Axis Capital Announces 2005 Second Quarter Net Income of $172.8 Million.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 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 -- AXIS Capital Holdings Limited ("AXIS
Capital") (NYSE NYSESee: 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 for the quarter ended June June: see month. 30, 2005 of $172.8 million, or $1.13 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, compared with $140.9 million, or $0.84 per diluted share, for the quarter ended June 30, 2004. Net income for the six months ended June 30, 2005 was $324.6 million, or $2.07 per diluted share, compared with $307.6 million, or $1.84 per diluted share, for the corresponding period in 2004. Financial results for the second quarter and first six months of 2005 benefited from increased underwriting profit 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. 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 second quarter of 2005 was $170.9 million, or $1.12 per diluted share, compared with $144.7 million, or $0.87 per diluted share, for the quarter ended June 30, 2004. This same item excluding foreign exchange losses, net of tax, for the second quarter of 2005 was $197.4 million, or $1.29 per diluted share, compared with $151.0 million, or $0.91 per diluted share, for the quarter ended June 30, 2004. Net income excluding net realized gains and losses on investments, net of tax, for the six months ended June 30, 2005 was $323.7 million, or $2.07 per diluted share, compared with $302.3 million, or $1.81 per diluted share, for the six months ended June 30, 2004. This same item excluding foreign exchange losses, net of tax, for the six months ended June 30, 2005 was $373.1 million, or $2.38 per diluted share, compared with $309.8 million, or $1.86 per diluted share, for the six months ended June 30, 2004. Net income excluding net realized gains and losses on investments, net of tax, and net income excluding net realized gains and losses on investments and foreign exchange losses, net of tax, are non-GAAP financial measures. Reconciliations of these measures to net income are presented at the end of this release. Operating highlights for the second quarter of 2005 are as follows: --Gross premiums written increased by 21.9% to $767.3 million and net premiums written increased by 26.2% to $615.8 million; --Combined ratio of 74.5%, which includes solid current accident year results and favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. reserve development of 11.9 percentage points; --Total pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta investment income, including net realized gains and losses, increased by 106.8% to $59.8 million primarily due to a combination of higher investment balances and higher investment yields; --Cash flows from operations were $860.9 million for the six months, up 9.7% from the comparable period of 2004; --Annualized return on average 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. of 22.6% achieved for the quarter and 20.3% achieved for the six months; and --Total shareholders' equity of $3.2 billion and 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. of $3.7 billion as of June 30, 2005. Commenting on the second quarter 2005 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: "The 22.6% return on equity generated during the quarter demonstrates our ongoing ability to produce real and attractive returns to our shareholders from the diversity of our global platform. We have worked diligently dil·i·gent adj. Marked by persevering, painstaking effort. See Synonyms at busy. [Middle English, from Old French, from Latin d this quarter and found plentiful plen·ti·ful adj. 1. Existing in great quantity or ample supply. 2. Providing or producing an abundance: a plentiful harvest. opportunity as was evidenced by AXIS Insurance's targeted entry into attractively rated 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. classes and AXIS Re's success in accessing new property 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. opportunities. However, our strong 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. discipline has manifested itself in reduced writings in lines of business where senseless sense·less adj. 1. Lacking sense or meaning; meaningless. 2. Deficient in sense; foolish or stupid. 3. Insensate; unconscious. competition has driven pricing to unacceptable levels." "At this time, I am pleased to report that we have concluded our exhaustive internal investigation led by external counsel. It has uncovered Uncovered may refer to:
A fictitious name is an assumed name that differs from an individual's actual name. A fictitious action is a lawsuit brought not for the adjudication of an actual controversy between the parties but merely for the purpose of or inflated quotes or related matters or conditioning direct insurance on the placement of reinsurance. No evidence of any of these types of wrongdoing wrong·do·er n. One who does wrong, especially morally or ethically. wrong  do was found. This
investigation was launched in the fourth quarter of 2004, following
inquiries stemming stemming - stemmer from the industry-wide investigations of the
