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Operator: Good day, and welcome to the AXIS Capital Second Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Mr. Clifford Gallant, Head of Investor Relations and Corporate Development. Please go ahead.

Clifford Henry Gallant: Thank you. Good morning, and welcome to our second quarter 2025 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 CEO; and Pete Vogt, our CFO. In addition, I would like to remind everyone that statements made during this call, including the question-and-answer session, which are not historical facts maybe 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.

Vincent Christopher Tizzio: Thank you, Cliff. Good morning, and thank you for joining our call. This was an excellent quarter for AXIS, as we continue to build on our sustained positive momentum, while achieving record performance across a range of indices. I’ll begin by sharing several AXIS Group results. We delivered an annualized operating return on equity of 19% in the quarter, record diluted book value per common share of $70.34, up 18.6% year-over-year. Operating earnings per share was an all-time high of $3.29, a 12% increase over the prior year quarter. We produced record second quarter premiums of $2.5 billion, including $732 million in new business, and we generated a combined ratio of 88.9%. Catastrophe events in the second quarter approximated an industry loss of $25 billion, and AXIS continued to manage its volatility profile by having just over 0.1 point of market share loss.

We are delivering strong results in a market that remains impacted by uncertainty stemming from trade disruption, tariffs, and geopolitical tensions, all of which can lead to inflation, rising loss costs and impediments to growth. Notwithstanding, we continue to lean into the strategy that we shared with you at our Investor Day. Let’s now dig deeper into the performance of our segments, and we’ll start with Insurance. Our Insurance segment again delivered an outstanding quarter, highlighted by a current accident year ex cat combined ratio of 83.2% and an overall combined ratio of 85.3%, record premium production of $1.9 billion, highlighted by 6.5% top line growth and $641 million in new premiums written with new business pricing achieving our hurdle rates.

Net written premium grew 8.1% in the quarter, and we generated underwriting income of $152 million, our highest on record. In North America, we produced exceptional financial results with premiums up 8% over the prior year quarter. Submissions were up more than 22% and produced further improvements in our underwriting metrics against our quote, bind and policy service standards. Of note, our new and expanded product offerings continue to deliver productivity gains, including sustained growth in our lower middle market business. In our Global Market division, we continue to observe competitive market conditions, particularly in property. Our focus remains on selective growth, which in the quarter included our A&H and renewable energy businesses.

We’ll now discuss broader market conditions within insurance. We are competing across a series of micro markets, each with their own risk dynamics. In this environment, we are continuing to maintain premium adequacy across our aggregated portfolio, as we cycle manage where needed while also leaning into attractive business lines. It is our observation that the market broadly continues to be disciplined and rational, albeit competitive. But as mentioned at our Investor Day, we remain bottom line-focused and target business that meets our risk-adjusted return thresholds. Let’s unpack this further. In Casualty, rates were up 12% in the quarter. We generated 14% increases in both rate and growth within our U.S. excess Casualty business. U.S. Primary Casualty rates increased 12.5%.

As respect to property, we produced flat to low single-digit growth with an 11% rate reduction overall. The go-to-market with eight underwriting units, spread across the globe, which are seeing varying degrees of competition and we benefit from the diversity of our customer segmentation in these units. Our portfolio remains highly premium adequate, maintains an average net limit in the low single digits, is well balanced in peril and geographic mix and has treaty protection that attaches at $100 million per event. In Professional, we grew 15%. Our investment in new and enhanced products, including design professionals, Allied Health and Environmental are bearing fruit. As these lines are now consistently contributing to our growth. 50% of the growth in Professional came from E&O.

We will continue to execute on our stated management liability product strategy ex public D&O. Finally, we would observe that D&O public pricing was virtually flat in the quarter, indicating that the potential floor has been reached. As respect cyber, the industry is navigating an evolving risk landscape where AI is enabling more sophisticated attacks with heightened frequency of midsized ransomware losses. Even with this loss activity, pressure in pricing has continued and is particularly acute from MGAs. Within the Access portfolio, our underwriting standards remain vigilant and helping insurers protect themselves from ransomware matters. As previously reported, we continue to execute the reshaping of our cyber portfolio. In the quarter, we reduced our delegated Cyber book by $35 million and remain on track to complete this work by the end of the third quarter.

We continue to invest in analytic capabilities to help inform our risk selection. We’ll now move to reinsurance. We again delivered positive bottom line results as we maintained our commitment to generate consistent profitability and low volatility. In the quarter, we produced a combined ratio of 92%, underwriting income of $38 million, and specialty short-tail lines, a key area of our focus, contributed 37% of our book premiums in the quarter with attractive returns. Our underwriting strategy in reinsurance is highly disciplined. As I’ve commented previously, we remain selective in professional and even more so than liability, particularly in North America, where despite positive rate momentum, ceding commissions are not commensurate with our portfolio progress.

