Bermudian (re)insurer Axis Capital reduced its catastrophe reinsurance underwriting capacity for the first quarter of this year and says it will continue to hold back capacity “until market pricing better reflects risk”.

The move follows last year’s huge catastrophe losses.

Axis reported $US122 million ($118 million) net profit for the first quarter of this year, compared to a $US384 million ($371 million) after-tax loss in the same period last year, driven by $US574 million ($554 million) in cat losses.

The group posted a 94.8% combined operating ratio for the quarter, a vastly improvement on 161.3% for the corresponding period last year. The company says it experienced “no significant catastrophe losses” during the quarter.

Tighter underwriting controls resulted in gross written premium falling 2% to $US1.5 billion ($1.4 billion) while net earned premiums increased 7% to $US846 million ($816 million).

President and CEO John Charman says rates have continued to firm, as evidenced by the April 1 reinsurance 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,” Mr Charman said.

“However, these rate changes are gradual and are not yet sufficient to warrant a dramatic upscaling in our underwriting activity.”