UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 28, 2011
AXIS CAPITAL HOLDINGS LIMITED
(Exact Name Of Registrant As Specified In Charter)
Bermuda | 001-31721 | 98-0395986 | ||
(State of Incorporation) | (Commission File No.) |
(I.R.S. Employer Identification No.) |
92 Pitts Bay Road
Pembroke, Bermuda HM 08
(Address of principal executive offices, including zip code)
(441) 405-2600
(Registrants telephone number, including area code)
Not applicable
(Former name or address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e(4)(c)) |
Item 2.02 | Results of Operations and Financial Condition. |
On April 28, 2011, AXIS Capital Holdings Limited, a Bermuda company, issued a press release reporting its first quarter 2011 results and the availability of its first quarter 2011 investor financial supplement. The press release and the investor financial supplement are attached hereto as Exhibit 99.1 and Exhibit 99.2, respectively.
Item 9.01 | Financial Statements and Exhibits |
(d) Exhibits
99.1 | Press release dated April 28, 2011. | |
99.2 | First quarter 2011 Investor Financial Supplement. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: April 28, 2011
AXIS CAPITAL HOLDINGS LIMITED | ||
By: | /s/ Richard T. Gieryn, Jr. | |
Richard T. Gieryn, Jr. | ||
General Counsel |
EXHIBIT INDEX
Exhibit |
Description of Document | |
99.1 | Press release dated April 28, 2011. | |
99.2 | First quarter 2011 Investor Financial Supplement. |
Exhibit 99.1
Investor Contacts | Media Contacts | |
Linda Ventresca | Michael Herley | |
AXIS Capital Holdings Limited | Kekst and Company | |
investorrelations@axiscapital.com | michael-herley@kekst.com | |
(441) 405-2727 | (212) 521-4897 |
AXIS CAPITAL REPORTS FIRST QUARTER OPERATING LOSS OF $414 MILLION
QUARTERLY DILUTED OPERATING LOSS PER COMMON SHARE OF $3.65
Pembroke, Bermuda, April 28, 2011 - AXIS Capital Holdings Limited (AXIS Capital) (NYSE: AXS) today reported a net loss available to common shareholders for the first quarter of 2011 of $384 million, or $3.39 per diluted common share, compared with net income of $112 million, or $0.79 per diluted common share, for the first quarter of 2010.
The operating loss1 for the first quarter of 2011 was $414 million, or $3.65 per diluted common share, compared with operating income of $96 million, or $0.67 per diluted common share, for the first quarter of 2010.
1 | The presentation of operating income (loss) available to common shareholders is a non-GAAP financial measure as defined in Regulation G. The reconciliation of operating income (loss) to net income (loss) available to common shareholders (the most directly comparable GAAP financial measure) is provided in this release, as is a discussion of the presentation of operating income (loss). |
AXIS Capital Holdings Limited 92 Pitts Bay Road Pembroke, Bermuda HM08
Tel. 441.496.2600 Fax 441.296.3140
www.axiscapital.com
- 1 -
First Quarter Highlights2
| Gross premiums written increased 9% to $1.5 billion; |
| Net premiums written increased 13% to $1.4 billion; |
| Net premiums earned increased 13% to $788 million; |
| Estimated pre-tax net losses (net of reinstatement premiums) of $87 million, $203 million and $287 million for Australian loss events, the Christchurch, New Zealand earthquake and the Japanese earthquake, respectively; |
| Combined ratio of 161.3%, compared to 98.3%; |
| Excluding the above catastrophe events, the first quarter combined ratio and current accident year loss ratio were 88.1% and 62.3% respectively, compared to 77.0% and 57.4% for the first quarter of 20103; |
| Net favorable prior year reserve development of $50 million, pre-tax, benefiting the combined ratio by 6.3 points, compared with $81 million in the prior year quarter, benefiting the combined ratio by 11.7 points; |
| Net investment income of $111 million, an increase of 6%; |
| Total return on cash and investments was 0.9% (pre-tax), compared to (0.3%) in the fourth quarter of 2010; |
| Shareholders equity of $5.2 billion; and |
| Diluted book value per common share of $35.69. |
2 | All comparisons are with the same period last year unless stated otherwise. |
3 | Includes the Chilean earthquake, Australian storms, European Windstorm Xynthia and U.S. winter storms |
AXIS Capital Holdings Limited 92 Pitts Bay Road Pembroke, Bermuda HM08
Tel. 441.496.2600 Fax 441.296.3140
www.axiscapital.com
- 2 -
Commenting on the first quarter 2011 financial results, John Charman, Chief Executive Officer and President of AXIS Capital, stated: The first quarter of 2011 has been an extraordinarily challenging quarter, not only for AXIS but also for the industry as a whole, marked by an unprecedented series of natural catastrophes including one of the largest earthquakes ever recorded. The scale of these losses is indicative of the terrible human tragedies we have witnessed during the period and our deepest sympathies are with those who have suffered from these events.
Currently, there is great uncertainty within the industry over the scale and distribution of total insured losses, which we believe are likely to exceed $50 billion. Against the backdrop of this uncertainty, we believe that we have been prudent in estimating our catastrophe losses. Therefore, our results this quarter are heavily influenced by an accumulation of expensive major natural catastrophes, slow pick-up in demand for our products, and continuing low investment yields. On a positive note, these industry-wide pressures, coming on the back of four to five years of aggressive price competition, are now driving an earlier exit from the absolute bottom of the property and casualty pricing cycle in a number of lines. We believe our major global businesses stand to gain meaningfully in the coming year.
Segment Highlights
Insurance Segment
Our insurance segment reported gross premiums written in the quarter of $425 million, up 14% from the first quarter of 2010. This increase was primarily driven by our new Global Accident & Health operations. Net premiums written and earned increased 40% and 28%, respectively, during the first quarter of 2011; these increases were primarily due to the changes in our ceded reinsurance purchasing and increases in gross premiums written.
Our insurance segment reported an underwriting loss of $48 million for the quarter, compared to underwriting income of $33 million for the first quarter of 2010. The current quarters underwriting result reflected a combined ratio of 114.9%, compared with 87.2% in the prior year quarter. The segments current accident year loss ratio increased from 60.9% in the first quarter of 2010 to 85.9% this quarter, primarily due to estimated net pre-tax losses of $3 million, $20 million and $27 million (inclusive of related premiums to reinstate reinsurance protection) for the Australian events and the New Zealand and Japanese earthquakes, respectively, which added 15.1 points to the quarters loss ratio. Net
AXIS Capital Holdings Limited 92 Pitts Bay Road Pembroke, Bermuda HM08
Tel. 441.496.2600 Fax 441.296.3140
www.axiscapital.com
- 3 -
favorable prior period reserve development was $15 million, or 4.5 points, this quarter compared with $25 million, or 9.9 points, in the first quarter of 2010. Increased acquisition costs reflected changes in our ceded reinsurance purchasing effected during the second quarter of 2010, while the increase in general and administrative expenses reflected the continued build-out of the segments platform.
Reinsurance Segment
Our reinsurance segment reported gross premiums written in the quarter of $1.1 billion, up 7% from the first quarter of 2010. Premium growth in the quarter was primarily driven by the motor reinsurance line.
Our reinsurance segment reported an underwriting loss of $413 million for the quarter, compared to a loss of $5 million in the first quarter of 2010. The segments combined ratio increased from 101.1% in the first quarter of 2010 to 189.7% for the first quarter of 2011. The current accident year loss ratio increased from 89.5% in the first quarter of 2010 to 171.1% this quarter, largely due to estimated net pre-tax losses (net of reinstatement premiums) of $84 million, $183 million and $260 million for the Australian events and the New Zealand and Japanese earthquakes, respectively, which added 115.0 points to the quarters loss ratio. Net favorable prior period reserve development was $35 million, or 7.6 points, this quarter compared with $56 million, or 12.8 points, in the first quarter of 2010.
Investments
Net investment income for the quarter increased $6 million, or 6%, relative to the prior year quarter to $111 million. This increase was primarily due to higher returns from our alternative investments (other investments). Net investment income from fixed maturities was $89 million this quarter, compared with $91 million in the prior year quarter. The decline was primarily due to lower reinvestment yields, partially offset by a higher fixed maturity investment balance.
