AXIS Capital Announces Record Third Quarter Net Income of $270 Million.Earnings Per Share of $1.65 and Annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. Return on Average Common Equity of 25.0% PEMBROKE, Bermuda -- First paragraph, second sentence under CONFERENCE CALL should read: The teleconference can be accessed by dialing (888) 680-0894 (U.S. callers) or (617) 213-4860 (international callers) and entering the pass code 98796237 approximately ten minutes in advance of the call (sted The teleconference can be accessed by dialing (866) 510-0676 (U.S. callers) or (617) 597-5361 (international callers) and entering the pass code 19326384 approximately ten minutes in advance of the call). The corrected release reads: AXIS CAPITAL ANNOUNCES RECORD THIRD QUARTER NET INCOME OF $270 MILLION Earnings Per Share of $1.65 and Annualized Return on Average Common Equity of 25.0% AXIS Capital Holdings Limited ("AXIS Capital") (NYSE NYSE See: New York Stock Exchange : AXS AXS Access AXS Anomalous X-Ray Scattering AXS Alpha Chi Sigma AXS Alpha X-Ray Spectrometer AXS Activex Script ) today reported net income available to common shareholders for the quarter ended September 30, 2007 of $270 million, or $1.65 per diluted common share, compared with $226 million, or $1.37 per diluted common share, for the quarter ended September 30, 2006. Net income for the nine months ended September 30, 2007 was $749 million, or $4.53 per diluted share, compared with $645 million, or $3.94 per diluted share, for the corresponding period in 2006. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. for the third quarter of 2007 was $271 million, or $1.66 per diluted share, compared with $228 million, or $1.38 per diluted common share, for the third quarter of 2006. This same item excluding foreign exchange gains, net of tax, for the third quarter of 2007 was $264 million, or $1.62 per diluted common share, compared with $231 million, or $1.40 per diluted common share, for the third quarter of 2006. Operating income for the first nine months of 2007 was $754 million, or $4.55 per diluted share, compared with $666 million, or $4.07 per diluted common share, for the first nine months of 2006. This same item excluding foreign exchange gains, net of tax, for the first nine months of 2007 was $739 million, or $4.46 per diluted common share, compared with $641 million, or $3.92 per diluted common share, for the first nine months of 2006. Operating highlights for the third quarter of 2007 included the following: * Operating income increased 19% to $271 million. * Gross premiums written When a non-life insurance company closes a contract to provide insurance against loss, the revenues (premiums) expected to be received over the life of the contract are called gross premiums written. increased 3% to $755 million. * Net premiums earned of $686 million were stable. * Combined ratio of 74.1% included net favorable reserve development of 12.0 percentage points. * Pre-tax net investment income increased 20% to $119 million. * Annualized return on average common shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. was 25.0%. * Diluted book value per common share Book Value Per Common Share A measure used by owners of common shares in a firm to determine the level of safety associated with each individual share after all debts are paid accordingly. Formula: increased by 22% from September 30, 2006, and by 15% from December 31, 2006, to $27.52. * Shareholders' equity increased 12% from December 31, 2006 to $4.9 billion. Capital management initiatives during the first nine months of 2007 included $180 million of share repurchases Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. . Commenting on the third quarter 2007 results, John Charman John R Charman (born 1953), is an English businessman, who has made his career in insurance. He is currently CEO/President/Director at Bermuda based Axis Capital Holdings Ltd. , Chief Executive Officer and President of AXIS Capital, stated: "For our eighth quarter in a row, our quality underwriting portfolio, good investment earnings and overall favorable loss experience delivered record profitability. Our diluted book value per share has increased 15% from the start of the year and 22% over the last twelve months. We believe our global, diversified underwriting platform will continue to deliver market outperformance during 2008." SEGMENT HIGHLIGHTS Insurance Segment Our insurance segment reported underwriting income Underwriting income For an insurance company, the difference between the premiums earned and the costs of settling claims. for the quarter of $111 million, up $43 million, or 62%, from the third quarter of 2006. The segment's combined ratio was 63.3% compared with 79.0% in the prior year quarter. The decrease in the ratio was due to both a higher level of favorable prior period development and the recognition of low reported claim activity in our property lines this quarter. Net favorable development of 19.4 percentage points in the current quarter compared with 8.5 percentage points in the third quarter of 2006. Our insurance segment reported gross premiums written in the quarter of $481 million, up 6% from the third quarter of 2006, and net premiums written of $316 million, down 2% from the third quarter of 2006. Despite an increasingly competitive marketplace in many of our lines, we were able to increase gross premiums written this quarter through the select expansion of our political risk and professional lines businesses. Growth in our professional lines business was associated with our acquisition in the last quarter of Media Pro. The reduction in net premiums written reflects an increase in premiums ceded. Cessions of 34% of gross premiums written in the quarter compared to cessions of 29% in the third quarter of 2006 and reflected expanded reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. coverage at attractive costs. Reinsurance Segment Our reinsurance segment reported underwriting income for the quarter of $88 million, down $19 million, or 18%, from the third quarter of 2006. The segment's combined ratio was 77.1% compared with 70.8% in the prior year quarter. The increase in the combined ratio was primarily due to an increase in the incidence of mid-sized natural catastrophe events in the quarter which included storms in Midwest U.S. and Canada and flooding damages in the U.K. Our reinsurance segment reported gross premiums written in the quarter of $274 million, down 3% from the third quarter of 2006. This decrease was driven by reduced catastrophe business written in the quarter compared to the same period last year. In 2006, catastrophe capacity available at the beginning of 2006 was reallocated to mid-year renewals to take advantage of stronger mid-year pricing. The decrease in catastrophe premium in the quarter was partially offset by increased participations on renewals for professional lines and liability reinsurance business. INVESTMENTS Pre-tax net investment income increased $20 million, or 20%, to $119 million for the quarter. The increase principally reflects the impact of higher average investment balances and average investment yields, offset by a small reduction in net investment income from our alternative investment portfolio ("other investments"). In September, we sold our life settlement investment resulting in a