insurance industry initiated by the New York New York, state, United StatesNew York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of Attorney General and other regulators." "There continues to be a number of fundamental issues that the industry needs to address over the next couple of years. The powerful combination of Sarbanes-Oxley and the insurance industry investigations led by the New York Attorney General make the resolution of these issues a matter of when, not if. These issues have not deterred us from implementing our strategy of becoming one of the leading and most consistently profitable specialist global insurance and reinsurance businesses. We believe that AXIS will ultimately benefit from these industry changes leading to greater transparency (1) The quality of being able to see through a material. The terms transparency and translucency are often used synonymously; however, transparent would technically mean "seeing through clear glass," while translucent would mean "seeing through frosted glass." See alpha blending. and honesty Honesty See also Righteousness, Virtuousness. Alethia ancient Greek personification of truth. [Gk. Myth.: Zimmerman, 18] Better Business Bureau nationwide system of organizations investigating dishonest business practices. [Am. , and, in the meantime Adv. 1. in the meantime - during the intervening time; "meanwhile I will not think about the problem"; "meantime he was attentive to his other interests"; "in the meantime the police were notified" meantime, meanwhile , we grow stronger and become more focused and more determined every day." Operating Results As of January January: see month. 2005, we are reporting two underwriting segments, insurance and reinsurance, and a corporate segment following the previously announced strategic reorganization The process of carrying out, through agreements and legal proceedings, a business plan for winding up the affairs of, or foreclosing a mortgage upon, the property of a corporation that has become insolvent. of our operations into AXIS Insurance and AXIS Re. The insurance segment is further divided into global insurance and U.S. insurance. Our total gross premiums increased 21.9% from the second quarter of 2004 and were derived de·rive v. de·rived, de·riv·ing, de·rives v.tr. 1. To obtain or receive from a source. 2. 66.9% from our insurance segment and 33.1% from our reinsurance segment compared to 69.3% and 30.7%, respectively, for the second quarter of 2004. This increase was largely attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to 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" in existing lines of business. Our combined ratio decreased to 74.5% in the quarter from 75.2% in the second quarter of 2004 primarily due to favorable prior period reserve development. Also, we have begun to utilize our own loss experience in establishing our initial expected net loss and loss expense ratios for many short tail lines of business. Our total gross premiums for the six months ended June 30, 2005 increased 17.5% from the same period of 2004 and were derived 47.9% from our insurance segment and 52.1% from our reinsurance segment compared to 52.9% and 47.1%, respectively, for the same period of 2004. This increase was largely attributable to our reinsurance segment where our Zurich office achieved greater market penetration in 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. and where we capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. on opportunities within our U.S. property reinsurance book. Our combined ratio increased to 76.4% in the six months ended June 30, 2005 from 73.9% in the same period of 2004 primarily due to a change in the mix of business. Insurance Segment Our insurance segment reported gross premiums in the quarter of $513.0 million, up 17.6% from the second quarter of 2004, and net premiums of $365.1 million, up 21.4% from the second quarter of 2004. The growth in our insurance segment was largely driven by growth in our U.S. insurance operation, which generated an increase in gross premiums of 29.8% and an increase in net premiums of 28.5%. This was derived from select expansion of our professional lines products and from greater market penetration in our umbrella umbrella, a small canopy used as a protection against the sun in China, Egypt, and elsewhere in remote antiquity. It was often an emblem of rank. During the Middle Ages the umbrella became almost extinct in Europe; its usefulness was not rediscovered until the late liability book. Global insurance experienced moderate growth in gross premiums of 5.2%, mainly generated by the development of our London London, city, Canada London, city (1991 pop. 303,165), SE Ont., Canada, on the Thames River. The site was chosen in 1792 by Governor Simcoe to be the capital of Upper Canada, but York was made capital instead. London was settled in 1826. market-based professional lines book of business. We continue to experience competition in many lines of business in global insurance and, therefore, continue to decline business that does not meet our underwriting criteria criteria (krītēr´ē  ),n. . Our insurance segment reported a combined ratio of 66.8% for the quarter compared to 78.8% for the second quarter of 2004. The insurance segment experienced favorable prior period reserve development from short-tail lines of $44.4 million in the second quarter compared to $24.4 million in the second quarter of 2004. Also, within this segment we have begun to reflect our own loss experience in establishing our initial expected net loss and loss expense ratios for many short tail lines of business. Reinsurance Segment Our reinsurance segment reported gross premiums in the quarter of $254.3 million, up 31.6% from the second quarter of 2004, and net premiums of $250.7 million, up 34.0% from the second quarter of 2004. Growth in this segment during the quarter was primarily driven by new opportunities within our U.S. property reinsurance and liability reinsurance lines of business. Our reinsurance segment reported a combined ratio of 77.7% compared to 65.7% in the second quarter of 2004. Favorable prior period reserve development from short-tail lines of business was $29.6 million in the quarter compared to $18.7 million in the second quarter of 2004. The increase in the combined ratio was primarily generated by a change in the mix of business, with more business generated by reinsurance products other than property catastrophe Catastrophe, from the Greek Καταστροφή (katastrephein), literally means "to turn" (strephein) "downwards" (kata-). . Interest Expense Interest expense for the quarter was $7.8 million compared to $0.2 million for the second quarter of 2004. Interest expense for the six months ended June 30, 2005 was $15.9 million compared to $0.2 million for the same period of 2004. Interest expense consists of interest due on outstanding debt, the amortization of debt offering expenses and offering discounts and fees relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc our credit facility. Our outstanding debt relates to $500.0 million of senior unsecured Unsecured A loan or equity interest that is given without any guarantee of payment, performance, satisfaction or opportunity for return from the recipient. No property, interest or security is used as collateral in either a guarantee or a pledge. notes issued on November November: see month. 