in our operational efficiency, and we're seeing it. And we feel good about our landing coming in around 11%. Vince, do you want to add anything?

Charlie, I think Matt covered it. The only thing I would say is we acknowledge the 1.3 point difference in G&A in the Insurance segment in 1Q. But we're continuing to invest. You should not really mistake the language we shared last year in the fourth quarter, we are not going to forsake investments in people, capability building in our claims organizations and operations, certainly the body of work that Ana is now leading as our COO. We're going to continue to invest. We're going to make certain that the business cases can be justified and that Matt will certainly run point on that. But I would look at us more as an 11% G&A company at the end of this year.

And then on the net to gross written premium ratios we saw some fairly larger moves in both Insurance even when excluding FAO and in Reinsurance. Can you break those down and is some of this permanent or is there some other one-time noise in there?

Yes. There's a lot of noise. And I think you're going to see particularly on Insurance the trend reverse to normalize. But let me just call out. What you're seeing in Q1 is our net written premium growth was 24% and higher than the 20% on gross, and that is somewhat unusual. Two things in the quarter: the FAO transactions, as you said, come net to us, so we have no reinsurance on that. That's roughly two points and we did retain more of our A&H business related to our pet business, reducing that quota share. So that's two items in the quarter. We also have some year-over-year noise — last year, in Q2, we reduced our quota shares on excess and lower middle market and that is falling through and is not comparable to this first quarter this year. So that is some year-over-year noise. You're going to get to the end of the year, and this will reverse and you'll see that pattern reverse completely. On the Reinsurance side, you're absolutely right. You're seeing large decreases in net written roughly 13 points, that compares to our gross down 2 points. That's quite intentional where we've guided that we're focused on reducing our writings in long-tail lines and we've also increased our cessions to our third-party capital providers. So that trend will continue throughout the rest of the year.

If I could just squeeze one last one in. We saw some industry loss estimates for the Baltimore bridge get updated. Are you guys fully reserved there? And how should we think about that?

It is a tragedy. So let me just give you a quick answer and then allow me a few minutes to talk about it a little further. So in the quarter, we didn't have to move our loss reserves. We were conservatively picked, and we did have a small amount of reinstatements that we're going to need to pay. I think the broader point here is when I was thinking about coming to AXIS, I was told our reserves are conservatively tested — and then in my first four or five months here, working with our actuarial team, I've seen that in action. And this is a perfect case where we really did not have any movements in our loss reserves. The increase in the expected industry loss was not a surprise to us, and it shows again that when it comes to loss picks, we're going to be conservative and really mine the books and only take good news when we have it. So overall, no movements in Baltimore bridge other than reinstatement premiums that we're pleased to report.

And our next question comes from Andre Giselle with Mizuho.

My first question is about top-line growth in Insurance. There are some investor concerns surrounding the accelerated top-line growth in Insurance in the face of some market softening and MGA competition. How would you address those concerns over the long-term profitability of newly added business?

Andre, Vince. Again, we place bottom line ahead of top line. I would encourage you to look at where we grew. If you look at our core business, that grew sub-5%. Our expanded classes, which we've detailed for you over the last couple of years, grew about 7%, and the balance came from ACS, where Matt really detailed the alignment of economic interests that we assure ourselves. I want to conclude by saying we will not grow for the sake of growing. We will grow guided by our two principles of diluted book value per share growth for the company and achieving risk-adjusted returns that meet our hurdle rates. This is exactly why I said to Elyse, if we think the market turns in a particular way that starts to prevent that, we will act in the same way we have over the many years in reshaping our portfolio. But the combination of investments that we've taken over the last three years gives us confidence at the moment that we can continue to grow our expanded classes, have moderate to nominal growth in our core portfolio and selective growth in our ACS portfolio.

And the next question comes from KBW; Meyer Shields is on the line.

Can you hear me? This is Scott on for Meyer. My question is on your prepared remarks on Cyber insurance. You talked about remaining cautious and you've pulled back cyber exposure over the last couple of quarters and years. Growth did pick up this quarter. So I'm wondering are you seeing more adequate pricing even though rates are down? And then, kind of a follow-up to that, with recent developments in AI, such as open-source models — does that change how you guys have approached underwriting Cyber in terms of terms and conditions? And do you think there's going to be a shift in the industry overall?

