AXIS Capital Reports Net Income of $166.8 Million for First Quarter 2004.Business Editors PEMBROKE Pembroke, town, Canada Pembroke (pĕm`brōk), town (1991 pop. 13,997), SE Ont., Canada, NW of Ottawa, on the Ottawa River. It is a lumbering center and also has steel and electric-products factories. , Bermuda--(BUSINESS WIRE)--May 3, 2004 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 a 56% increase in net income for the quarter ended March 31, 2004 to $166.8 million, or $1.00 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, from $107.1 million, or $0.75 per diluted share, for the quarter ended March 31, 2003. This was generated by increased underwriting profits Underwriting profit is a term used in the insurance industry. It consists of the earned premium remaining after losses have been paid and administrative expenses have been deducted. It does not include any investment income earned on held premiums. and investment income. 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 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 22.9% for the quarter ended March 31, 2004 compared to 21.2% for the quarter ended March 31, 2003. Net income excluding 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, net of tax, for the quarter ended March 31, 2004 was $157.6 million, or $0.94 per diluted share, compared with $96.0 million, or $0.67 per diluted share, for the quarter ended March 31, 2003. Net income excluding net realized gains and losses on investments, net of tax, is a non-GAAP financial measure. A reconciliation of this measure to net income is presented at the end of this release. 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. , President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , commented: "This first quarter of 2004 saw all four of our underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. segments fully operational for the first time. Our diversified diversified (di·verˑ·s , global AXIS franchise was able to participate strongly in the important renewal season and all segments reported substantial growth ranging from 23% to 170%. This geographic geographic /geo·graph·ic/ (je?o-graf´ik) in pathology, of or referring to a pattern that is well demarcated, resembling outlines on a map. geographic pertaining to geography. and product diversified group of specialty A contract under seal. A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. businesses, trading daily as a highly efficient and focused, integrated underwriting machine, has generated an annualized return on average equity of 22.9%." Mr. Charman continued, "Our diversity of operations, our strong balance sheet, our highly skilled and well regarded underwriting professionals continue to attract quality business and drive long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. real value for our shareholders." 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. for the quarter ended March 31, 2004 were $1,044.1 million compared to $608.6 million for the quarter ended March 31, 2003, an increase of 72%. Of these premiums written: $300.4 million were derived de·rive v. de·rived, de·riv·ing, de·rives v.tr. 1. To obtain or receive from a source. 2. from global insurance compared to $243.6 million in the corresponding quarter of 2003, an increase of 23%; $429.1 million from global 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. compared to $211.5 million in the corresponding quarter of 2003, an increase of 103%; $148.3 million from U.S. insurance compared to $91.9 million in the corresponding quarter of 2003, an increase of 61%; and $166.3 million from U.S. reinsurance compared to $61.6 million the corresponding quarter of 2003, an increase of 170%. The increase in our global reinsurance gross premiums written was largely driven by our strategic expansion into continental Europe Continental Europe, also referred to as mainland Europe or simply the Continent, is the continent of Europe, explicitly excluding European islands and, at times, peninsulas. . The increase in our U.S. insurance and reinsurance gross premiums written was largely driven by greater market penetration Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market penetration - the act of entering into or through something; "the penetration of upper management by women" and our ability to participate fully in the first quarter's important renewal season. For the quarter ended March 31, 2004 compared to the quarter ended March 31, 2003, ceded premiums increased to $144.9 million from $68.4 million and our net premiums written rose to $899.2 million from $540.1 million. Net premiums earned increased to $471.2 million from $302.4 million. The increase reflects the increase in our gross premiums written over the last twelve months. For the quarter ended March 31, 2004, net investment income was $31.3 million and realized gains were $10.1 million, compared with $11.4 million in net investment income and $11.2 million in realized gains for the quarter ended March 31, 2003. The increase in net investment income was due to increased invested assets on which we obtained improved investment yields. Cash flow generated from operations was $365.5 million compared with $264.4 million for the quarter ended March 31, 2004. For the quarter ended March 31, 2004, the Company generated a combined ratio of 72.5%, a loss ratio of 51.5% and an expense ratio of 21.0% compared to 73.1%, 48.4% and 24.7%, respectively, for the quarter ended March 31, 2003. In both of these quarters, there was limited catastrophic loss activity. In addition, our loss ratios benefited by 10.3 percentage points and 3.4 percentage points, respectively, as a result of favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. prior period loss reserve development. Our expense ratio continues to improve as our earned premium Earned premium is the portion of an insurance written premium which is considered "earned" by the insurer, based on the part of the policy period that the insurance has been in effect, and during which the insurer has been exposed to loss. base increases. Our shareholders' equity increased to $3.0 billion at March 31, 2004. Diluted book value per share at March 31, 2004 was $18.54, compared to $17.48 at December December: see month. 31, 2003. Diluted book value per share is a non-GAAP financial measure. A reconciliation of this measure to book value per share is presented at the end of this release. AXIS Capital will host a conference call on Tuesday Tuesday: see week. , May 4, 2004 at 8:30 AM (Eastern) to discuss the first quarter financial results and related matters. This presentation will be available through an audio webcast accessible through the Investor Information section of the Company's 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 the Company's financial results for the first quarter 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 in excess of $3.0 billion and locations in Bermuda Bermuda (bûrmy  `də), British dependency (2005 est. pop. 65,400), 21 sq mi (53 sq km), comprising some 150 coral rocks, islets, and islands (of which some 20 are inhabited), in the , 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. and
Europe Europe (y r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). . 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 as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. a rating of "A" ("Excellent") by A.M. Best and a rating of "A" ("Strong") by Standard & Poor's. For more information about AXIS Capital, visit the Company's website at www.axiscapital.com.