15, 2004. Investments Total pre-tax investment income, which included $58.0 million in net investment income and $1.8 million in realized gains, grew 106.8% to $59.8 million in the quarter up from $28.9 million in the second quarter of 2004. The increase primarily reflected the positive impact of higher average yields on higher investment balances. These increased yields were generated by higher short term U.S. interest rates together with our increased allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as to other investments. Total pre-tax investment income for the six months ended June 30, 2005 of $111.2 million included $110.8 million in net investment income and $0.4 million in realized gains. This was an increase of 58.2% from $70.3 million in the same period of 2004. Capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. / Shareholders' Equity Total capitalization at June 30, 2005 was $3.7 billion, including $499.0 million 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. , which was comparable to December December: see month. 31, 2004 levels following capital management initiatives undertaken in the first quarter of 2005. In February February: see month. 2005, we repurchased 12,783,094 shares of common stock from certain of our initial investors at an average price of $27.38 per share for a total of $350 million. 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: at June 30, 2005 was $22.51 compared to $21.20 per common share at December 31, 2004. Diluted book value per share at June 30, 2005 increased 5.2% to $20.89 compared with $19.85 per share at December 31, 2004. Diluted book value per share is a non-GAAP financial measure. A reconciliation of this measure to shareholders' equity is presented at the end of this release. Insurance Industry Investigation and Conclusion of Internal Investigation As previously disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). , our U.S. holding company has received subpoenas from the Office of the Attorney General of the State of New York seeking information regarding incentive commission agreements, fictitious and inflated quotes and related matters and conditioning direct insurance on the placement of reinsurance. In addition, our U.S. insurance companies have received subpoenas and requests for information from various state insurance regulators regarding these same matters. These inquiries are part of industry-wide investigations in these jurisdictions and we understand that officials from other jurisdictions in which we do business have also initiated investigations into similar matters. Accordingly, we may in the future receive additional subpoenas and requests for information. We are cooperating fully with the Attorney General of the State of New York and the other state regulators in their investigations and intend to cooperate fully with any future investigations. In connection with these inquiries, we have conducted an internal investigation, led by outside counsel, to determine whether we have engaged in any of the improper
adj. Of long duration or existence: a long-standing friendship. long-standing Adjective existing for a long time and wide-spread industry practice, we have in the past entered into incentive commission arrangements with brokers; however, we have not entered into any of these arrangements with respect to 2005. Two purported pur·port·ed adj. Assumed to be such; supposed: the purported author of the story. pur·port ed·ly adv. shareholders class action lawsuits class action lawsuitA lawsuit in which one party or a limited number of parties sue on behalf of a larger group to which the parties belong. For example, investors may bring a class action lawsuit against a brokerage firm that has actively promoted a tax have been filed against us and some of our executive officers relating to the practices being investigated by the Attorney General of the State of New York and other state regulators. On April 13, 2005, these lawsuits were consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: into one lawsuit lawsuit: see procedure; tort. . On May 13, 2005, the plaintiffs filed an amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , consolidated complaint and added as defendants the managing underwriters Managing underwriter The leading firm in an underwriting group, which originates the deal and acts as an agent for the group. managing underwriter See lead underwriter. and one of the selling shareholders in our secondary offering completed in March 2004. As we have previously stated, we believe that the lawsuit is completely without merit and intend to vigorously vig·or·ous adj. 1. Strong, energetic, and active in mind or body; robust. See Synonyms at healthy. 2. Marked by or done with force and energy. See Synonyms at active. defend against it. Conference Call We will host a conference call on Wednesday Wednesday: see week. August 3, 2005 at 8:30 AM (Eastern) to discuss the second quarter financial results and related matters. This presentation will be available through an audio webcast accessible through the Investor Information section of our website at www.axiscapital.com. In addition, a financial supplement relating to our financial results for the second quarter and six months 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 June 30, 2005 in excess of $3.1 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 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). and Singapore Singapore (sĭng`gəpôr, sĭng`ə–, sĭng'gəpôr`), officially Republic of Singapore, republic (2005 est. pop. 4,426,000), 240 sq mi (625 sq km). . 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. 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.