Net realized investment gains were $30 million, compared to net realized investment gains of $16 million in the prior year quarter.
AXIS Capital Holdings Limited 92 Pitts Bay Road Pembroke, Bermuda HM08
Tel. 441.496.2600 Fax 441.296.3140
www.axiscapital.com
- 4 -
Capitalization / Shareholders Equity
Total capitalization at March 31, 2011 was $6.2 billion, including $1.0 billion of long-term debt and $0.5 billion of preferred equity. At March 31, 2011, diluted book value per common share on a treasury stock basis was $35.69 and book value per common share was $41.17, compared to $39.37 and $45.60, respectively, as of December 31, 2010.
Subsequent to March 31, 2011, certain of our founding shareholders exercised their warrants on a cashless basis pursuant to the terms of the applicable warrant agreements, resulting in a lower number of shares being issued than the number of warrants exercised. Accordingly, we issued 11,852,589 shares upon the exercise of 18,102,623 warrants. In connection with the warrant exercise, we paid deferred dividends of $93 million to those warrant holders who chose the deferred cash option for dividends declared, which was included in other liabilities in the consolidated balance sheets at March 31, 2011. As of April 28, 2011, 1,697,839 warrants remain outstanding and will expire on November 20, 2011.
We did not repurchase any common shares under our authorized repurchase plan during the quarter. At April 28, 2011, we had approximately $593 million of remaining authorization for common share repurchases through December 31, 2012.
AXIS Capital Holdings Limited 92 Pitts Bay Road Pembroke, Bermuda HM08
Tel. 441.496.2600 Fax 441.296.3140
www.axiscapital.com
- 5 -
Conference Call
We will host a conference call on Friday April 29, 2011 at 8:00 AM (Eastern) to discuss the first quarter financial results and related matters. The teleconference can be accessed by dialing (866) 843-0890 (U.S. callers) or (412) 317-9250 (international callers) approximately ten minutes in advance of the call and entering the code 5-3-3-4-8-5-6. A live, listen-only webcast of the call will also be available via the Investor Information section of the Companys website at www.axiscapital.com. A replay of the teleconference will be available for 90 days by dialing (877) 344-7529 (U.S. callers) or (412) 317-0088 (international callers) and entering the code 4-4-9-8-3-9. The webcast will be archived in the Investor Information section of our website.
In addition, a financial supplement relating to our financial results for the quarter ended March 31, 2011 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 March 31, 2011 of $5.2 billion and locations in Bermuda, the United States, Europe, Singapore, Canada and Australia. Its operating subsidiaries have been assigned a rating of A+ (Strong) by Standard & Poors and A (Excellent) by A.M. Best. AXIS Capital and AXIS Specialty Finance LLC have been assigned senior unsecured debt ratings of A- (stable) by Standard & Poors and Baa1 (stable) by Moodys Investors Service. For more information about AXIS Capital, visit our website at www.axiscapital.com.
AXIS Capital Holdings Limited 92 Pitts Bay Road Pembroke, Bermuda HM08
Tel. 441.496.2600 Fax 441.296.3140
www.axiscapital.com
- 6 -
AXIS CAPITAL HOLDINGS LIMITED
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2011 (UNAUDITED) AND DECEMBER 31, 2010
2011 | 2010 | |||||||
(in thousands) | ||||||||
Assets |
||||||||
Investments: |
||||||||
Fixed maturities, available for sale, at fair value |
$ | 10,726,390 | $ | 10,482,897 | ||||
Equity securities, available for sale, at fair value |
502,096 | 349,254 | ||||||
Other investments, at fair value |
554,113 | 519,296 | ||||||
Short-term investments, at amortized cost |
132,512 | 172,719 | ||||||
Total investments |
11,915,111 | 11,524,166 | ||||||
Cash and cash equivalents |
963,266 | 929,515 | ||||||
Restricted cash and cash equivalents |
122,923 | 115,840 | ||||||
Accrued interest receivable |
94,013 | 96,364 | ||||||
Insurance and reinsurance premium balances receivable |
1,880,305 | 1,343,665 | ||||||
Reinsurance recoverable on unpaid and paid losses |
1,688,778 | 1,577,547 | ||||||
Deferred acquisition costs |
498,598 | 359,300 | ||||||
Prepaid reinsurance premiums |
212,808 | 221,396 | ||||||
Goodwill and intangible assets |
102,847 | 103,231 | ||||||
Other assets |
195,275 | 174,707 | ||||||
Total assets |
$ | 17,673,924 | $ | 16,445,731 | ||||
Liabilities |
||||||||
Reserve for losses and loss expenses |
$ | 8,013,861 | $ | 7,032,375 | ||||
Unearned premiums |
2,938,328 | 2,333,676 | ||||||
Insurance and reinsurance balances payable |
141,483 | 164,927 | ||||||
Senior notes |
994,246 | 994,110 | ||||||
Other liabilities |
231,523 | 275,422 | ||||||
Net payable for investments purchased |
164,903 | 20,251 | ||||||
Total liabilities |
12,484,344 | 10,820,761 | ||||||
Shareholders equity |
||||||||
Preferred shares - Series A and B |
500,000 | 500,000 | ||||||
Common shares |
1,958 | 1,934 | ||||||
Additional paid-in capital |
2,074,982 | 2,059,708 | ||||||
Accumulated other comprehensive income |
155,192 | 176,821 | ||||||
Retained earnings |
3,853,076 | 4,267,608 | ||||||
Treasury shares, at cost |
(1,395,628 | ) | (1,381,101 | ) | ||||
Total shareholders equity |
5,189,580 | 5,624,970 | ||||||
Total liabilities and shareholders equity |
$ | 17,673,924 | $ | 16,445,731 | ||||
AXIS Capital Holdings Limited 92 Pitts Bay Road Pembroke, Bermuda HM08
Tel. 441.496.2600 Fax 441.296.3140
www.axiscapital.com
- 7 -
AXIS CAPITAL HOLDINGS LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010
2011 | 2010 | |||||||
(in thousands, except per share amounts) | ||||||||
Revenues |
||||||||
Net premiums earned |
$ | 788,201 | $ | 696,192 | ||||
Net investment income |
110,655 | 104,619 | ||||||
Other insurance related income |
763 | 626 | ||||||
Net realized investment gains: |
||||||||
Other-than-temporary impairment losses |
(2,155 | ) | (6,957 | ) | ||||
Portion of impairment losses transferred to other comprehensive income |
215 | 1,449 | ||||||
Other realized investment gains |
32,084 | 21,684 | ||||||
Total net realized investment gains |
30,144 | 16,176 | ||||||
Total revenues |
929,763 | 817,613 | ||||||
Expenses |
||||||||
Net losses and loss expenses |
1,019,801 | 468,262 | ||||||
Acquisition costs |
135,356 | 116,649 | ||||||
General and administrative expenses |
116,520 | 99,769 | ||||||
Foreign exchange losses (gains) |
15,058 | (8,147 | ) | |||||
Interest expense and financing costs |
15,860 | 8,688 | ||||||
Total expenses |
1,302,595 | 685,221 | ||||||
Income (loss) before income taxes |
(372,832 | ) | 132,392 | |||||
Income tax expense |
1,709 | 11,361 | ||||||
Net income (loss) |
(374,541 | ) | 121,031 | |||||
Preferred shares dividends |
9,219 | 9,219 | ||||||
Net income (loss) available to common shareholders |
$ | (383,760 | ) | $ | 111,812 | |||
Per share data |
||||||||
Net income (loss) per common share: |
||||||||
Basic net income (loss) |
$ | (3.39 | ) | $ | 0.87 | |||
Diluted net income (loss) |
$ | (3.39 | ) | $ | 0.79 | |||
Weighted average number of common shares outstanding - basic |
113,351 | 128,202 | ||||||
Weighted average number of common shares outstanding - diluted |
113,351 | 142,176 | ||||||
Cash dividends declared per common share |
$ | 0.23 | $ | 0.21 |
AXIS Capital Holdings Limited 92 Pitts Bay Road Pembroke, Bermuda HM08
Tel. 441.496.2600 Fax 441.296.3140
www.axiscapital.com
- 8 -
AXIS CAPITAL HOLDINGS LIMITED
CONSOLIDATED SEGMENTAL DATA (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010
2011 | 2010 | |||||||||||||||||||||||
Insurance | Reinsurance | Total | Insurance | Reinsurance | Total | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Gross premiums written |
$ | 424,991 | $ | 1,123,439 | $ | 1,548,430 | $ | 372,929 | $ | 1,052,272 | $ | 1,425,201 | ||||||||||||