A number of our cedents have begun enhancing their underwriting and claim processes. The progress observed will take time to be evident, and as such, we are managing our exposure in this line. Taken together, across our businesses, we’re pleased with our sustained progress, underpinned by our ability to cycle manage, identify profitable growth pockets, and leverage our global product platform, while providing value to our distribution partners. Enabling our progress, we continue to make investments in our business through our “How We Work” program. By example, in the quarter, we further advanced the modernization of our underwriting pipeline, while leveraging emerging technology and AI. This includes enhancing our North American underwriting platform with several AI-powered services, deploying automated clearance capabilities to facilitate more straight-through processing and augmenting underwriting decisioning by leveraging third-party data to build a deeper understanding of our insurers.

In closing, I remain highly encouraged by the consistent positive trends in our performance and the momentum that we’ve built. Underlying our strong execution is a focused and disciplined underwriting culture, a resilient and well-diversified book of business and an exceptionally skilled team. We believe we are very well efficient in the market, and we see ample opportunity for continued profitable growth as we leverage our specialty capabilities to help our customers navigate a dynamic risk environment. Finally, I’ll extend my gratitude to my AXIS teammates for their outstanding efforts as we together help our company realize its specialty leadership aspiration. I’ll now pass the floor to Pete for his comments.

Peter John Vogt: Thank you, Vince, and good morning, everyone. AXIS had another excellent quarter. Our net income available to common shareholders was $216 million or $2.72 per diluted common share. And our operating income was $261 million or $3.29 per diluted common share, producing a 19% annualized operating return on common equity. This drove our book value per diluted common share to $70.34 at June 30, an increase of 18.6% over the past 12 months. I’ll start with consolidated company underwriting highlights. Our gross premiums written of $2.5 billion were up 3.1% over the prior year quarter, with accelerating growth initiatives in insurance partially offset by an expected decline in reinsurance. Our combined ratio was excellent 88.9%, and our accident year loss ratio ex cat and weather was 56.4%.

Cat losses were just $37 million, producing a cat loss ratio of 2.6%. Cat losses were primarily driven by severe convective storms in the United States. We adhere to our philosophy of wanting to see sustained positive signals before releasing reserves. And we recorded a release of $20 million from the short-tail lines with $15 million in insurance and $5 million in reinsurance. Our consolidated G&A ratio, including corporate, was 11.6%, up slightly from 11.4% a year ago, as we had onetime costs related to severance and made information technology investments in the quarter. In the prior year quarter, we had a below-the-line charge for reorganization expenses which included similar type costs. The investments we’re making give us increased confidence that we will hit our full year 2026 target of an 11% G&A ratio.

Now let’s move on and discuss our segment results in more detail. Insurance had a strong quarter. Gross premiums written were $1.9 billion, a record quarter for insurance and an increase of 7% compared to the prior year quarter. As Vince mentioned, excluding the remediations in cyber, growth was just under 9%. As we told you before, we expect to complete the cyber remediation in the third quarter with approximately $20 million to $25 million remaining. Property remains a very attractively priced book, but there are growing rate pressures. And as you can see, we held the line with just 1% growth. As we have noted, we have a diversified property book spanning eight product lines. And in the quarter, E&S property, and global property were both down, but offset by other products, most notably renewable energy and U.K. property.

Liability is where rate momentum is strongest, and we reported 17% growth with particular strength in U.S. Excess Casualty. As Vince mentioned, in pro lines, we had 15% growth, driven by new and expanded products, including Allied Health and Environmental and the 25% growth in A&H was driven by our pet product. Net written premiums were up 11%, excluding A&H, which has a new quota share for the pet product. Our net written premium growth is exceeding our gross premium growth due to decreased session rates as we retain more of the risks we know and like. Overall, we’re very happy with where we are positioned today as the pricing cycle advances. We’re largely through remediation and some of the investments we’ve made in product development are beginning to gain traction.

Driven by our enhanced product and service offerings, we expect new business growth to continue to be strong and with less headwinds of remediation, we may see growth in the second half of the year higher than the 6% we saw in the first 6 months of the year. To echo Vince, we are just beginning to seize the mantle as a global specialty leader. The insurance combined ratio was an outstanding 85.3%. The quarter included 3.6 points of cat and weather-related losses and 1.5 points of reserve releases from short-tail lines. Now let’s move on to reinsurance segment, where the business is continuing to deliver stable, consistent and strong profitability. The second quarter typically is about 1/4 of our annual premium volume. Gross premiums were down 6.8% due in part to timing issues but also our underwriting discipline.