AXIS CAPITAL HOLDINGS LIMITED
UNAUDITED CONSOLIDATED BALANCE SHEETS
As at June 30, 2005 and December 31, 2004
(Expressed in thousands of U.S. dollars, except share and per share
amounts)
June 30, December 31,
2005 2004
Assets
Cash and cash equivalents $ 793,304 $ 632,329
Investments at fair market value 5,298,519 5,128,345
(Amortized cost 2005: $5,295,717;
2004: $5,114,997)
Other investments 441,650 271,344
Accrued interest receivable 54,571 47,487
Securities lending collateral 998,196 865,311
Insurance and reinsurance premium
balances receivable 1,230,321 914,562
Deferred acquisition costs 263,491 211,082
Prepaid reinsurance premiums 269,625 271,187
Reinsurance recoverable 648,025 596,299
Intangible assets 29,947 31,734
Other assets 89,307 68,605
----------- -----------
Total Assets $10,116,956 $ 9,038,285
=========== ===========
Liabilities
Reserve for losses and loss expenses $ 2,929,699 $ 2,404,560
Unearned premiums 2,071,073 1,644,771
Insurance and reinsurance balances payable 251,753 247,940
Accounts payable and accrued expenses 91,982 89,804
Securities lending payable 994,346 864,354
Net payable for investments purchased 112,515 49,854
Debt 498,992 498,938
----------- -----------
Total Liabilities 6,950,360 5,800,221
----------- -----------
Shareholders' Equity
Share capital
(Authorized 800,000,000 common shares,
par value $0.0125; issued and
outstanding 2005: 140,668,032;
2004: 152,764,917) 1,758 1,910
Additional paid-in capital 1,680,148 2,017,144
Accumulated other comprehensive (loss) income (255) 12,915
Retained earnings 1,484,945 1,206,095
----------- -----------
Total Shareholders' Equity 3,166,596 3,238,064
----------- -----------
----------- -----------
Total Liabilities & Shareholders'
Equity $10,116,956 $ 9,038,285
=========== ===========
AXIS CAPITAL HOLDINGS LIMITED
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Quarters and Six Months ended June 30, 2005 and 2004
(Expressed in thousands of U.S. dollars, except share and per share
amounts)
Quarters ended Six Months ended
June 30, June 30, June 30, June 30,
2005 2004 2005 2004
Revenues (see Note 1) (see Note 1) (see Note 1) (see Note 1)
Gross premiums
written $767,293 $629,319 $1,965,992 $1,673,442
Premiums ceded (151,497) (141,442) (288,125) (286,375)
Change in
unearned
premiums 8,617 (1,474) (427,864) (429,416)
------------ ------------ ------------ ------------
Net premiums
earned 624,413 486,403 1,250,003 957,651
Net investment
income 58,001 33,345 110,759 64,604
Net realized
gains (losses) 1,831 (4,411) 438 5,686
Other insurance
related (loss)
income (5,451) 156 (5,519) 444
------------ ------------ ------------ ------------
Total revenues 678,794 515,493 1,355,681 1,028,385
------------ ------------ ------------ ------------
Expenses
Net losses and
loss expenses 322,853 257,850 667,143 500,450
Acquisition costs 85,471 65,491 176,772 122,454
General and
administrative
expenses 56,796 42,442 111,098 84,292
Foreign exchange
losses 27,226 6,413 50,644 7,558
Interest expense 7,818 181 15,897 219
------------ ------------ ------------ ------------
Total expenses 500,164 372,377 1,021,554 714,973
------------ ------------ ------------ ------------
Income before
income taxes 178,630 143,116 334,127 313,412
Income tax
expense (5,785) (2,260) (9,483) (5,770)
------------ ------------ ------------ ------------
Net Income $172,845 $140,856 $324,644 $307,642
============ ============ ============ ============
Weighted average
common shares and
common share
equivalents -
basic 140,566,523 152,487,082 143,584,354 152,484,015
============ ============ ============ ============