Net premiums written |
289,316 | 1,111,463 | 1,400,779 | 206,812 | 1,036,823 | 1,243,635 | ||||||||||||||||||
Net premiums earned |
327,648 | 460,553 | 788,201 | 256,281 | 439,911 | 696,192 | ||||||||||||||||||
Other insurance related income |
763 | | 763 | 626 | | 626 | ||||||||||||||||||
Net losses and loss expenses |
(266,633 | ) | (753,168 | ) | (1,019,801 | ) | (130,703 | ) | (337,559 | ) | (468,262 | ) | ||||||||||||
Acquisition costs |
(42,079 | ) | (93,277 | ) | (135,356 | ) | (31,141 | ) | (85,508 | ) | (116,649 | ) | ||||||||||||
General and administrative expenses |
(67,726 | ) | (27,386 | ) | (95,112 | ) | (61,610 | ) | (21,851 | ) | (83,461 | ) | ||||||||||||
Underwriting income (loss) |
$ | (48,027 | ) | $ | (413,278 | ) | (461,305 | ) | $ | 33,453 | $ | (5,007 | ) | 28,446 | ||||||||||
Corporate expenses |
(21,408 | ) | (16,308 | ) | ||||||||||||||||||||
Net investment income |
110,655 | 104,619 | ||||||||||||||||||||||
Net realized investment gains |
30,144 | 16,176 | ||||||||||||||||||||||
Foreign exchange (losses) gains |
(15,058 | ) | 8,147 | |||||||||||||||||||||
Interest expense and financing costs |
(15,860 | ) | (8,688 | ) | ||||||||||||||||||||
Income (loss) before income taxes |
$ | (372,832 | ) | $ | 132,392 | |||||||||||||||||||
Net loss and loss expense ratio |
81.4 | % | 163.5 | % | 129.4 | % | 51.0 | % | 76.7 | % | 67.3 | % | ||||||||||||
Acquisition cost ratio |
12.8 | % | 20.3 | % | 17.1 | % | 12.2 | % | 19.4 | % | 16.7 | % | ||||||||||||
General and administrative expense ratio |
20.7 | % | 5.9 | % | 14.8 | % | 24.0 | % | 5.0 | % | 14.3 | % | ||||||||||||
Combined ratio |
114.9 | % | 189.7 | % | 161.3 | % | 87.2 | % | 101.1 | % | 98.3 | % | ||||||||||||
AXIS Capital Holdings Limited 92 Pitts Bay Road Pembroke, Bermuda HM08
Tel. 441.496.2600 Fax 441.296.3140
www.axiscapital.com
- 9 -
AXIS CAPITAL HOLDINGS LIMITED
CONSOLIDATED SEGMENTAL DATA (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010
2011 | 2010 | |||||||
(in thousands, except per share amounts) |
||||||||
Net income (loss) available to common shareholders |
$ | (383,760 | ) | $ | 111,812 | |||
Net realized investment gains, net of tax(1) |
(30,142 | ) | (16,162 | ) | ||||
Operating income (loss) |
$ | (413,902 | ) | $ | 95,650 | |||
Net income (loss) per share - diluted |
$ | (3.39 | ) | $ | 0.79 | |||
Net realized investment gains, net of tax |
(0.26 | ) | (0.12 | ) | ||||
Operating income (loss) per share - diluted |
$ | (3.65 | ) | $ | 0.67 | |||
Weighted average common shares and common share equivalents - diluted |
113,351 | 142,176 | ||||||
Average common shareholders equity |
$ | 4,907,275 | $ | 4,938,132 | ||||
Annualized return on average common equity |
(31.3 | %) | 9.1 | % | ||||
Annualized operating return on average common equity |
(33.7 | %) | 7.7 | % |
(1) | Tax cost of $2 and $14 for the three months ended March 31, 2011 and 2010, respectively. Tax impact is estimated by applying the statutory rates of applicable jurisdictions, after consideration of other relevant factors including the ability to utilize capital losses. |
AXIS Capital Holdings Limited 92 Pitts Bay Road Pembroke, Bermuda HM08
Tel. 441.496.2600 Fax 441.296.3140
www.axiscapital.com
- 10 -
Cautionary Note Regarding Forward-Looking Statements
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) the occurrence and magnitude of natural and man-made disasters, (2) actual claims exceeding our loss reserves, (3) general economic, capital, and credit market conditions, (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) inability to obtain additional capital on favorable terms, or at all, (8) the loss of one or more key executives, (9) a decline in our ratings with rating agencies, (10) the loss of business provided to us by our major brokers, (11) changes in accounting policies or practices, (12) the use of industry catastrophe models and changes to those models, (13) changes in governmental regulations, (14) increased competition, (15) changes in the political environment of certain countries in which we operate or underwrite business, (16) fluctuations in interest rates, credit spreads, equity prices and/or currency values, and (17) the other factors set forth in our most recent report on Form 10-K, Form 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.
AXIS Capital Holdings Limited 92 Pitts Bay Road Pembroke, Bermuda HM08
Tel. 441.496.2600 Fax 441.296.3140
www.axiscapital.com
- 11 -
Non-GAAP Financial Measures
In this release, we have presented operating income, which is a non-GAAP financial measure as defined in Regulation G. Operating income (loss) represents after-tax operational results without consideration of after-tax net realized investment gains (losses). A reconciliation of operating income to the most directly comparable GAAP financial measure, net income (loss) available to common shareholders, is included above.
In addition, this press release presents the following measures which are derived from the non-GAAP operating income measure:
1. | Diluted operating earnings (loss) per share - represents operating income (loss) divided by diluted weighted average common shares and share equivalents; and |
2. | Annualized operating return on average common equity - represents operating income (loss) for the period, projected for a full year, as a percentage of average common equity for the period. |
We present our results of operations in the way we believe will be most meaningful and useful to investors, analysts, rating agencies and others who use our financial information to evaluate our performance. This presentation includes the use of operating income (loss) and annualized operating return on average common equity, which is based on the operating income (loss) measure. Although the investment of premiums to generate income and realized investment gains (or losses) is an integral part of our operations, the determination to realize investment gains (or losses) is independent of the underwriting process and is heavily influenced by the availability of market opportunities. Furthermore, many users believe that the timing of the realization of investment gains (or losses) is somewhat opportunistic for many companies. In this regard, certain users of our financial statements evaluate earnings excluding after-tax net realized investment gains (losses) to understand the profitability of recurring sources of income.
We believe that showing net income available to common shareholders exclusive of net realized gains (losses) reflects the underlying fundamentals of our business.
In addition, we believe that this presentation enables investors and other users of our financial information to analyze performance in a manner similar to how our management analyzes the underlying business performance. We also believe this measure follows industry practice and, therefore, facilitates comparison of our performance with our peer group. We believe that equity analysts and certain rating agencies that follow us, and the insurance industry as a whole, generally exclude realized gains (losses) from their analyses for the same reasons.
AXIS Capital Holdings Limited 92 Pitts Bay Road Pembroke, Bermuda HM08
Tel. 441.496.2600 Fax 441.296.3140
www.axiscapital.com
- 12 -
Exhibit 99.2
AXIS Capital Holdings Limited
INVESTOR FINANCIAL SUPPLEMENT
FIRST QUARTER 2011
AXIS Capital Holdings Limited
92 Pitts Bay Road
Pembroke HM 08 Bermuda
Contact Information:
Linda Ventresca
Investor Relations
441 405 2727
investorrelations@axiscapital.com
Website Information:
www.axiscapital.com
This report is for informational purposes only. It should be read in conjunction with the documents that we file with the Securities and Exchange Commission pursuant to the Securities Act of 1933 and the Securities Exchange Act of 1934.