For example, North America liability premiums were down 17%, but exposures were down 28% as we’ve held back despite getting rate increases in this line. Growth areas have been in some highly profitable areas of credit and surety. For the full year, we expect flat to low single-digit premium growth. The reinsurance combined ratio was 92% with an ex cat accident year loss ratio of $67.9. Cats were just 0.1 point with 1.4 points of benefit from the reserve releases. As we discussed when we reported last quarter, we are taking a cautious stance in booking our reinsurance loss ratio something we expect to continue to do. We had a very good quarter for investment income at $187 million. The big thing in the quarter was the movement of approximately $2 billion out of cash for the closing of the LPT transaction.

Please note that since the LPT closed towards the end of April, there was $4 million to $5 million benefit in net investment income from cash in the quarter that won’t be repeatable. For our alternatives, we had another better-than-expected quarter. It benefited from FX, and we would once again to say that the quarter’s result is about double what we would expect on a more normal run rate. Our outlook for investment income remains favorable as we continue to generate excellent operating cash flow and the market yield of 5% is above our 4.6% book yield as of June 30. Our effective tax rate of 20.1% in the quarter reflects the geographic mix of our profits. And as a reminder, Bermuda is now a 15% corporate tax rate jurisdiction. We expect the full year tax rate to be in the high teens.

Despite the gyration of the financial markets, we remain in a very strong capital position. The priority for capital is to advance our strategic goals. And in the first half of the year, we executed on that priority by funding growth opportunities, including the hiring of new teams and by investing in our digital and analytical capabilities. We also have returned substantial capital to our shareholders this year. And despite not being too far off our all-time highs, we are opportunistically buying back our stock, which we view to be a very attractive use of capital today. In the quarter, we completed $50 million of share repurchases and declared $35 million in common dividends. We have $110 million remaining on our repurchase authorization.

While 2025 has been headlined by turbulent financial markets, AXIS’s results have been stable, consistent and at record levels. We have spent considerable effort over the past 2 years under Vince’s leadership to make AXIS a stronger, better, more valuable company. We’ve invested in talent, built out our product offering, improved our service capabilities, got it through some painful re-underwriting, strengthened our reserve and capital positions and executed on the “How We Work” program, all to make AXIS faster and more effective while being more expense efficient. While we are cognizant of the pricing cycle, we believe that challenging times will suit us well and give us the opportunity to truly separate ourselves from the pack. With that, we’d be happy to take your questions.

Operator: [Operator Instructions] And the first question will come from Andrew Kligerman with TD Cowen.

Andrew Scott Kligerman: So my first question is on the insurance segment, where gross written premium was still up a nice 6.5%, net written up 8% due to decreased session rates. And as I look at your written premium growth, I note that about 1/3 of it is ceded. So my question is, how are you thinking about sessions a few years down the road? I mean, 1/3 is a lot to see. Do you see that coming down materially? How much? And — yes.

Vincent Christopher Tizzio: Andrew, this is Vince. Look, broadly speaking, our reinsurance strategy is a composite of many factors. And as you know, as a specialist, given the breadth of our product offering, given the customer segmentation that we are aiming to pursue and penetrate, our strategy will remain agile. In the last couple of years, we’ve repositioned our reinsurance purchase strategy to comport with our view of risk, the internal capabilities that are enhancing our underwriting risk selection, the increased capital position of our company, the ability to manage our expenses in a different manner than our historical path. While I won’t predict the next several years, What I will say expressly is that you should expect our reinsurance purchase strategy to remain agile, flexible and to comport to our view of risk and all the other factors that we take into account, as I mentioned, capital, certainly expenses and our view of risk.

I would say at the moment, as I’ve said previously, we have high confidence in the insurance segment business generally. And as you know, in this quarter, with the exception of our cyber business, each of our businesses grew. And so we’re pleased with both the financial results and more specifically to your question, we’re comfortable with our current reinsurance purchase strategy. We won’t predict the future, as you highlight in a number of years, but what I would say to you is, remember, we’ll be flexible and comport our strategy to our underwriting view of risk.

Andrew Scott Kligerman: That sounds very thoughtful. And then, just shifting over to reinsurance. So I note that the accident year loss ratio went to 68% from 64.5%. And you’ve highlighted a cautious stance on reserving given uncertainty in the environment. Do you feel like the loss ratio now and the reserving process is where you want it to be going forward? Or is there a chance that you could get increasingly conservative given what we’re seeing with social inflation.