Weighted average
common shares and
common share
equivalents -
diluted 153,637,750 166,842,606 157,013,504 166,785,604
============ ============ ============ ============
Net income per
share - basic $1.23 $0.92 $2.26 $2.02
============ ============ ============ ============
Net income per
share - diluted $1.13 $0.84 $2.07 $1.84
============ ============ ============ ============
Insurance Ratios
Loss ratio 51.7% 53.0% 53.4% 52.3%
Expense ratio 22.8% 22.2% 23.0% 21.6%
------------ ------------ ------------ ------------
Combined ratio 74.5% 75.2% 76.4% 73.9%
============ ============ ============ ============
Note 1: Interest expense has been reclassified from general
administrative expenses for 2004 to conform to current year
classifications. Interest expense consists of interest due on
outstanding debt, the amortization of debt offering expenses and
offering discounts and fees relating to our credit facility.
AXIS CAPITAL HOLDINGS LIMITED
UNAUDITED CONSOLIDATED SEGMENTAL DATA
Quarter ended June 30, 2005
Global U.S. Total
Insurance Insurance Insurance
---------- --------- ---------
Revenues:
Gross premiums written $ 227,512 $ 285,470 $ 512,982
Net premiums written 214,005 151,098 365,103
Net premiums earned 204,717 108,321 313,038
Other insurance related (loss) income (5,627) 326 (5,301)
Expenses:
Net losses and loss expenses (78,039) (70,658) (148,697)
Acquisition costs (26,455) (3,695) (30,150)
General and administrative expenses (9,632) (20,777) (30,409)
--------- --------- ---------
Underwriting income (a) 84,964 13,517 98,481
Corporate expenses
Net investment income
Realized gains on investments
Foreign exchange losses
Interest expense
Income before income taxes
Net loss and loss expense ratio 38.1% 65.2% 47.5%
Acquisition cost ratio 12.9% 3.4% 9.6%
General and administrative expense ratio 4.7% 19.2% 9.7%
--------- --------- ---------
Combined ratio 55.7% 87.8% 66.8%
========= ========= =========
Reinsurance Corporate Total
----------- --------- --------
Revenues:
Gross premiums written $ 254,311 $ - $ 767,293
Net premiums written 250,693 - 615,796
Net premiums earned 311,375 - 624,413
Other insurance related (loss) income (150) - (5,451)
Expenses:
Net losses and loss expenses (174,156) - (322,853)
Acquisition costs (55,321) - (85,471)
General and administrative expenses (12,330) - (42,739)
---------- -------- ---------
Underwriting income (a) 69,418 - 167,899
Corporate expenses (14,057) (14,057)
Net investment income 58,001 58,001
Realized gains on investments 1,831 1,831
Foreign exchange losses (27,226) (27,226)
Interest expense (7,818) (7,818)
---------
Income before income taxes $178,630
=========
Net loss and loss expense ratio 55.9% 51.7%
Acquisition cost ratio 17.8% 13.7%
General and administrative expense ratio 4.0% 2.2% 9.1%
---------- -------- ---------
Combined ratio 77.7% 74.5%
========== =========
(a) The Company utilizes underwriting income as a measure of
underwriting profitability as it evaluates profitability solely on
underwriting related revenues and costs. Items not considered to be
part of underwriting include corporate expenses, investment income,
realized losses and gains on the sale of investments, foreign exchange
and interest expense. These items are evaluated separately from our
underwriting results. Underwriting income takes into account net
premiums earned and other insurance related income as revenue and net
losses and loss expenses, acquisition costs and underwriting related
general and administrative expenses as expenses. Underwriting income
is the difference between the revenue and expense items.