AXIS Capital Holdings Limited
FINANCIAL SUPPLEMENT TABLE OF CONTENTS
Page(s) | ||||||
Basis of Presentation |
i - iii | |||||
I. Financial Highlights |
1 | |||||
II. Income Statements |
||||||
a. Consolidated Statements of Income - Quarterly | 2 | |||||
b. Consolidated Segment Data | 3 | |||||
c. Gross Premium Written by Segment by Line of Business |
4 | |||||
d. Segment Data - Quarterly |
5-6 | |||||
e. Net Investment Income - Quarterly | 7 | |||||
III. Balance Sheets |
||||||
a. Consolidated Balance Sheets |
8 | |||||
b. Cash and Invested Assets: |
||||||
Cash and Invested Assets Portfolio |
9 | |||||
Cash and Invested Assets Composition - Quarterly |
10 | |||||
Corporate Debt Composition |
11 | |||||
Ten Largest Issuer Holdings in Fixed Maturity Portfolio |
12 | |||||
Mortgage Backed and Assets Backed Securities Composition |
13 | |||||
c. Reinsurance Recoverable Analysis |
14-15 | |||||
IV. Loss Reserve Analysis |
||||||
a. Paid to Incurred Analysis |
16 | |||||
b. Paid to Incurred Analysis by Segment |
17 | |||||
c. Segment Consecutive Quarters |
18-19 | |||||
d. 2011 Impact of Major Catastrophe Events |
20 | |||||
e. Estimated Net Modeled Losses to Peak Territory Catastrophe Exposures |
21 | |||||
V. Share Analysis |
||||||
a. Earnings Per Common Share Analysis and Common Share Rollforward - Quarterly |
22 | |||||
b. Diluted Book Value Per Common Share Analysis |
23 | |||||
VI. Non-GAAP Financial Measures |
24 | |||||
a. Non-GAAP Financial Measure Reconciliation |
AXIS Capital Holdings Limited
BASIS OF PRESENTATION
DEFINITIONS AND PRESENTATION
| Unless otherwise noted, all data is in thousands, except for per share amounts and ratio information. |
| All financial information contained herein is unaudited, except for the consolidated balance sheet at December 31, 2010. |
| Amounts may not reconcile exactly due to rounding differences. |
| NM - Not meaningful; NR - Not Reported; NA - Not applicable |
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS:
Statements in this presentation that are not historical facts, including statements regarding our estimates, beliefs, expectations, intentions, strategies or projections, may be forward-looking statements within the meaning of the U.S. federal securities laws, including the Private Securities Litigation Reform Act of 1995. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in the United States securities laws. In some cases, these statements can be identified by the use of forward-looking words such as may, should, could, anticipate, estimate, expect, plan, believe, predict, potential, intend or similar expressions. Our expectations are not guarantees and are based on currently available competitive, financial and economic data along with our operating plans. Forward-looking statements contained in this presentation may include, but are not limited to, information regarding our estimates of losses related to catastrophes and other large losses, measurements of potential losses in the fair market value of our investment portfolio, our expectations regarding pricing and other market conditions, our growth prospects, and valuations of the potential impact of movements in interest rates, equity prices, credit spreads and foreign currency rates.
Forward-looking statements only reflect our expectations and are not guarantees of performance. Accordingly, there are or will be important factors that could cause actual results to differ materially from those indicated in such statements. We believe that these factors include, but are not limited to, the following:
| the occurrence and magnitude of natural and man-made disasters, |
| actual claims exceeding our loss reserves, |
| general economic, capital and credit market conditions, |
| the failure of any of the loss limitation methods we employ, |
| the effects of emerging claims and coverage issues, |
| the failure of our cedants to adequately evaluate risks, |
| inability to obtain additional capital on favorable terms, or at all, |
| the loss of one or more key executives, |
| a decline in our ratings with rating agencies, |
| loss of business provided to us by our major brokers, |
| changes in accounting policies or practices, |
| the use of industry catastrophe models and changes to those models, |
| changes in governmental regulations, |
| increased competition, |
| changes in the political environment of certain countries in which we operate or underwrite business, and |
| fluctuations in interest rates, credit spreads, equity prices and/or currency values. |
We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
i
AXIS Capital Holdings Limited
BASIS OF PRESENTATION
BUSINESS DESCRIPTIONS
INSURANCE SEGMENT
Our insurance segment offers specialty insurance products to a variety of niche markets on a worldwide basis. The following are the lines of business in our insurance segment:
Property: provides physical loss or damage, business interruption and machinery breakdown coverage for virtually all types of property, including commercial buildings, residential premises, construction projects and onshore energy installations. This line of business consists of both primary and excess risks, some of which are catastrophe-exposed.
Marine: provides coverage for traditional marine classes, including offshore energy, cargo, liability, recreational marine, fine art, specie, hull and war. Offshore energy coverages include physical damage, business interruption, operators extra expense and liability coverage for all aspects of offshore upstream energy, from exploration and construction through the operation and distribution phases.
Terrorism: provides coverage for physical damage and business interruption of an insured following an act of terrorism.
Aviation: provides hull and liability and specific war coverage primarily for passenger airlines but also for cargo operations, general aviation operations, airports, aviation authorities, security firms and product manufacturers.
Credit and political risk: provides credit and political risk insurance products for banks and corporations. Coverage is provided for a range of risks including sovereign default, credit default, political violence, currency inconvertibility and non-transfer, expropriation, aircraft non-repossession and contract frustration due to political events. The credit insurance coverage is primarily for lenders seeking to mitigate the risk of non-payment from their borrowers in emerging markets. For the credit insurance contracts, it is necessary for the buyer of the insurance (most often a bank) to hold an insured asset (most often an underlying loan) in order to claim compensation under the insurance contract. The traditional political risk coverage provides protection against sovereign actions that result in the impairment of cross-border investments for banks and major corporations (known as CEND coverages).
Professional lines: provides coverage for directors and officers liability, errors and omissions liability, employment practices liability, fiduciary liability, crime, professional indemnity and other financial insurance related coverages for commercial enterprises, financial institutions and not-for-profit organizations. This business is predominantly written on a claims-made basis.
Liability: primarily targets primary and low/mid-level excess and umbrella commercial liability risks in the U.S. excess and surplus lines markets. Target industry sectors include construction, manufacturing, transportation and trucking and other services.
Other: commencing in 2010, primarily relates to our Global Accident & Health business and includes accidental death and sickness insurance for employer and affinity groups, financial institutions, schools and colleges, as well as accident reinsurance for catastrophic events on a quota share and/or excess of loss basis, with aggregate and/or per person deductibles. In prior years, our underwriting in this line of business primarily related to employee medical coverage for self-insured, small and medium-sized employers, for losses in excess of a given retention.
ii
AXIS Capital Holdings Limited
BASIS OF PRESENTATION
BUSINESS DESCRIPTIONS (CONTINUED)
REINSURANCE SEGMENT
Our reinsurance segment provides non-life reinsurance to insurance companies on a worldwide basis. The following are the lines of business in our reinsurance segment:
Catastrophe: provides protection for most catastrophic losses that are covered in the underlying insurance policies written by our cedants. The exposure in the underlying policies is principally property exposure but also covers other exposures including workers compensation, personal accident and life. The principal perils in this portfolio are hurricane and windstorm, earthquake, flood, tornado, hail and fire. In some instances, terrorism may be a covered peril or the only peril. We underwrite catastrophe reinsurance principally on an excess of loss basis.
Property: includes reinsurance written on both a proportional and a per risk excess of loss basis and covers underlying personal lines and commercial property exposures. Here the primary reason for the product is not simply to protect against catastrophic perils, however they are normally included with limitations.
Professional Liability: covers directors and officers liability, employment practices liability, medical malpractice, lawyers and accountants liability, environmental liability and miscellaneous errors and omissions insurance risks. The underlying business is predominantly written on a claims-made basis. Business is written on both a proportional and excess of loss basis.
Credit and Bond: consists of reinsurance of trade credit insurance products and includes both proportional and excess of loss structures. The underlying insurance indemnifies sellers of goods and services in the event of a payment default by the buyer of those goods and services. Also included in this line of business is coverage for losses arising from a broad array of surety bonds issued by bond insurers principally to satisfy regulatory demands in a variety of jurisdictions around the world.