Vincent Christopher Tizzio: Yes. Thank you. I’ll start and Pete certainly come in over me. I think, first, please observe that this ratio, this loss ratio is fairly consistent with what Pete guided to in the first quarter. And as it relates to our reserve position, obviously, we take a very active management and a consistent philosophy around our reserving. As I noted in my prepared remarks, Andrew, within casualty, liability, North America, in particular, we remain highly selective, highly prudent, and we are observing, as I observed the commission — ceding commission levels not being commensurate. So what I think you can infer is we’ll probably hold around the 68% certainly through the balance of 2025. And I think more broadly, as you know, within reinsurance, this is a very clear mandate from our leadership that runs the business.

This is a bottom line focused business unit. They are certainly resisting the temptation of a number of opportunities to gross line the business. 37-odd percent of the premium came from our short-tail specialty lines. We feel very good about the execution of that team. We’re highly observant about the changing risk landscape in North America, in particular, in liability. I don’t know, Pete, if you want to come over the top of that.

Peter John Vogt: No. I think you said it well, Vince. I would say we’re very consistent with what we did in the first quarter where we did move up some loss picks in our specialty lines. We’ve held that in the second quarter. And on our casualty lines, we’ve been very consistent for the last year, and we haven’t really changed our view of risk there right now. So I would expect it to stay right around that level for the rest of the year, Andrew.

Operator: Your next question will come from Charlie Lederer with BMO Capital Markets.

Charles William Lederer: So Vince, you pointed out the diverse series of markets AXIS is faced with today. Can you help us understand whether the pricing is ahead of loss cost and insurance? And then separately, the same question for reinsurance.

Vincent Christopher Tizzio: Yes. I think what I would say, Charlie, first, is that we are continuing to observe a changing rate landscape environment, clearly, in the line of focus, certainly liability, casualty, we comfortably are pricing well ahead of trend. As you know from our financial results, the property environment has driven our short-tail line pricing deterioration in relevant part. Having said that, as I noted in my opening remarks, the premium adequacy of the aggregate portfolio remains excellent.

Charles William Lederer: And I guess just my follow-up. So looking at Page 18 of the supplement, wondering, just with all the changes in mix, if you could unpack I guess, what we’re seeing in terms of paid loss and IBNR trends in the Insurance segment.

Vincent Christopher Tizzio: Yes, happy to. Thank you. So first of all, this business, as you know, has been growing reasonably well over the last couple of years. Secondly, and more particularly in the quarter, we had a number of over year claim payments made that certainly added to the paid to incurred ratio. Third, as you know, this ratio can be quite noisy from quarter-to-quarter. And so we observe it over a continuum of time. I think importantly, for you and our shareholders, our conservative reserving approach and methodology will remain consistent. The underlying metrics that we’re observing through the variety of tools that we use remain favorable in our point of view. Finally, and consistent with our “How We Work” program, we’ve made a number of investments in our claims organization, processes, people, tools, all of which is aiming toward a more effective and efficient claims process.

And so, we look through those numbers with an observant eye, just as you, we feel very comfortable with why the numbers are what they are. Pete, I don’t know if you want to come in over the top.

Peter John Vogt: The only thing I’d add is a couple of things. When you’re looking at that just in the quarter, as Vince mentioned, there is some, I’ll call it, volatility that can happen from quarter-to-quarter. But we did have some large — larger older claims get paid in the quarter. And also, we paid out a fair amount of our wildfire claims from the first quarter and the second quarter, which was really good to get our claims, people getting those payments to our clients very quickly, because they’re in definite need of that. So we did see an uptick in our wildfire claims, and that came through in the second quarter, too. But to your point, to Vince’s point, it’s a metric that we look at and we digest every quarter and make sure that it’s in line with our expectations and understand any differences. I would say, overall, our A to E is tracking as expected this year, and our overall reserve process remains very, very consistent.

Charles William Lederer: Got it. And if I could just sneak one more in. Just on the expense ratio in insurance. I guess, the trends kind of changed up a little bit as far as the acquisition cost start to move down, while it was going up previously and the opposite on the G&A side. Can you help us understand, I guess, what drove that and whether we should expect that to continue in the back half?

Peter John Vogt: Yes, this is Pete. I’ll handle that, Charlie. On the G&A ratio, I think you’re just looking at the quarter-to-quarter last year, I would remind everyone, we did take a restructuring charge. And so there were some expenses that were put below the line with that. So I would look more year-to-date. If you look year-to-date, the G&A ratio for insurance is actually down. I’m sorry, it is actually down about 0.5 point and that is going in the right direction. So overall, we feel good about where we are, and we’re on track to hit our 11% next year for the entire company. So I’d say that overall. But for insurance generally, the acquisition cost is down a little bit. I would expect it to still be in that high 19s, right around 20% for the rest of the year.