I would acknowledge that $6 million of growth in the Insurance segment is relatively flat when you think about the scale of the business. So we have a very cautious eye. And in the aggregate, our company downsized our cyber writings and you accurately accounted for the sizing of the business over the last couple of years. With specific reference to the impacts of Mythos and Anthropic, for us it is another example of the humility that we take to this class. The vulnerability in the security protocols of companies is facing yet another challenge. The ability for perpetrators to identify vulnerabilities without massive human capital, now enabled through AI tools, exacerbates and makes this challenge more difficult. That makes the situation more difficult for the middle market and small commercial concerns. You may recall from prior calls, AXIS and its underwriting focus has steered its attention to the large account segment, betting on the hygiene standards that we bring generally to the underwriting process of cyber in reliance on the financial wherewithal to have the said tools and capabilities that meet this emerging exposure. Equally, we have a partnership with a third party cybersecurity provider. We're a proud supporter of that partnership and we have a financial interest in that organization as well. They are helping us prosecute our middle market strategy. Importantly, they have capabilities at-risk diagnosis that extend beyond the underwriting process at the renewals. So we have surveillance abilities throughout the policy period. Net-net, AXIS has a cautious view — you can see that materially in the downsizing of our Reinsurance cyber portfolio. You can see that largely in our Insurance portfolio; I would not characterize $6 million as meaningful growth. And I would also point out we're broadly cautious around the risk/reward. So to answer the end part of your question, we think this class should be repriced. We think there's enough ingredients in the loss environment — there's enough reason for caution to be extended, limits management to be extended, all the ingredients that we think at AXIS we're executing. Hopefully that addresses your question.

Great. And then my second question is on the Middle East conflict. Matt talked about how about one-third of cat losses stemmed from the Middle East conflict. Has the conflict provided any opportunities in terms of rate increases for the lines affected? Or has the conflict caused you guys to be cautious with those risks?

I would say modest, but I would feel remiss if I didn't congratulate my underwriting teams out of London that have been completely all over it, and they're very noted practitioners in the marketplace. I'm very proud of how they have been navigating very uncertain times. So we've had selective and modest writings since the war was announced. We remain very interactive with our third-party consultants for vision on the ground in terms of our risk profile. We know exactly where our exposures are. We put up a provision of $15 million thoughtfully. We do expect, as time proceeds, some increase in that number. We don't think it's outsized with the available information we have today. But we're very encouraged by what we've been analyzing and reviewing and we think that what we've picked is a proper measurement. Matt, if you want to come over the top?

Yes. I would just say this was great for me to see the exposure management team at work. The moment this conflict picked up our team mobilized. We have a great understanding of our limits and our exposures. We came up with the $15 million based upon that, based upon notices we've received and based upon advisers we have on the ground. So $15 million is a round number. Could it increase, as Vince said? Sure, it could, but we feel very comfortable as we have a great understanding of our limited exposures.

And the next question comes from Andrew Anderson with Jefferies.

This is Charlie on for Andrew. My first question is on Insurance. How sensitive is the loss ratio there to further deterioration in Property pricing? And how does that compare to how you guys are thinking about loss trend and reserve adequacy on the long-tail side?

Charlie, how sensitive — I'm not going to stipulate the exact collars of rates that would change our view. But we know the thresholds that would change our view of risk and our underlying loss ratio assumptions. I'm not going to publish that here, but I think it's the right question that would give confidence to our investors that we're not indifferent to the achievement of the gross line without respect to our loss picks, the mix of business that's coming in or our net retention. If we need to act, you'll see it reflected as you've seen it in other classes — by way of memory, primary casualty, public D&O, delegated cyber — we will reshape those portfolios quickly and with earnestness. Hopefully that helps answer your question.

And then a quick follow-up. It looks like paid-to-incurred dropped a little bit relative to where it was trending in the past few quarters. Is there anything — would you attribute that mostly to timing or cat experience versus how much of that reflects changes in underlying claims development patterns?

We're well aware of the attention that this data point gets. We'll say the same thing now as when the ratio was trending higher: it's one data point of many that we look at. Held by itself, it's not a good metric. So you're seeing it improve on Insurance and you're seeing it improve on Reinsurance. That's good news, but it will continue to be volatile. And we, as an organization, look at a number of metrics to manage and understand these relationships.

I think Matt covered it. We've unpacked reasons why we think that ratio by itself is not very indicative of much. There are lots of reasons it could move. But we're comfortable with where it is balanced against our other indices, which we've outlined in the past and which involve claims expectancy, reserve adequacy and many other factors.

This concludes today's question-and-answer session. I would now like to turn the conference back over to Vince Tizzio, CEO, for any closing remarks.

Thank you, operator. Thank you all for your time and your questions today. We appreciate it. I want to extend sincere appreciation to all of our AXIS colleagues for their earnest effort, and to our shareholders and customers for your belief and conviction in our company — we earn your trust each day with confidence and responsibility. We look forward to reporting our progress at the second-quarter mark and look forward to chatting with all of you in the interim. Thank you.

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