Motor: provides coverage to cedants for motor liability and, to a lesser degree, property damage losses arising out of any one occurrence. The occurrence can involve one or many claimants where the ceding insurer aggregates the claims from the occurrence.
Liability: provides coverage to insurers of standard casualty business, excess and surplus casualty business and specialty casualty programs. The primary focus of the underlying business is general liability, although workers compensation and auto liability are also written.
Engineering: provides coverage for all types of construction risks and risks associated with erection, testing and commissioning of machinery and plants during the construction stage. This line of business also includes coverage for losses arising from operational failures of machinery, plant and equipment and electronic equipment as well as business interruption.
Other: includes aviation, marine, personal accident and crop reinsurance.
iii
AXIS Capital Holdings Limited
FINANCIAL HIGHLIGHTS
Quarter ended March 31, | ||||||||||||||
2011 | 2010 | Change | ||||||||||||
HIGHLIGHTS |
Gross premiums written | $ | 1,548,430 | $ | 1,425,201 | 8.6 | % | |||||||
Gross premiums written - Insurance |
27.4 | % | 26.2 | % | 1.3 | pts | ||||||||
Gross premiums written - Reinsurance |
72.6 | % | 73.8 | % | (1.3 | )pts | ||||||||
Net premiums written | $ | 1,400,779 | $ | 1,243,635 | 12.6 | % | ||||||||
Net premiums earned | $ | 788,201 | $ | 696,192 | 13.2 | % | ||||||||
Net premiums earned - Insurance |
41.6 | % | 36.8 | % | 4.8 | pts | ||||||||
Net premiums earned - Reinsurance |
58.4 | % | 63.2 | % | (4.8 | )pts | ||||||||
Net income (loss) available to common shareholders |
$ | (383,760 | ) | 111,812 | nm | |||||||||
Operating income (loss) [a] |
(413,902 | ) | 95,650 | nm | ||||||||||
Reserve for losses and loss expenses |
8,013,861 | 6,759,522 | 18.6 | % | ||||||||||
Total shareholders equity |
5,189,580 | 5,376,019 | (3.5 | )% | ||||||||||
PER COMMON SHARE AND |
Basic earnings (loss) per common share |
($ | 3.39 | ) | $ | 0.87 | nm | |||||||
COMMON SHARE DATA |
Diluted earnings (loss) per common share |
($ | 3.39 | ) | $ | 0.79 | nm | |||||||
Operating diluted earnings (loss) per common share [b] |
($ | 3.65 | ) | $ | 0.67 | nm | ||||||||
Weighted average common shares outstanding |
113,351 | 128,202 | (11.6 | )% | ||||||||||
Diluted weighted average common shares outstanding |
113,351 | 142,176 | (20.3 | )% | ||||||||||
Book value per common share |
$ | 41.17 | $ | 39.27 | 4.8 | % | ||||||||
Diluted book value per common share (treasury stock method) |
$ | 35.69 | $ | 34.56 | 3.3 | % | ||||||||
Accumulated dividends paid per common share |
$ | 4.96 | $ | 4.10 | 21.0 | % | ||||||||
FINANCIAL RATIOS |
ROACE [c] | (31.3 | )% | 9.1 | % | nm | ||||||||
Operating ROACE [b] | (33.7 | )% | 7.7 | % | nm | |||||||||
Net loss and loss expense ratio |
129.4 | % | 67.3 | % | 62.1 | pts | ||||||||
Acquisition cost ratio |
17.1 | % | 16.7 | % | 0.4 | pts | ||||||||
General and administrative expense ratio |
14.8 | % | 14.3 | % | 0.5 | pts | ||||||||
Combined ratio | 161.3 | % | 98.3 | % | 63.0 | pts | ||||||||
INVESTMENT DATA |
Total assets |
$ | 17,673,924 | $ | 16,329,170 | 8.2 | % | |||||||
Total cash and invested assets [d] |
12,930,410 | 12,125,262 | 6.6 | % | ||||||||||
Net investment income |
110,655 | 104,619 | 5.8 | % | ||||||||||
Net realized investment gains |
30,144 | 16,176 | 86.4 | % | ||||||||||
Total return on cash and investments [e] |
0.9 | % | 1.8 | % | (0.5 | )pts | ||||||||
Return on other investments [f] |
4.7 | % | 2.9 | % | 1.8 | pts | ||||||||
Book yield of fixed maturities |
3.3 | % | 3.7 | % | (0.4 | )pts |
[a] | Operating income (loss) is a Non-GAAP financial measure as defined by Regulation G. See page 24 for reconciliation of operating income to net income (loss) available to common shareholders. |
[b] | Operating return on average common equity (ROACE), also a Non-GAAP financial measure, is calculated by dividing operating income (loss) for the period by the average common shareholders equity determined by using the common shareholders equity balances at the beginning and end of the period. Operating income (loss) for the quarter-periods is annualized. Operating diluted earnings per share is calculated by dividing operating income (loss) for the period by weighted average common shares and share equivalents. |
[c] | ROACE is calculated by dividing net income (loss) available to common shareholders for the period by the average common shareholders equity determined by using the common shareholders equity balances at the beginning and end of the period. Net income (loss) for the quarter-periods is annualized. |
[d] | Cash and invested assets represents the total cash, available for sale investments, other investments, accrued interest receivable and net receivable (payable) for investments sold (purchased). |
[e] | In calculating total return, we include net investment income, net realized investment gains (losses) and the change in unrealized gains (losses) generated by our average month-end cash and investment balances. |
[f] | Return on other investments is calculated by dividing other investment income by the average month-end other investment balances for the period. |
nm | not meaningful |
1
AXIS Capital Holdings Limited
CONSOLIDATED STATEMENTS OF INCOME - QUARTERLY
Q1 2011 | Q4 2010 | Q3 2010 | Q2 2010 | Q1 2010 | Q1 2009 | |||||||||||||||||||
UNDERWRITING REVENUES |
||||||||||||||||||||||||
Gross premiums written |
$ | 1,548,430 | $ | 634,774 | $ | 750,687 | $ | 939,873 | $ | 1,425,201 | $ | 1,323,495 | ||||||||||||
Premiums ceded |
(147,651 | ) | (146,130 | ) | (124,365 | ) | (150,935 | ) | (181,566 | ) | (161,194 | ) | ||||||||||||
Net premiums written |
1,400,779 | 488,644 | 626,322 | 788,938 | 1,243,635 | 1,162,301 | ||||||||||||||||||
Gross premiums earned |
944,627 | 917,480 | 920,954 | 905,137 | 888,607 | 839,316 | ||||||||||||||||||
Ceded premiums amortized |
(156,426 | ) | (160,162 | ) | (162,081 | ) | (170,110 | ) | (192,415 | ) | (173,957 | ) | ||||||||||||
