With approximately $3.8 billion in gross premiums written in 2018 and more than 900 employees serving multitudes of clients globally, our Insurance business is striving to build on our strengths while operating with greater focus and efficiency.
Among the year’s key accomplishments were the successful integration of the Novae and Aviabel acquisitions, the realignment of the A&H Insurance business, the creation of a Global Cyber and Technology unit, the introduction of technological innovations to enhance the distributor experience, and continued improvements in operating efficiency. These initiatives, as well as other achievements during 2018, reflect our efforts to deliver on the four key strategic principles we outlined in the 2017 Annual Report. These principles will remain our focus in 2019, and will help us deliver on our vision of achieving leadership across our chosen specialty markets:
The integration of Novae, in particular, has allowed us to advance several strategic objectives. Combining the complementary AXIS and Novae businesses has increased our relevance in key specialty markets, adding to our expertise in areas such as Cyber, Marine, and Political Risk and Credit lines while enabling us to do more for our clients and partners in distribution. Additionally, over time, it is expected that our ability to produce higher volume of business in both Lloyd’s and within our Company platform will strengthen operating efficiency.
We were also successful in integrating Aviabel, a Brussels-based firm specializing in aviation with particular emphasis on general aviation. Aviabel has a strong core of attractive business serving the relatively stable regional airline and general aviation risk classes, which will be important as we seek to transition our existing airlines book away from more competitive and volatile areas.
We also integrated our A&H insurance business, formerly a separate operating entity within AXIS, into the Insurance segment. This realignment has resulted in a global A&H insurance unit that can now benefit from the scale, operations and distribution relationships of the larger global Insurance segment.
AXIS Insurance has continued to exercise discipline in underwriting within the risk pools we choose to target — pursuing those lines in which we have a differentiated value proposition and the potential to achieve profitable growth. We have invested in growing businesses such as Cyber, Renewable Energy, Primary Casualty and A&H, among others. At the same time, we have made decisions to exit markets, where we either did not have the required relevance or where the market was unlikely to deliver sufficiently attractive returns over the cycle. We also have been disciplined in evaluating pricing relative to risk across all our portfolios and will regularly trade growth for profitability.
Among the areas we have targeted for investment, we created a consolidated Global Cyber and Technology unit to help deepen our leadership position in this key growth market. This investment is vital for us to maintain leadership in a product area of such importance to our customers and brokers.
We continued to see opportunities in our AXIS Programs business, which provides property and casualty insurance products through Program Administrators (PAs) and Managing General Agents (MGAs) throughout the U.S. This program focus enables AXIS to serve the small-to-midsize customer segments with a broad range of commercial and personal lines coverages. Our long-standing approach in this segment is to partner with PAs and MGAs that have a high level of technical expertise and strong distribution capabilities.
We have continued to invest in AXIS Insurance’s distribution function to enable a more disciplined and focused approach to working with our key broker partners — with the goal of taking our distribution management to the next level. This will include creating an even more targeted approach to support our business in existing and emerging distribution channels.
Across AXIS, we have also continued to invest in advanced data and analytics to deepen our underwriting capabilities and insights while also delivering greater efficiency to our teams. For example:
Our Future Insurance Platform, a multi-year technology investment that utilizes the Duck Creek platform, underpins the Insurance underwriting operations. The platform has resulted in an enhanced distributor experience by improving quote turnaround times, reducing time to market with coverage enhancements and markedly improving the speed with which we deliver final policies. In 2018, AXIS Insurance was the recipient of the Novarica Research Council Impact Award for deployment of this platform.
We are building a dedicated data and analytics Center of Excellence within Insurance that will work in partnership with our Global Underwriting and Analytics (GUA) office (see case study, “Innovation: Investing in New Capabilities to Win in the Future”).
Operationally, we have continued to invest in and improve our administrative systems, which we expect will deliver cost-effective efficiencies and improved speed to market. All of this effort is to ensure that AXIS has the most robust, nimble and flexible systems needed to support future growth.
In 2018, gross premiums written increased by $983 million, or 35%, and net premiums written increased by $549 million, or 31%. The growth in gross premiums written was largely driven by the acquisition of Novae. Adjusting for the impact of the Novae acquisition, gross premiums written increased $60 million or 2%, and net premiums decreased $65 million, or 4%. The decrease in net written premiums was driven by disciplined underwriting which slowed new business growth and the purchase of additional reinsurance protections as we took advantage of attractive risk-adjusted reinsurance pricing to decrease our exposure to volatility.
Insurance reported underwriting income of $77 million for 2018, compared to an underwriting loss in 2017 and an ex-PGAAP underwriting loss of $44 million for 2018, compared to an ex-PGAAP underwriting loss of $267 million in 2017.
In 2018, Insurance improved its accident year loss ratio excluding catastrophe and weather-related losses, but more progress is needed. The improvement was driven largely by the addition of the Novae portfolio, which carries a lower loss ratio. In addition, underwriting actions were accelerated during the year to further reduce losses and volatility in the portfolio with a particular focus on the segment’s Property book.
Our Insurance business enters 2019 with confidence in our potential for long-term growth and profitability. That outlook comes from our belief in a number of our competitive advantages, including:
These advantages, paired with our relentless focus on our four key strategic principles, will help us achieve our vision of leadership across our chosen specialty markets.