reduction in our other investments and a corresponding reduction in our liability under repurchase agreement Repurchase agreement An agreement with a commitment by the seller (dealer) to buy a security back from the purchaser (customer) at a specified price at a designated future date. . We experienced net realized losses Realized Loss A loss recognized when assets are sold for a price lower than the original purchase price. Notes: A portion of the realized loss may be applied against a capital gain or realized profit to reduce taxes. of $1 million in the three months ended September 30, 2007, compared to $2 million for the corresponding period of 2006. CAPITALIZATION / SHAREHOLDERS' EQUITY Total capitalization Total capitalization The total long-term debt and all types of equity of a company that constitutes its capital structure. total capitalization See capitalization. at September 30, 2007 was $5.4 billion, including $0.5 billion of long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. and $0.5 billion of preferred equity, compared to $4.9 billion at December 31, 2006. During the quarter, we repurchased 2.2 million shares of common stock at an average price of $35.74 per share, for a total cost of $79.6 million. During the nine months ended September 30, 2007, we repurchased 4.9 million shares of common stock at an average price of $36.57 per share, for a total cost of $180 million. We have $220 million remaining under our current share repurchase authorization. At September 30, 2007, diluted book value per common share was $27.52 and book value per common share was $30.50, compared to $24.02 and $26.09 respectively, as of December 31, 2006. CONFERENCE CALL We will host a conference call on Tuesday October 30, 2007 at 8:00 AM (Eastern) to discuss the third quarter financial results and related matters. The teleconference can be accessed by dialing (888) 680-0894 (U.S. callers) or (617) 213-4860 (international callers) and entering the pass code 98796237 approximately ten minutes in advance of the call. A live, listen-only webcast of the call will be available via the Investor Information section of our website at www.axiscapital.com. In addition, a financial supplement relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc our financial results for the quarter ended September 30, 2007 is available in the Investor Information section of our website. AXIS Capital is a Bermuda-based global provider of specialty lines insurance and treaty reinsurance with shareholders' equity at September 30, 2007 of $4.9 billion and locations in Bermuda, the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , Europe and Singapore. Its operating subsidiaries An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. have been assigned a rating of "A" ("Excellent") by A.M. Best and a rating of "A" ("Strong") by Standard & Poor's. AXIS Capital has been assigned a senior unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. rating of Baa1 (stable) by Moody's Investors Service Moody's Investors Service A leading global credit rating, research and risk analysis firm. Moody's Investors Service A leading firm engaged in credit rating, risk analysis, and research of fixed-income securities and their issuers. and BBB BBB A medium grade assigned to a debt obligation by a rating agency to indicate an adequate ability to pay interest and repay principal. However, adverse developments are more likely to impair this ability than would be the case for bonds rated A and above. + (stable) by Standard & Poor's. For more information about AXIS Capital, visit our website at www.axiscapital.com. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] Cautionary Note Regarding Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This release contains forward-looking statements within the meaning of the U.S. federal securities laws. Forward-looking statements contained in this release include our expectations regarding market conditions and information regarding our estimates of losses related to natural disasters. These statements involve risks, uncertainties and assumptions. Actual events or results may differ materially from our expectations. Important factors that could cause actual events or results to be materially different from our expectations include (1) our limited operating history, (2) the occurrence of natural and man-made disasters man-made disaster Technological disaster Public health An event in which a significant number of people are injured or die as a result of human devices or activities, unrelated to conflicts, and attributed to operator error–eg, Exxon Valdez , (3) actual claims exceeding our loss reserves, (4) the failure of any of the loss limitation methods we employ, (5) the effects of emerging claims and coverage issues, (6) the failure of our cedants to adequately evaluate risks, (7) the loss of one or more key executives, (8) a decline in our ratings with rating agencies, (9) the loss of business provided to us by our major brokers, (10) changes in governmental regulations, (11) increased competition, (12) general economic conditions and (13) the other factors set forth in our most recent report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. , Form 10-Q Form 10-Q See 10-Q. and other documents on file with the Securities and Exchange Commission. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Non-GAAP Financial Measures In this release, we have presented the following non-GAAP financial measures: 1. Operating income. This represents net income available to common shareholders, before the after tax impact of net realized gains Realized Gain A gain resulting from selling an asset at a price higher than the original purchase price. Notes: There may be tax consequences for a realized profit. and losses on investments; 2. Operating income, excluding the after tax impact of foreign exchange gains/losses; and 3. Diluted book value per common share using the "if-converted" method. We have included the first and second measures as we believe that security analysts, rating agencies and investors believe that realized gains and losses and foreign exchange, where an actively managed foreign exchange program is not in place, are largely opportunistic and are a function of economic and interest rate conditions. As a result, we believe that they evaluate earnings before realized gains and losses and foreign exchange, adjusted for tax, to make performance comparisons with our industry peers. We have included the third measure because it takes into account the effect of the full conversion of our outstanding stock options, warrants, restricted stock and phantom stock Phantom stock is essentially a cash bonus plan, although some plans pay out the benefits in the form of shares. Phantom stock provides a cash or stock bonus based on the value of a stated number of shares, to be paid out at the end of a specified period of time. units. As we have no plans to reacquire all such dilutive securities, the calculation assumes the retention of all proceeds upon exercise and the resulting issuance of common shares to remain outstanding. Because we had dilutive common shares outstanding in each of the periods presented, we believe diluted book value per share provides useful information for investors to measure shareholder returns. |
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