Net premiums earned |
788,201 | 757,318 | 758,873 | 735,027 | 696,192 | 665,359 | ||||||||||||||||||
Other insurance related income (loss) |
763 | 345 | 884 | 217 | 626 | (9,395 | ) | |||||||||||||||||
Total underwriting revenues |
788,964 | 757,663 | 759,757 | 735,244 | 696,818 | 655,964 | ||||||||||||||||||
UNDERWRITING EXPENSES |
||||||||||||||||||||||||
Net losses and loss expenses |
1,019,801 | 383,345 | 422,154 | 403,370 | 468,262 | 387,999 | ||||||||||||||||||
Acquisition costs |
135,356 | 124,098 | 123,788 | 124,176 | 116,649 | 101,976 | ||||||||||||||||||
General and administrative expenses |
95,112 | 117,674 | 86,439 | 86,862 | 83,461 | 68,752 | ||||||||||||||||||
Total underwriting expenses |
1,250,269 | 625,117 | 632,381 | 614,408 | 668,372 | 558,727 | ||||||||||||||||||
UNDERWRITING INCOME (LOSS) |
(461,305 | ) | 132,546 | 127,376 | 120,836 | 28,446 | 97,237 | |||||||||||||||||
OTHER OPERATING REVENUE (EXPENSES) |
||||||||||||||||||||||||
Net investment income |
110,655 | 107,889 | 111,800 | 82,584 | 104,619 | 99,292 | ||||||||||||||||||
Net realized investment gains (losses) |
30,144 | 77,772 | 76,531 | 24,619 | 16,176 | (40,597 | ) | |||||||||||||||||
Interest expense and financing costs |
(15,860 | ) | (15,690 | ) | (15,800 | ) | (15,697 | ) | (8,688 | ) | (7,921 | ) | ||||||||||||
Total other operating revenues |
124,939 | 169,971 | 172,531 | 91,506 | 112,107 | 50,774 | ||||||||||||||||||
OTHER (EXPENSES) REVENUE |
||||||||||||||||||||||||
Foreign exchange (losses) gains |
(15,058 | ) | 5,120 | (24,961 | ) | 27,229 | 8,147 | 389 | ||||||||||||||||
Corporate expenses [a] |
(21,408 | ) | (22,946 | ) | (16,996 | ) | (19,200 | ) | (16,308 | ) | (17,805 | ) | ||||||||||||
Total other (expenses) revenue |
(36,466 | ) | (17,826 | ) | (41,957 | ) | 8,029 | (8,161 | ) | (17,416 | ) | |||||||||||||
INCOME (LOSS) BEFORE INCOME TAXES |
(372,832 | ) | 284,691 | 257,950 | 220,371 | 132,392 | 130,595 | |||||||||||||||||
Income tax expense |
(1,709 | ) | (11,129 | ) | (9,890 | ) | (6,300 | ) | (11,361 | ) | (5,697 | ) | ||||||||||||
NET INCOME (LOSS) |
(374,541 | ) | 273,562 | 248,060 | 214,071 | 121,031 | 124,898 | |||||||||||||||||
Preferred share dividends |
(9,219 | ) | (9,219 | ) | (9,218 | ) | (9,219 | ) | (9,219 | ) | (9,219 | ) | ||||||||||||
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS |
$ | (383,760 | ) | $ | 264,343 | $ | 238,842 | $ | 204,852 | $ | 111,812 | $ | 115,679 | |||||||||||
KEY RATIOS/PER SHARE DATA |
||||||||||||||||||||||||
Net loss and loss expense ratio |
129.4 | % | 50.6 | % | 55.6 | % | 54.9 | % | 67.3 | % | 58.3 | % | ||||||||||||
Acquisition cost ratio |
17.1 | % | 16.4 | % | 16.3 | % | 16.9 | % | 16.7 | % | 15.3 | % | ||||||||||||
General and administrative expense ratio [a] |
14.8 | % | 18.6 | % | 13.7 | % | 14.4 | % | 14.3 | % | 13.0 | % | ||||||||||||
Combined ratio |
161.3 | % | 85.6 | % | 85.6 | % | 86.2 | % | 98.3 | % | 86.6 | % | ||||||||||||
Weighted average basic shares outstanding |
113,351 | 117,101 | 120,091 | 121,766 | 128,202 | 137,316 | ||||||||||||||||||
Weighted average diluted shares outstanding |
113,351 | 132,799 | 134,406 | 135,665 | 142,176 | 149,023 | ||||||||||||||||||
Basic earnings per common share |
($ | 3.39 | ) | $ | 2.26 | $ | 1.99 | $ | 1.68 | $ | 0.87 | $ | 0.84 | |||||||||||
Diluted earnings per common share |
($ | 3.39 | ) | $ | 1.99 | $ | 1.78 | $ | 1.51 | $ | 0.79 | $ | 0.78 | |||||||||||
ROACE (annualized) |
(31.3 | )% | 20.2 | % | 18.5 | % | 16.6 | % | 9.1 | % | 11.6 | % | ||||||||||||
Operating ROACE (annualized) |
(33.7 | )% | 14.3 | % | 12.6 | % | 14.6 | % | 7.7 | % | 15.7 | % |
[a] | Corporate expenses are included in the calculation of the general and administrative expense ratio. |
2
AXIS Capital Holdings Limited
CONSOLIDATED SEGMENT DATA
Quarter ended March 31, 2011 | Quarter ended March 31, 2010 | |||||||||||||||||||||||
Insurance | Reinsurance | Total | Insurance | Reinsurance | Total | |||||||||||||||||||
UNDERWRITING REVENUES |
||||||||||||||||||||||||
Gross premiums written |
$ | 424,991 | $ | 1,123,439 | $ | 1,548,430 | $ | 372,929 | $ | 1,052,272 | $ | 1,425,201 | ||||||||||||
Net premiums written |
289,316 | 1,111,463 | 1,400,779 | 206,812 | 1,036,823 | 1,243,635 | ||||||||||||||||||
Gross premiums earned |
479,908 | 464,719 | 944,627 | 443,050 | 445,557 | 888,607 | ||||||||||||||||||
Ceded premiums amortized |
(152,260 | ) | (4,166 | ) | (156,426 | ) | (186,769 | ) | (5,646 | ) | (192,415 | ) | ||||||||||||
Net premiums earned |
327,648 | 460,553 | 788,201 | 256,281 | 439,911 | 696,192 | ||||||||||||||||||
Other insurance related income |
763 | | 763 | 626 | | 626 | ||||||||||||||||||
Total underwriting revenues |
328,411 | 460,553 | 788,964 | 256,907 | 439,911 | 696,818 | ||||||||||||||||||
UNDERWRITING EXPENSES |
||||||||||||||||||||||||
Net losses and loss expenses |
266,633 | 753,168 | 1,019,801 | 130,703 | 337,559 | 468,262 | ||||||||||||||||||
Acquisition costs |
42,079 | 93,277 | 135,356 | 31,141 | 85,508 | 116,649 | ||||||||||||||||||
General and administrative expenses |
67,726 | 27,386 | 95,112 | 61,610 | 21,851 | 83,461 | ||||||||||||||||||
Total underwriting expenses |
376,438 | 873,831 | 1,250,269 | 223,454 | 444,918 | 668,372 | ||||||||||||||||||
UNDERWRITING INCOME (LOSS) |
$ | (48,027 | ) | $ | (413,278 | ) | $ | (461,305 | ) | $ | 33,453 | $ | (5,007 | ) | $ | 28,446 | ||||||||
KEY RATIOS |
||||||||||||||||||||||||
Current accident year loss ratio |
85.9 | % | 171.1 | % | 135.7 | % | 60.9 | % | 89.5 | % | 79.0 | % | ||||||||||||
Prior period reserve development |
(4.5 | %) | (7.6 | %) | (6.3 | %) | (9.9 | %) | (12.8 | %) | (11.7 | %) | ||||||||||||
Net loss and loss expense ratio |
81.4 | % | 163.5 | % | 129.4 | % | 51.0 | % | 76.7 | % | 67.3 | % | ||||||||||||
Acquisition cost ratio |
12.8 | % | 20.3 | % | 17.1 | % | 12.2 | % | 19.4 | % | 16.7 | % | ||||||||||||
General and administrative expense ratio |
20.7 | % | 5.9 | % | 12.1 | % | 24.0 | % | 5.0 | % | 12.0 | % | ||||||||||||
Corporate expense ratio |
2.7 | % | 2.3 | % | ||||||||||||||||||||
Combined ratio |