AXIS CAPITAL HOLDINGS LIMITED
UNAUDITED CONSOLIDATED SEGMENTAL DATA
Quarter ended June 30, 2004
Global U.S. Total
Insurance Insurance Insurance
---------- --------- ---------
Revenues:
Gross premiums written $ 216,188 $ 219,915 $ 436,103
Net premiums written 183,240 117,605 300,845
Net premiums earned 196,568 83,667 280,235
Other insurance related income (loss) (399) - (399)
Expenses:
Net losses and loss expenses (117,616) (47,124) (164,740)
Acquisition costs (30,422) (2,363) (32,785)
General and administrative expenses (7,265) (16,112) (23,377)
--------- --------- ---------
Underwriting income(a) 40,866 18,068 58,934
Corporate expenses
Net investment income
Realized losses on investments
Foreign exchange losses
Interest expense
Income before income taxes
Net loss and loss expense ratio 59.8% 56.3% 58.8%
Acquisition cost ratio 15.5% 2.8% 11.7%
General and administrative expense ratio 3.7% 19.3% 8.3%
--------- --------- ---------
Combined ratio 79.0% 78.4% 78.8%
========= ========= =========
Reinsurance Corporate Total
----------- --------- --------
Revenues:
Gross premiums written $ 193,216 - $ 629,319
Net premiums written 187,032 - 487,877
Net premiums earned 206,168 - 486,403
Other insurance related income (loss) 555 - 156
Expenses:
Net losses and loss expenses (93,110) - (257,850)
Acquisition costs (32,706) - (65,491)
General and administrative expenses (9,426) - (32,803)
---------- -------- ---------
Underwriting income(a) 71,481 - 130,415
Corporate expenses (9,639) (9,639)
Net investment income 33,345 33,345
Realized losses on investments (4,411) (4,411)
Foreign exchange losses (6,413) (6,413)
Interest expense (181) (181)
---------
Income before income taxes $ 143,116
=========
Net loss and loss expense ratio 45.2% 53.0%
Acquisition cost ratio 15.9% 13.5%
General and administrative expense ratio 4.6% 1.9% 8.7%
---------- -------- ---------
Combined ratio 65.7% 75.2%
========== =========
(a) The Company utilizes underwriting income as a measure of
underwriting profitability as it evaluates profitability solely on
underwriting related revenues and costs. Items not considered to be
part of underwriting include corporate expenses, investment income,
realized losses and gains on the sale of investments, foreign exchange
and interest expense. These items are evaluated separately from our
underwriting results. Underwriting income takes into account net
premiums earned and other insurance related income as revenue and net
losses and loss expenses, acquisition costs and underwriting related
general and administrative expenses as expenses. Underwriting income
is the difference between the revenue and expense items.
AXIS CAPITAL HOLDINGS LIMITED
UNAUDITED CONSOLIDATED SEGMENTAL DATA
Six Months ended June 30, 2005
Global U.S. Total
Insurance Insurance Insurance
---------- --------- ---------
Revenues:
Gross premiums written $ 479,835$ 462,396 $ 942,231
Net premiums written 417,435 242,330 659,765
Net premiums earned 421,575 214,822 636,397
Other insurance related (loss) income (5,865) 346 (5,519)
Expenses:
Net losses and loss expenses (143,934)(142,376) (286,310)
Acquisition costs (59,537) (6,739) (66,276)
General and administrative expenses (19,484) (41,088) (60,572)
--------- --------- ---------
Underwriting income (a) 192,755 24,965 217,720
Corporate expenses
Net investment income
Realized gains on investments
Foreign exchange losses
Interest expense
Income before income taxes
Net loss and loss expense ratio 34.1% 66.3% 45.0%
Acquisition cost ratio 14.1% 3.1% 10.4%
General and administrative expense ratio 4.6% 19.1% 9.5%
--------- --------- ---------
Combined ratio 52.8% 88.5% 64.9%
========= ========= =========
Reinsurance Corporate Total
----------- --------- ---------
Revenues:
Gross premiums written $1,023,761 - $1,965,992
Net premiums written 1,018,102 - 1,677,867
Net premiums earned 613,606 - 1,250,003
Other insurance related (loss) income - - (5,519)
Expenses:
Net losses and loss expenses (380,833) - (667,143)
Acquisition costs (110,496) - (176,772)
General and administrative expenses (24,631) - (85,203)
---------- -------- ----------
Underwriting income (a) 97,646 - 315,366
Corporate expenses (25,895) (25,895)
Net investment income 110,759 110,759
Realized gains on investments 438 438
Foreign exchange losses (50,644) (50,644)
Interest expense (15,897) (15,897)
----------
Income before income taxes $ 334,127
==========
Net loss and loss expense ratio 62.1% 53.4%
Acquisition cost ratio 18.0% 14.1%
General and administrative expense
ratio 4.0% 2.1% 8.9%
---------- -------- ----------
Combined ratio 84.1% 76.4%
========== ==========
(a) The Company utilizes underwriting income as a measure of
underwriting profitability as it evaluates profitability solely on
underwriting related revenues and costs. Items not considered to be
part of underwriting include corporate expenses, investment income,
realized losses and gains on the sale of investments, foreign exchange
and interest expense. These items are evaluated separately from our
underwriting results. Underwriting income takes into account net
premiums earned and other insurance related income as revenue and net
losses and loss expenses, acquisition costs and underwriting related
general and administrative expenses as expenses. Underwriting income
is the difference between the revenue and expense items.