It’s down a bit because we’re getting some better ceding commissions on our quota shares. So as we renewed our quota shares, we’re getting good ceding commissions. And also, we have a little bit less as we talked about cyber, we got out of some of our MGA relationships. So that’s actually helping on the acquisition cost there a little bit.

Vincent Christopher Tizzio: I think the bumpers there, Pete, is one, we’re both affirming our ’26 GA target. Secondly, we’re doing exactly as we said, we’re continuing to invest in the business. It will move. It will gyrate I think, is the word Pete used in the past from quarter-to-quarter. We’re very pleased with the progression of our GA target.

Operator: The next question will come from Andrew Andersen with Jefferies.

Andrew E. Andersen: We’ve heard some discussion around MGAs this quarter just around pricing. Maybe you could just talk about AXIS’ approach to MGAs, maybe how that’s changed and where you see your appetite there?

Vincent Christopher Tizzio: Andrew, it’s Vince. Well, certainly, since the charge back in December 2023, we have put in place a renewed underwriting strategy with respect to MGAs. I think for context sake, our organization in the quarter had about 30-odd percent of the premium come from MGAs. It is a highly selective, highly disciplined strategy. I would comment in North America, which has had the brunt of the change in the philosophy of use. The leadership there has a very defined strategy that is complementary to our overall underwriting strategy. In North America, it’s about 14% of our business in the second quarter. Look, we see a competitive use of MGAs under select circumstances. We equally observed some of the challenge that they present in classes like cyber and in property where often, we’re not seeing commensurate pricing that we think is worthy of competing with.

And we have a more fulsome value proposition, right? We’re an underwriting organization with a dedicated claims organization and infrastructure to support our underwriters and the view of risk that we have. So the bumper sticker is, our strategy within MGAs is certainly bottom line focused, alignment of interest in any of those instances that we use, MGAs. And on the competitive landscape side, we observe them very carefully, and we have not competed on price in many instances and are willing to trade for bottom line over volume, and that is the approach that we’ll continue to execute against in our company.

Andrew E. Andersen: And on the reinsurance side, showing some discipline there, and I don’t think you’re alone in those comments in that approach. But perhaps where are we with the cedents enhancing their underwriting and their claims? Are we in the second inning? Are we in the seventh — and kind of what further progress would you need to see to get a bit more interested in reinsurance liability growth?

Vincent Christopher Tizzio: This is a subject that Anne and the team and I, we talk about a lot. I think that we see mid-innings, but it’s hard to attach an overall because, as you know, we’re a pick your partner underwriting company in reinsurance. And the team works deliberately and earnestly are trying to understand the evolving changes that are going on within the underlying cedents portfolios. The interaction model and communication is vibrant. And I would say you’d have to acknowledge if you look at the cumulative environment since ’24, the number of companies that have taken action in strengthening their liability reserves. It stands to reason that there’s comfort that needs to be evident in a statistically repeatable way before we think the trade is worth leaning into.

And at the moment, we just don’t feel it as a general matter. That doesn’t mean we won’t selectively grow, but we’re going to pick our partner. We’re going to look at the trade and the balance of fairness and accuracy and we want to see the evidence of the changes that are being spoken about, revealed in our interactions. And that will come through both data and our oral communications with our cedents. So that’s the course that we’re going to stay.

Operator: The next question will come from Josh Shanker with Bank of America.

Joshua David Shanker: First question relates to the DTA. A couple of things. One is there was — some of the value was amortized down in the quarter in a non-operating sort of way? And two, I’m trying to understand how much of your incurred taxes are likely to be payable in cash versus being payable through the DTA. If you can sort of walk us through that, kind of, how that works a little bit?

Peter John Vogt: So Josh, this is Pete. I’ll take that for you. So when we put up the DTA last year in 2024, we decided to take it as a non-operating item, because it was something that really wasn’t germane to the operations, and we didn’t want to gyrate operating income with a huge benefit in 2024 due to putting that up. So when you go to Page 16 of our press release, and we’re reconciling from net income to operating income, as we amortize that back down, we’re actually pulling it out and just pointing it into non-operating so we can be consistent. So you’ll see that on the chart, and you’ll see that every quarter. So we can just give you a full disclosure as to what that aspect is.

Joshua David Shanker: What exactly is amortizing down? I’m trying to understand that. Apologies.

Peter John Vogt: Well, I guess, I would say we put up at the end of the day, at the end of last year, $176 million, and that actually amortizes that deferred tax asset, Josh, will amortize to zero for the most part over the next 10 years. That’s what happens. And as that amortizes down, that will count as part of our effective tax rate for Bermuda, but that amount will actually not be paid in cash to Bermuda.

