New York-based Standard & Poor's Ratings Services announced yesterday that it has raised credit and debt ratings for Bermuda-based AXIS Capital and also upped the financial strength ratings of its insurance subsidiaries to "A-plus" from "A."
S&P analyst Laline Carvalho said the upgrade "reflects our view that AXIS has consistently outperformed most of its peers, with strong operating results since its inception in 2001."
She said in a statement, "We believe AXIS' earnings quality is also strong, as demonstrated by a history of moderate earnings volatility relative to peers, even including large loss years such as 2005 and 2008."
In addition to raising the financial strength ratings of the insurance operations, S&P said it raised its counterparty credit and senior unsecured debt ratings of Bermuda-based holding company AXIS Capital Holdings Ltd. to "A-minus" from "triple-B-plus."
The outlook for all the ratings is stable, S&P said, noting that other rating factors supporting the upgrade are AXIS' strong competitive position, seasoned management team, very strong capital adequacy, strong liquidity and significant enhancements to the group's enterprise risk management framework, which S&P views as strong.
"We also believe AXIS' investment portfolio has relatively limited downside risk given the short-term and liquid nature of the investment portfolio, as well as modest exposure to subprime assets," S&P said.
S&P said it views AXIS' exposure to potential losses from directors and officers and errors and omissions liability coverages in its professional liability portfolio as "modest relative to the group's equity base."
On the downside, S&P said factors partially offsetting the strengths it outlines are AXIS' exposure to severity-related risks, given the short-tail nature of its business portfolio, and a business model that is moderately dependent on the use of reinsurance protection on the insurance side of the business.
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