AXIS CAPITAL HOLDINGS LIMITED
UNAUDITED CONSOLIDATED BALANCE SHEETS
As at March 31, 2004 and December 31, 2003
(Expressed in thousands of U.S. dollars, except share and per share
amounts)
March 31, December
2004 31, 2003
Assets
Cash and cash equivalents $ 802,129 $ 605,175
Investments at fair market value 3,692,455 3,385,576
(Amortized cost 2004:
$3,633,957; 2003:$3,359,102)
Other investments 9,332 -
Accrued interest receivable 30,564 29,530
Net receivable for investments sold - 3,371
Securities lending collateral 505,186 -
Insurance and reinsurance premium balances
receivable 1,019,195 660,530
Deferred acquisition costs 219,113 136,281
Prepaid reinsurance premiums 213,994 164,999
Reinsurance recoverable 190,917 124,899
Intangible assets 24,204 24,579
Other assets 39,899 37,333
---------- ----------
Total Assets $6,746,988 $5,172,273
========== ==========
Liabilities
Reserve for losses and loss expenses $1,261,094 $ 992,846
Unearned premiums 1,620,384 1,143,447
Insurance and reinsurance balances payable 193,252 151,381
Accounts payable and accrued expenses 39,456 67,451
Securities lending payable 504,730 -
Net payable for investments purchased 121,509 -
---------- ----------
Total Liabilities 3,740,425 2,355,125
---------- ----------
Shareholders' Equity
Share capital
(Authorized 800,000,000 common shares,
par value $0.0125; issued and
outstanding 2004; 152,480,904:
2003; 152,474,011) 1,906 1,906
Additional paid-in capital 2,005,425 2,000,731
Accumulated other comprehensive income,
net of tax 53,906 25,164
Retained earnings 945,326 789,347
---------- ----------
Total Shareholders' Equity 3,006,563 2,817,148
---------- ----------
Total Liabilities & Shareholders'
Equity $6,746,988 $5,172,273
========== ==========
AXIS CAPITAL HOLDINGS LIMITED
UNAUDITED CONSOLIDATED STATEMENTS OF
OPERATIONS
For the quarters ended March 31, 2004 and 2003
(Expressed in thousands of U.S. dollars, except share and
per share amounts)
Quarters ended March 31,
2004 2003
(note 1)
Revenues
Gross premiums written $1,044,123 $608,587
Premiums ceded (144,933) (68,443)
Change in unearned premiums (427,942) (237,717)
------------ ------------
Net premiums earned 471,248 302,427
Net investment income 31,259 11,352
Net realized gains 10,097 11,198
Other insurance related income 288 1,106
------------ ------------
Total revenues 512,892 326,083
------------ ------------
Expenses
Net losses and loss expenses 242,600 146,335
Acquisition costs 56,963 44,251
General and administrative expenses 41,888 30,362
Foreign exchange 1,145 (1,887)
------------ ------------
Total expenses 342,596 219,061
------------ ------------
Income before income taxes 170,296 107,022
Income tax (expense) recovery (3,510) 97
------------ ------------
Net Income $166,786 $107,119
============ ============
Weighted average common shares and
common share equivalents - basic 152,480,904 136,381,025
============ ============
Weighted average common shares and
common share equivalents - diluted 167,252,826 142,785,514
============ ============
Net income per share - basic $1.09 $0.79
============ ============
Net income per share - diluted $1.00 $0.75
============ ============
Insurance Ratios
Loss ratio 51.5% 48.4%
Expense ratio 21.0% 24.7%
------------ ------------
Combined ratio 72.5% 73.1%
============ ============
Note 1: Acquisition costs and general and administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. for 2003 have been reclassified to conform to Verb 1. conform to - satisfy a condition or restriction; "Does this paper meet the requirements for the degree?" fit, meet coordinate - be co-ordinated; "These activities coordinate well" current year classifications. 