114.9 | % | 189.7 | % | 161.3 | % | 87.2 | % | 101.1 | % | 98.3 | % | ||||||||||||
3
AXIS Capital Holdings Limited
GROSS PREMIUM WRITTEN BY SEGMENT BY LINE OF BUSINESS
Q1 2011 | Q4 2010 | Q3 2010 | Q2 2010 | Q1 2010 | Q1 2009 | |||||||||||||||||||
INSURANCE SEGMENT |
||||||||||||||||||||||||
Property |
$ | 116,231 | $ | 125,285 | $ | 150,123 | $ | 207,184 | $ | 118,214 | $ | 106,138 | ||||||||||||
Marine |
63,655 | 33,556 | 46,403 | 77,996 | 66,859 | 60,626 | ||||||||||||||||||
Terrorism |
6,270 | 7,047 | 8,029 | 17,079 | 5,091 | 5,667 | ||||||||||||||||||
Aviation |
2,803 | 44,118 | 9,891 | 18,649 | 3,136 | 17,067 | ||||||||||||||||||
Credit and political risk |
10,801 | 13,169 | 10,754 | 9,444 | (2,698 | ) | 2,491 | |||||||||||||||||
Professional lines |
136,544 | 208,400 | 156,276 | 219,432 | 127,945 | 120,328 | ||||||||||||||||||
Liability |
44,878 | 62,266 | 50,448 | 61,817 | 53,716 | 51,812 | ||||||||||||||||||
Other |
43,809 | 2,903 | 1,626 | 1,292 | 666 | 29 | ||||||||||||||||||
TOTAL INSURANCE SEGMENT |
424,991 | 496,744 | 433,550 | 612,893 | 372,929 | 364,158 | ||||||||||||||||||
REINSURANCE SEGMENT |
||||||||||||||||||||||||
Catastrophe |
253,218 | 8,631 | 92,479 | 124,168 | 227,781 | 237,347 | ||||||||||||||||||
Property |
182,204 | 27,424 | 73,080 | 75,527 | 178,498 | 126,430 | ||||||||||||||||||
Professional lines |
93,273 | 66,106 | 56,963 | 58,368 | 106,799 | 113,640 | ||||||||||||||||||
Credit and bond |
236,645 | 5,997 | 17,527 | 2,532 | 228,073 | 197,271 | ||||||||||||||||||
Motor |
195,114 | 9,408 | 11,872 | 9,289 | 118,114 | 77,572 | ||||||||||||||||||
Liability |
99,015 | 11,565 | 56,437 | 36,680 | 133,379 | 153,856 | ||||||||||||||||||
Engineering |
50,664 | 8,443 | 7,424 | 7,972 | 44,376 | 41,266 | ||||||||||||||||||
Other |
13,306 | 456 | 1,355 | 12,444 | 15,252 | 11,955 | ||||||||||||||||||
TOTAL REINSURANCE SEGMENT |
1,123,439 | 138,030 | 317,137 | 326,980 | 1,052,272 | 959,337 | ||||||||||||||||||
CONSOLIDATED TOTAL |
$ | 1,548,430 | $ | 634,774 | $ | 750,687 | $ | 939,873 | $ | 1,425,201 | $ | 1,323,495 | ||||||||||||
4
AXIS Capital Holdings Limited
INSURANCE SEGMENT DATA - QUARTERLY
Q1 2011 | Q4 2010 | Q3 2010 | Q2 2010 | Q1 2010 | Q1 2009 | |||||||||||||||||||
UNDERWRITING REVENUES |
||||||||||||||||||||||||
Gross premiums written |
$ | 424,991 | $ | 496,744 | $ | 433,550 | $ | 612,893 | $ | 372,929 | $ | 364,158 | ||||||||||||
Net premiums written |
289,316 | 349,250 | 309,277 | 466,880 | 206,812 | 212,015 | ||||||||||||||||||
Gross premiums earned |
479,908 | 485,188 | 477,149 | 466,627 | 443,050 | 445,541 | ||||||||||||||||||
Ceded premiums amortized |
(152,260 | ) | (156,813 | ) | (156,965 | ) | (164,975 | ) | (186,769 | ) | (169,918 | ) | ||||||||||||
Net premiums earned |
327,648 | 328,375 | 320,184 | 301,652 | 256,281 | 275,623 | ||||||||||||||||||
Other insurance related income (loss) |
763 | 345 | 884 | 217 | 626 | (9,805 | ) | |||||||||||||||||
Total underwriting revenues |
328,411 | 328,720 | 321,068 | 301,869 | 256,907 | 265,818 | ||||||||||||||||||
UNDERWRITING EXPENSES |
||||||||||||||||||||||||
Net losses and loss expenses |
266,633 | 132,811 | 150,860 | 155,494 | 130,703 | 152,704 | ||||||||||||||||||
Acquisition costs |
42,079 | 41,553 | 38,962 | 40,567 | 31,141 | 26,203 | ||||||||||||||||||
General and administrative expenses |
67,726 | 86,633 | 64,147 | 64,045 | 61,610 | 50,481 | ||||||||||||||||||
Total underwriting expenses |
376,438 | 260,997 | 253,969 | 260,106 | 223,454 | 229,388 | ||||||||||||||||||
UNDERWRITING INCOME (LOSS) |
$ | (48,027 | ) | $ | 67,723 | $ | 67,099 | $ | 41,763 | $ | 33,453 | $ | 36,430 | |||||||||||
KEY RATIOS |
||||||||||||||||||||||||
Current accident year loss ratio |
85.9 | % | 51.0 | % | 55.8 | % | 61.7 | % | 60.9 | % | 68.4 | % | ||||||||||||
Prior period reserve development |
(4.5 | %) | (10.6 | )% | (8.7 | )% | (10.1 | )% | (9.9 | )% | (13.0 | )% | ||||||||||||
Net loss and loss expense ratio |
81.4 | % | 40.4 | % | 47.1 | % | 51.6 | % | 51.0 | % | 55.4 | % | ||||||||||||
Acquisition cost ratio |
12.8 | % | 12.7 | % | 12.2 | % | 13.4 | % | 12.2 | % | 9.5 | % | ||||||||||||
General and administrative expense ratio |
20.7 | % | 26.4 | % | 20.0 | % | 21.2 | % | 24.0 | % | 18.3 | % | ||||||||||||
Combined ratio |
114.9 | % | 79.5 | % | 79.3 | % | 86.2 | % | 87.2 | % | 83.2 | % | ||||||||||||
5
AXIS Capital Holdings Limited
REINSURANCE SEGMENT DATA - QUARTERLY
Q1 2011 | Q4 2010 | Q3 2010 | Q2 2010 | Q1 2010 | Q1 2009 | |||||||||||||||||||
UNDERWRITING REVENUES |
||||||||||||||||||||||||
Gross premiums written |
$ | 1,123,439 | $ | 138,030 | $ | 317,137 | $ | 326,980 | $ | 1,052,272 | $ | 959,337 | ||||||||||||
Net premiums written |
1,111,463 | 139,394 | 317,045 | 322,058 | 1,036,823 | 950,286 | ||||||||||||||||||
Gross premiums earned |
464,719 | 432,291 | 443,805 | 438,510 | 445,557 | 393,775 | ||||||||||||||||||
Ceded premiums amortized |
(4,166 | ) | (3,348 | ) | (5,116 | ) | (5,135 | ) | (5,646 | ) | (4,039 | ) | ||||||||||||
Net premiums earned |
460,553 | 428,943 | 438,689 | 433,375 | 439,911 | 389,736 | ||||||||||||||||||
Other insurance related income |
| | | | | 410 | ||||||||||||||||||
Total underwriting revenues |
460,553 | 428,943 | 438,689 | 433,375 | 439,911 | 390,146 | ||||||||||||||||||
UNDERWRITING EXPENSES |
||||||||||||||||||||||||
Net losses and loss expenses |
753,168 | 250,534 | 271,294 | 247,876 | 337,559 | 235,295 | ||||||||||||||||||
Acquisition costs |
93,277 | 82,545 | 84,826 | 83,609 | 85,508 | 75,773 | ||||||||||||||||||
General and administrative expenses |
27,386 | 31,041 | 22,292 | 22,817 | 21,851 | 18,271 | ||||||||||||||||||
Total underwriting expenses |
873,831 | 364,120 | 378,412 | 354,302 | 444,918 | 329,339 | ||||||||||||||||||
UNDERWRITING INCOME (LOSS) |
$ | (413,278 | ) | $ | 64,823 | $ | 60,277 | $ | 79,073 | $ | (5,007 | ) | $ | 60,807 | ||||||||||
KEY RATIOS |
||||||||||||||||||||||||
Current accident year loss ratio |
171.1 | % | 69.3 | % | 71.8 | % | 68.3 | % | 89.5 | % | 72.8 | % | ||||||||||||
Prior period reserve development |