Joshua David Shanker: So in any given quarter, you’re not paying taxes based on your tax obligation, you’re using to pay tax based on the amortization rate.

Peter John Vogt: Yes, we’re paying tax based on our effective tax rate, yet with the cash, the portion of that ETR that is the amortization is not cash. And you can see that now at $3.4 million in the second quarter.

Joshua David Shanker: Okay. And what about the risk that there’s something that changes if you’re doing this slow amortization, was there any way to accelerate the amortization with how much tax you paid this year given that maybe next year, the agreement with the global tax body won’t allow you to use the CTA..

Peter John Vogt: Yes. So right now, Josh, we know that the OECD has allowed the first 2 years. I don’t want to make any comments past that because it’s going to depend on what legislation happens and it would be, I would just — it would be pure guess work for me. So — but on the tax law that was passed, there’s four pieces to it. It pretty much amortizes over 10 years. I’m generalizing because there are a couple of little pieces that one goes a little longer, one goes a little shorter, but it’s kind of, for the most part, over a 10-year period. But we will see what happens when we get to 2027.

Joshua David Shanker: And then my other question, I wanted to follow-up on Charlie’s a little bit, and I really appreciate you taking in the minutia. Some people wouldn’t have patience for this. The paid to current insurance did go up by a lot. I understand you had a couple of large payments for older accident years and the California wildfire. Can we put some numbers and for the two other claims, some categories around this, just to understand, it is a big move in the paid-to-incurred. And usually, I wouldn’t belabor it does jump around quarter-to- quarter as it should, but maybe like it might appease the concern about the higher paid-to-incurred for the more we know.

Vincent Christopher Tizzio: Josh, I’ll start, and then Pete can add on top. So first, again, we had a number of older year claims, including the wildfires. So there were certainly a contribution in that regard of 5 or 7-odd points against the 89. Secondly, you know through our “How We Work” program, the effectiveness and the efficiency is revealing itself throughout our operating model. And clearly, our claims organization is one of the entities that’s benefiting from those changes. They’re introducing heightened skills and capabilities, more technology. This will add to the effectiveness and the efficiency from quarter-to-quarter, that may reveal itself in paid-to-incurred ratios. In other instances, it may reveal itself in other ways that is value-added to our insurers and to our brokers. There is nothing beyond that, that I would say. But Pete, if there’s something additional for you, please share it.

Peter John Vogt: Yes. It’d be difficult to get into specifics. I would say there were some specific large claims. When I think about the SEC classes, Josh, I’d say that some of them came out of the marine and aviation class and some of them came out of the pro lines class from years ago. But I really wouldn’t want to get into specific claimants and dollars of claims that were paid. But it was really — it came out of those two classes, I guess, is what I’d say.

Operator: Your next question will come from Brian Meredith with UBS.

Brian Robert Meredith: So the first one, I’m just curious, if I look at the share buyback in the quarter, it looks like you didn’t buy back any stock in June. I’m just curious if there was a reason for that. And maybe talk a little bit about what your AXIS capital position is currently and kind of plans for that? I know share buyback is obviously kind of top of the list.

Peter John Vogt: Brian, this is Pete. What I will tell you is, I remind you, we tend to be opportunistic when it comes to share buyback, and we’ll buyback when we feel that it’s appropriate. We did have a plan in place for May, didn’t continue it into June. I would not read anything into it. As I said, we were just being opportunistic in the quarter with what we saw going on. And as we went into the end of the quarter, we saw good growth. We made investments in technology, data and analytics. And so we continue to put our capital to use in growing organically our business, but also in building out our platform for future growth. And we feel very good about those uses of capital as we go forward. Overall, I’d say we have $110 million left in our share repurchase authorization. I think you should think of us as continuing just to be opportunistic with the use of that share buyback. I don’t know, if you want to add on to that Vince.

Vincent Christopher Tizzio: No, I think the only thing to contribute is one, we added some new teams in North America in the quarter. Secondly, you’ve said historically, we’re opportunistic. We are. We’re comfortable with our capital position. We made investments in the operating model, Brian, that we’re really pleased with the progression. Our company has moved almost virtually to the cloud through technology at this point. So there’s a lot going on in the “How We Work” program.

Peter John Vogt: Yes. And then just overall, I know you asked for a specific number, Brian. We typically don’t give that out, but I would say that our capital position remains very strong, and we continue to feel good about what that capital position is and where it is to fund our future growth.