AXIS CAPITAL HOLDINGS LIMITED
UNAUDITED CONSOLIDATED SEGMENTAL DATA
Six Months ended June 30, 2004
Global U.S. Total
Insurance Insurance Insurance
---------- --------- ---------
Revenues:
Gross premiums written $ 516,596$ 368,257 $ 884,853
Net premiums written 415,779 198,429 614,208
Net premiums earned 396,284 157,571 553,855
Other insurance related (loss) income (219) - (219)
Expenses:
Net losses and loss expenses (216,143) (96,740) (312,883)
Acquisition costs (56,463) (2,537) (59,000)
General and administrative expenses (15,455) (31,705) (47,160)
--------- --------- ---------
Underwriting income (a) 108,004 26,589 134,593
Corporate expenses
Net investment income
Realized gains on investments
Foreign exchange losses
Interest expense
Income before income taxes
Net loss and loss expense ratio 54.5% 61.4% 56.5%
Acquisition cost ratio 14.2% 1.6% 10.6%
General and administrative expense ratio 3.9% 20.1% 8.5%
--------- --------- ---------
Combined ratio 72.6% 83.1% 75.6%
========= ========= =========
Reinsurance Corporate Total
----------- --------- ---------
Revenues:
Gross premiums written $ 788,589 - $1,673,442
Net premiums written 772,859 - 1,387,067
Net premiums earned 403,796 - 957,651
Other insurance related (loss) income 663 - 444
Expenses:
Net losses and loss expenses (187,567) - (500,450)
Acquisition costs (63,454) - (122,454)
General and administrative expenses (18,528) - (65,688)
---------- -------- ----------
Underwriting income (a) 134,910 - 269,503
Corporate expenses (18,604) (18,604)
Net investment income 64,604 64,604
Realized gains on investments 5,686 5,686
Foreign exchange losses (7,558) (7,558)
Interest expense (219) (219)
----------
Income before income taxes $ 313,412
==========
Net loss and loss expense ratio 46.5% 52.3%
Acquisition cost ratio 15.7% 12.8%
General and administrative expense
ratio 4.6% 1.9% 8.8%
---------- -------- ----------
Combined ratio 66.8% 73.9%
========== ==========
(a) The Company utilizes underwriting income as a measure of
underwriting profitability as it evaluates profitability solely on
underwriting related revenues and costs. Items not considered to be
part of underwriting include corporate expenses, investment income,
realized losses and gains on the sale of investments, foreign exchange
and interest expense. These items are evaluated separately from our
underwriting results. Underwriting income takes into account net
premiums earned and other insurance related income as revenue and net
losses and loss expenses, acquisition costs and underwriting related
general and administrative expenses as expenses. Underwriting income
is the difference between the revenue and expense items.