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 may include forward-looking statements within the meaning of the U.S. federal securities laws. These statements involve risks, uncertainties and assumptions. Actual events or results may differ materially from the Company's expectations. Important factors that could cause actual events or results to be materially different from the Company's 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), failure of any of the loss limitation methods we employ, (5) 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 Standard & Poor's and A.M. Best, (9) loss of business provided to us by our major brokers, (10) changes in governmental regulations, (11) increased competition and (12) general economic conditions. The Company undertakes 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 addition to the GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). financial measures included within this release, the Company has presented "net income excluding net realized gains and losses on investments, net of tax" and "diluted book value per share," which are non-GAAP financial measures. The Company has included the first measure as it believes that security analysts, rating agencies and investors believe that realized gains and losses are largely opportunistic opportunistic /op·por·tu·nis·tic/ (op?er-tldbomacn-is´tik) 1. denoting a microorganism which does not ordinarily cause disease but becomes pathogenic under certain circumstances. 2. and are a function of economic and interest rate conditions. As a result, the Company believes that they evaluate earnings before realized gains and losses, adjusted for tax, to make performance comparisons with the Company's industry peers. The Company has included the second measure because it takes into account the effect of dilutive securities and, therefore, the Company believes that this is a better measure of calculating shareholder returns than book value per share.
AXIS CAPITAL HOLDINGS LIMITED
NON-GAAP FINANCIAL MEASURE RECONCILIATION
NET INCOME EXCLUDING REALIZED GAINS AND LOSSES ON INVESTMENTS,
NET OF TAX
For the quarters ended March 31, 2004 and 2003
(Expressed in thousands of U.S. dollars, except per share amounts)
Quarters ended March 31,
2004 2003
Net income $ 166,786 $ 107,119
Adjustment for net realized gains on
investments (10,097) (11,198)
Adjustment for associated tax impact
of net realized gains on investments 953 77
Net income excluding realized gains on --------- ----------
investments, net of tax $ 157,642 $ 95,998
========= ==========
Net income per share - diluted $ 1.00 $ 0.75
Adjustment for net realized gains on (0.06) (0.08)
investments
Adjustment for associated tax impact
of net realized gains on investments 0.00 0.00
Net income excluding realized gains on
investments, net of tax per diluted --------- ----------
share $ 0.94 $ 0.67
========= ==========
Weighted average common shares and
common share equivalents - diluted 167,252,826 142,785,514
=========== ============
AXIS CAPITAL HOLDINGS LIMITED
NON-GAAP FINANCIAL MEASURE RECONCILIATION
DILUTED BOOK VALUE PER SHARE
As at March 31, 2004 and December 31, 2003
(Expressed in thousands of U.S. dollars, except share and
per share amounts)
March 31, December 31,
2004 2003
Shareholders' equity $3,006,563 $2,817,148
Shares outstanding 152,480,904 152,474,011
------------ ------------
Book value per share $19.72 $18.48
============ ============
Diluted book value on an "as if
converted basis"
Shareholders' equity $3,006,563 $2,817,148
add in:
proceeds on exercise of options 94,885 62,630
proceeds on exercise of warrants 244,814 244,811
------------ ------------
Adjusted shareholders' equity $3,346,262 $3,124,589
------------ ------------
As if converted diluted shares
outstanding Shares outstanding 152,480,904 152,474,011
add in:
vesting of restricted stock 2,430,175 1,884,696
exercise of options 5,766,102 4,695,512
exercise of warrants 19,774,584 19,690,692
------------ ------------
Diluted shares outstanding 180,451,765 178,744,911
------------ ------------
------------ ------------
Diluted book value per share $18.54 $17.48
============ ============
In the fourth quarter of 2004, the Company adopted, prospectively, the fair value recognition provisions of SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 123 "Accounting for Stock-Based Compensation" for all stock-based employee compensation granted, modified mod·i·fy v. mod·i·fied, mod·i·fy·ing, mod·i·fies v.tr. 1. To change in form or character; alter. 2. or settled after January January: see month. 1, 2004. As a result, with respect to unvested restricted stock awards, the amount of deferred compensation is eliminated from share capital and additional paid-in-capital. This charge impacts the calculation of "Book value per share" but has no impact on the calculation of "Diluted book value per share". |
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