Brian Robert Meredith: Great. And then the second question, Vince, I was hoping we could dive a little bit more into the lower middle market build-out and what you’re doing there. How big is that business right now kind of growth prospects? And then I guess also, in that business, is there any thoughts of, call it, inorganic growth to kind of build that platform out quickly?

Peter John Vogt: Yes. So this is an initiative that you know we’ve been talking about for some period of time. In the sizing of the business, in the quarter, depending upon how you define lower middle market from our prior discussions. What I would say to you, we grew our wholesale LMM business about $64 million in the quarter. That’s what we wrote out of that three dedicated products. But more broadly, the lower middle market strategy aims to identify every product within our North American franchise that’s transactional. And transactional for us has a very specific meaning. And so, we’re well on our way with regard to isolating the lines of business that are defined by LMM, and that’s generally a turnover or revenue, as we say, in America, defined risk attribute.

This is generally lower complex business, high transactional volume. Secondly, this business from an investment perspective is well on its way. It’s one of the cornerstone how we work investments through the modernization of our underwriting platform. We’re in the lower innings of that. We’re not at the fifth inning yet, but we’re making pace. And certainly, the diagnostics that we secured in the third quarter through two AI vendors last year are helping us in our growth trajectory. At the end of 2024, this is about a $400-odd million business in the aggregate. And so we feel continued momentum, continued focus. Finally, I would note that the submission volume in this unit is off the charts. The team has done an excellent job at attracting value to our brand, value in our service proposition, which we believe is a distinctive advantage.

And so we have high expectancy of this business and its continuance of profitable growth. We have continued investment that Mike and Ann are ensuring is aiding our underwriters in our aspiration of a straight-through process. And finally, we believe the reflection of these efforts is being rewarded by our distribution channel that continues to seek out our solutions.

Operator: Next question will come from Elyse Greenspan with Wells Fargo.

Elyse Beth Greenspan: My first question is on the insurance premium growth. I think you guys said that the second half might be higher than the 6% in the first half. I know there’s a little bit of cyber remediation, right, $20 million to $25 million, right, for the Q3. But given that we’re through the bulk of the remediation, I’m just surprised, would it — it just feels like with some of the initiatives, et cetera, that growth the second half should be greater than the first half? Or is there some, I guess, conservatism built into that kind of the guide that you guys gave?

Vincent Christopher Tizzio: Elyse, this is Vince. First of all, we’ll conclude the cyber remediation in the third quarter. Secondly, what Pete and I had indicated in the first quarter was mid-single-digit growth for the insurance business for the full year. We’re optimistic about continuing to achieve profitable growth. I think we grew 1.5 points quarter-over-quarter in the business between 1Q, 2Q. We do have expectancy of continuing our profitable growth, and we like the degree of growth that’s delivered here in the second quarter, and we’ll remain focused on delivering where we can.

Peter John Vogt: And I guess, I would just add on, maybe I wasn’t clear in my comments, Elyse. I think, I did say that the second half of the year should be better than the 6% we’ve seen year-to-date.

Elyse Beth Greenspan: Okay. And then — my second question, I guess we can all debate right what happens this wind season and size of loss or losses and the materiality that, that could bring to the property market as well as in the primary and reinsurance side. You guys obviously exited that business several years ago. So I guess my question is, is there — and Vince, I understand, right, you would be speculating to some degree. But is there a market movement, like if there’s a huge series or one event that really turns the cat market this year. Would you, at some point, consider getting back in? Or is that door permanently closed for the company?

Vincent Christopher Tizzio: We’ll be excited in such an event to help our insurance team go after the opportunity that will undoubtedly be revealed and certainly and most likely come into our wholesale E&S business and the team in North America stands ready. So the direct answer is no, we think our profile and the value creation journey that Pete, and the ExCo and I are on is situated perfectly and we’re comfortable with our underwriting strategy.

Elyse Beth Greenspan: No. You finish first.

Vincent Christopher Tizzio: Yes. No, I would just observe to you, look at the property business within AXIS, look at the order of growth, look at the comments that Pete and I have attributed to the profitability of that business, the portfolio construct of that business, the channel in which we, at least in the United States Transact, which is the largest of our eight underwriting division. So we feel comfortable that we’re not — we’re not leaving the opportunity on the table. We’re seeking it and we’re seeking it in a very decided way. Thank you.

Elyse Beth Greenspan: And then one last quick one. Was there any adverse, if any, that you guys had from the U.K., Russia aviation ruling in the quarter?

Peter John Vogt: No. So Elyse, this is Pete. As we articulated in the past, we do not play in that contingent war market. And so, we are in the all perils market, and so the rulings really came down well for us. And it’s what we expected, what the market did expect. And so the short answer is no, there was no impact to us in the quarter.