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 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), 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 rating agencies, (9) loss of business provided to us by our major brokers, (10) changes in governmental regulations, (11) increased competition and (12) general economic conditions. 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 addition to the GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). financial measures included within this release, we have presented "net income excluding net realized gains and losses on investments, net of tax", "net income excluding net realized gains and losses on investments and foreign exchange, net of tax" and "diluted book value per share," which are non-GAAP financial measures. 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 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, 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 dilutive securities and, therefore, we believe 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 and Six Months ended June 30, 2005 and 2004
(Expressed in thousands of U.S. dollars, except per share amounts)
Quarters ended Six Months ended
June 30, June 30, June 30, June 30,
2005 2004 2005 2004
Net income $172,845 $140,856 $324,644 $307,642
Adjustment for net
realized losses
(gains) on
investments (1,831) 4,411 (438) (5,686)
Adjustment for
associated tax
impact of net
realized (losses)
gains on
investments (65) (595) (521) 358
Net income
excluding
realized (losses)
gains on
investments, ------------ ------------ ------------ ------------
net of tax $170,949 $144,672 $323,685 $302,314
============ ============ ============ ============
Net income per
share - diluted $1.13 $0.84 $2.07 $1.84
============ ============ ============ ============
Adjustment for net
realized (losses)
gains on
investments (0.01) 0.03 - (0.03)
Adjustment for
associated tax
impact of net
realized (losses)
gains on
investments - - - -
Net income excluding
realized (losses)
gains on
investments, net
of tax per ------------ ------------ ------------ ------------
diluted share $1.12 $0.87 $2.07 $1.81
============ ============ ============ ============
Weighted average
common shares and
common share
equivalents -
diluted 153,637,750 166,842,606 157,013,504 166,785,604
============ ============ ============ ============
AXIS CAPITAL HOLDINGS LIMITED
NON-GAAP FINANCIAL MEASURE RECONCILIATION
NET INCOME EXCLUDING REALIZED GAINS AND LOSSES ON INVESTMENTS
AND FOREIGN EXCHANGE LOSSES, NET OF TAX
For the Quarters and Six Months ended June 30, 2005 and 2004
(Expressed in thousands of U.S. dollars, except per share amounts)
Quarters ended Six Months ended
June 30, June 30, June 30, June 30,
2005 2004 2005 2004
Net income $172,845 $140,856 324,644 $307,642
Adjustment for net
realized losses
(gains) on
investments (1,831) 4,411 (438) (5,686)
Adjustment for
foreign exchange
losses 27,226 6,413 50,644 7,558
Adjustment for
associated tax
impact (812) (636) (1,725) 308
Net income excluding
realized (losses)
gains on
investments and
foreign exchange
losses, net of ------------ ------------ ------------ ------------
tax $197,428 $151,044 $373,125 $309,822
============ ============ ============ ============
Net income per
share - diluted $1.13 $0.84 $2.07 $1.84
============ ============ ============ ============
Adjustment for net
realized losses
(gains) on
investments (0.01) 0.03 - (0.03)
Adjustment for
foreign exchange
losses 0.18 0.04 0.32 0.05
Adjustment for
associated tax
impact (0.01) - (0.01) -
Net income excluding
realized (losses)
gains on
investments and
foreign exchange
losses, net of
tax per diluted ------------ ------------ ------------ ------------
share $1.29 $0.91 $2.38 $1.86
============ ============ ============ ============
Weighted average
common shares and
common share
equivalents -
diluted 153,637,750 166,842,606 157,013,504 166,785,604
============ ============ ============ ============
AXIS CAPITAL HOLDINGS LIMITED
NON-GAAP FINANCIAL MEASURE RECONCILIATION
DILUTED BOOK VALUE PER SHARE
As at June 30, 2005 and December 31, 2004
(Expressed in thousands of U.S. dollars, except share and per share
amounts)
June 30, December 31,
2005 2004
Shareholders' equity $ 3,166,596 $ 3,238,064
Shares outstanding 140,668,032 152,764,917
------------ ------------
Book value per share $ 22.51 $ 21.20
============ ============
Diluted book value on an "as if
converted basis"
Shareholders' equity $ 3,166,596 $ 3,238,064
add in:
proceeds on exercise of options 125,094 94,724
proceeds on exercise of warrants 244,812 244,812
------------ ------------
Adjusted shareholders' equity 3,536,502 3,577,600
------------ ------------
As if converted diluted shares
outstanding
Shares outstanding 140,668,032 152,764,917
add in:
vesting of restricted stock 2,288,218 2,182,700
exercise of options 6,686,681 5,694,181
exercise of warrants 19,633,839 19,619,152
------------ ------------
Diluted shares outstanding 169,276,770 180,260,950
------------ ------------
------------ ------------
Diluted book value per share $ 20.89 $ 19.85
============ ============
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