Pricing continued to firm through the quarter but rate changes are gradual, noted Charman

Axis Capital has reported net income for the first quarter of 2012 of $122m, compared to a net loss of $384m in the first quarter of 2011, which was adversely impacted by $574m of net after-tax losses from the Japanese earthquake and tsunami, New Zealand II and Australian loss events.

Operating income for the first quarter of 2012 was $136m, compared with an operating loss of $399m for Q1 2011. Gross written premiums decreased by 2% to $1.5bn.

The combined ratio for the quarter was 94.8%, compared to 161.3% for the same quarter a year ago. There were no significant catastrophe losses during Q1 2012.

“The exit from the bottom of the property and casualty pricing cycle maintained its steady progress,” said Axis president and chief executive John Charman. “Pricing continued to firm through the quarter and into April renewals, particularly in catastrophe exposed classes.

“For lines of business where our global franchise maintains a meaningful participation, this ‘cycle change’ trend of pricing improvement is now visible in almost every geography and every product line. However, these rate changes are gradual and are not yet sufficient to warrant a dramatic upscaling in our underwriting activity.”

“Recognising this transitional period for the industry, we remain judicious with our capacity and are totally focused on either preserving or expanding underwriting margin in order to drive value for our shareholders. We are very confident that our major global businesses are well positioned and ready to gain meaningfully when the supply of our capital is more appropriately compensated.”