Operator: The next question is a follow-up from Andrew Kligerman with TD Cowen.

Andrew Scott Kligerman: Yes. Vince, in your prepared remarks, you talked a little bit about, in reinsurance, some of your cedents were evolving their claims processes. And I was wondering if you could elaborate on that a bit.

Vincent Christopher Tizzio: Well, certainly, all I could say broadly is that, Andrew, as a result of the strengthening that you saw last year across a number of different companies, there’s no doubt that all underwriting companies are taking stock of their claim organizations evaluating a whole variety of things. And certainly, that kind of communication is vibrant with us in our reinsurance business, and we’ll remain observant to it. I won’t obviously cite cedents, but broadly, it’s not as though that the strengthening taken across the industry go silent in these underwriting organizations. And they take stock of how they’re coming to market, how they’re managing their own claims organizations. Hopefully, that answers your question.

Andrew Scott Kligerman: Yes, it does. And then, you talked quite a bit on the call about your investments in AI and other technologies. And I think, I heard you in the Q&A, Vince, talk about being like the fifth inning. When you look over your shoulder at the competition, where do you see AXIS in the scope of AI and other technology? Do you feel like you’re far in front, middle of the pack? How are you seeing your investments and how you’re doing versus the competition?

Vincent Christopher Tizzio: Yes. Outside of the public comments that are offered, I really don’t know where the competition is beyond that. But what I do know is the Compass and the strategy of AXIS is rightsized in its ambition. Recall, please, first, we have an efficiency and productivity aspiration in the utilization of AI. Secondly, we have a vibrant set of use cases in our organization that range between our corporate legal function, all the way up to the front end of the company. Third, we have an investment set of strategies that aims to optimize our aspiration of achieving more profitable growth in lower middle market enabling a more straight-through process capability in our company generally. And finally, to take advantage of the investments we’ve made in the provision of our data and analytics, our Chief Data Officer, who works with our Chief Underwriting Officer, has made considerable progress and is enabling our front end to make better risk selections, and we think that will translate into a sustained profitable growth run rate, certainly in the balance of 2025.

So taken together, we’re pleased with the progress that we’re making. We think it’s rightsized to a mid-cap specialty underwriter. We have a number of tests that are going on against our hypotheses to challenge whether or not we will achieve the efficiency and productivity gains. And I would tell you that if you look at the discrete 2Q North American quote, bind, turnaround time, they are being materially enhanced, and they are being aided. I won’t say they’re being driven by, but they’re certainly being aided by those investments. And I think the North American leadership has a very active posture at making sure that they get the kind of benefits that we expect from both technology and more broadly, AI.

Operator: Your next question will come from Meyer Shields with KBW.

Meyer Shields: Vince, I was hoping if you could talk about the loss trend that you’re seeing in the professional liability lines that you’re writing now?

Vincent Christopher Tizzio: Yes. Well, firstly, remember, for the SEC class for AXIS, there’s a lot of different products in there. It’s a combination of short-tail and longer-tail. But I think to put a bumper sticker on it, we’re seeing low single-digit trend in that business. Obviously, if you talk about public, we would take that out. But it’s a panoply of a lot of different products in that bucket. It ranges between errors and omissions, management liability, environmental classes and certainly public D&O and even IPO D&O as well. So that’s what I would say. Pete?

Peter John Vogt: I wouldn’t add anything other than to reiterate again, we still — I mean, public D&O has become a very tiny portion of our portfolio in the insurance side, because of the pricing over the last couple of years. As Vince mentioned, it looks at the pricing might be bottoming out. So we’ll see where that business can go in the future. But right now, that’s a really small part. So that was not part of the growth we saw in pro lines this quarter.

Meyer Shields: Okay. That’s very helpful. And then a quick follow-up for Pete. You had about $850 million of unrestricted cash and equivalents at the end of the second quarter. Is that about the right level that we should expect going forward?

Peter John Vogt: Yes. I think, when you look back over the last couple, I’ll even call it, 1.5 years or so, that’s probably about the right level, Meyer. It was obviously highly exaggerated at year-end and first quarter as we were funding for the LPT. But I think we’ve gotten right back down to like a normal cash level for the organization.

Operator: This concludes our question-and-answer session. I would like to turn the conference back over to our CEO, Vincent Tizzio for any closing remarks. Please go ahead, sir.

Vincent Christopher Tizzio: Thank you, operator. Thank you for joining today’s call. It is our strong belief that AXIS has a very bright future ahead. We remain confident in the execution capability of our company and are committed to delivering on our promise to consistently produce profitable returns, increased shareholder value, and excellent product and services to our customers. Thank you very much. We look forward to speaking with you after the third quarter.

Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.