(7.6 | )% | (10.9 | )% | (10.0 | )% | (11.1 | )% | (12.8 | )% | (12.4 | )% | ||||||||||||
Net loss and loss expense ratio |
163.5 | % | 58.4 | % | 61.8 | % | 57.2 | % | 76.7 | % | 60.4 | % | ||||||||||||
Acquisition cost ratio |
20.3 | % | 19.2 | % | 19.4 | % | 19.3 | % | 19.4 | % | 19.4 | % | ||||||||||||
General and administrative expense ratio |
5.9 | % | 7.3 | % | 5.1 | % | 5.3 | % | 5.0 | % | 4.7 | % | ||||||||||||
Combined ratio |
189.7 | % | 84.9 | % | 86.3 | % | 81.8 | % | 101.1 | % | 84.5 | % | ||||||||||||
6
AXIS Capital Holdings Limited
NET INVESTMENT INCOME - QUARTERLY
Q1 2011 | Q4 2010 | Q3 2010 | Q2 2010 | Q1 2010 | Q1 2009 | |||||||||||||||||||
Fixed maturities |
$ | 88,581 | $ | 84,887 | $ | 89,580 | $ | 86,772 | $ | 91,118 | $ | 91,697 | ||||||||||||
Other investments |
25,311 | 25,391 | 25,094 | (1,985 | ) | 16,265 | 6,870 | |||||||||||||||||
Cash and cash equivalents |
2,153 | 1,595 | 1,517 | 989 | 1,735 | 2,856 | ||||||||||||||||||
Equities |
824 | 63 | 917 | 1,332 | 588 | 371 | ||||||||||||||||||
Short-term investments |
387 | 706 | 308 | 207 | 220 | 266 | ||||||||||||||||||
Gross investment income |
117,256 | 112,642 | 117,416 | 87,315 | 109,926 | 102,060 | ||||||||||||||||||
Investment expense |
(6,601 | ) | (4,753 | ) | (5,616 | ) | (4,731 | ) | (5,307 | ) | (2,768 | ) | ||||||||||||
Net investment income |
$ | 110,655 | $ | 107,889 | $ | 111,800 | $ | 82,584 | $ | 104,619 | $ | 99,292 | ||||||||||||
7
AXIS Capital Holdings Limited
CONSOLIDATED BALANCE SHEETS
Mar 31, 2011 |
Dec 31, 2010 |
Sep 30, 2010 |
Jun 30, 2010 |
Mar 31, 2010 |
Mar 31, 2009 |
|||||||||||||||||||
ASSETS |
||||||||||||||||||||||||
Investments: |
||||||||||||||||||||||||
Fixed maturities, available for sale, at fair value |
$ | 10,726,390 | $ | 10,482,897 | $ | 10,664,824 | $ | 10,064,335 | $ | 9,649,199 | $ | 8,238,175 | ||||||||||||
Equities, available for sale, at fair value |
502,096 | 349,254 | 251,005 | 201,173 | 201,920 | 78,527 | ||||||||||||||||||
Other investments, at fair value |
554,113 | 519,296 | 533,072 | 547,873 | 538,917 | 494,405 | ||||||||||||||||||
Short-term investments, at amortized cost |
132,512 | 172,719 | 129,042 | 131,104 | 143,937 | 225,583 | ||||||||||||||||||
Total investments |
11,915,111 | 11,524,166 | 11,577,943 | 10,944,485 | 10,533,973 | 9,036,690 | ||||||||||||||||||
Cash and cash equivalents |
1,086,189 | 1,045,355 | 1,205,393 | 1,197,543 | 1,510,027 | 1,411,551 | ||||||||||||||||||
Accrued interest receivable |
94,013 | 96,364 | 92,758 | 94,686 | 84,407 | 80,746 | ||||||||||||||||||
Insurance and reinsurance premium balances receivable |
1,880,305 | 1,343,665 | 1,536,944 | 1,722,586 | 1,708,400 | 1,581,743 | ||||||||||||||||||
Reinsurance recoverable on paid and unpaid losses |
1,688,778 | 1,577,547 | 1,551,612 | 1,545,080 | 1,445,918 | 1,432,650 | ||||||||||||||||||
Deferred acquisition costs |
498,598 | 359,300 | 402,887 | 419,191 | 420,283 | 375,774 | ||||||||||||||||||
Prepaid reinsurance premiums |
212,808 | 221,396 | 234,850 | 271,700 | 291,382 | 266,789 | ||||||||||||||||||
Securities lending collateral |
| | | 107,167 | 86,975 | 312,364 | ||||||||||||||||||
Goodwill and intangible assets |
102,847 | 103,231 | 89,744 | 90,473 | 91,217 | 95,380 | ||||||||||||||||||
Other assets |
195,275 | 174,707 | 154,399 | 165,369 | 156,588 | 183,679 | ||||||||||||||||||
TOTAL ASSETS |
$ | 17,673,924 | $ | 16,445,731 | $ | 16,846,530 | $ | 16,558,280 | $ | 16,329,170 | $ | 14,777,366 | ||||||||||||
LIABILITIES |
||||||||||||||||||||||||
Reserve for losses and loss expenses |
$ | 8,013,861 | $ | 7,032,375 | $ | 6,934,528 | $ | 6,718,776 | $ | 6,759,522 | $ | 6,392,278 | ||||||||||||
Unearned premiums |
2,938,328 | 2,333,676 | 2,614,239 | 2,781,101 | 2,748,283 | 2,646,578 | ||||||||||||||||||
Insurance and reinsurance balances payable |
141,483 | 164,927 | 123,127 | 199,463 | 144,679 | 154,763 | ||||||||||||||||||
Securities lending payable |
| | | 107,167 | 87,975 | 317,310 | ||||||||||||||||||
Senior notes |
994,246 | 994,110 | 993,976 | 993,843 | 993,712 | 499,395 | ||||||||||||||||||
Other liabilities |
231,523 | 275,422 | 240,338 | 182,959 | 215,835 | 222,832 | ||||||||||||||||||
Net payable for investments purchased |
164,903 | 20,251 | 91,384 | 79,669 | 3,145 | 51,373 | ||||||||||||||||||
TOTAL LIABILITIES |
12,484,344 | 10,820,761 | 10,997,592 | 11,062,978 | 10,953,151 | 10,284,529 | ||||||||||||||||||
SHAREHOLDERS EQUITY |
||||||||||||||||||||||||
Series A and B preferred shares |
500,000 | 500,000 | 500,000 | 500,000 | 500,000 | 500,000 | ||||||||||||||||||
Common shares |
1,958 | 1,934 | 1,931 | 1,930 | 1,929 | 1,899 | ||||||||||||||||||
Additional paid-in capital |
2,074,982 | 2,059,708 | 2,046,297 | 2,038,158 | 2,027,950 | 1,977,144 | ||||||||||||||||||
Accumulated other comprehensive income (loss) |
155,192 | 176,821 | 371,625 | 221,856 | 165,455 | (767,182 | ) | |||||||||||||||||
Retained earnings |
3,853,076 | 4,267,608 | 4,033,018 | 3,824,111 | 3,649,770 | 3,282,392 | ||||||||||||||||||
Treasury shares, at cost |
(1,395,628 | ) | (1,381,101 | ) | (1,103,933 | ) | (1,090,753 | ) | (969,085 | ) | (501,416 | ) | ||||||||||||
TOTAL SHAREHOLDERS EQUITY |
5,189,580 | 5,624,970 | 5,848,938 | 5,495,302 | 5,376,019 | 4,492,837 | ||||||||||||||||||
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY |
$ | 17,673,924 | $ | 16,445,731 | $ | 16,846,530 | $ | 16,558,280 | $ | 16,329,170 | $ | 14,777,366 | ||||||||||||
Basic common shares outstanding |
113,902 | 112,393 | 119,958 | 120,254 | 124,155 | 137,622 | ||||||||||||||||||
Diluted common shares outstanding |
131,402 | 130,189 | 137,115 | 136,613 | 141,076 | 151,545 | ||||||||||||||||||
Book value per common share |
$ | 41.17 | $ | 45.60 | $ | 44.59 | $ | 41.54 | $ | 39.27 | $ | 29.01 | ||||||||||||
Diluted book value per common share |
$ | 35.69 | $ | 39.37 | $ | 39.01 | $ | 36.57 | $ | 34.56 | $ | 26.35 | ||||||||||||
Debt (Senior notes) to total capital [a] |
16.1 | % | 15.0 | % | 14.5 | % | 15.3 | % | 15.6 | % | 10.0 | % | ||||||||||||
Debt plus preferred shares to total capital |
24.2 | % | 22.6 | % | 21.8 | % | 23.0 | % | 23.5 | % | 20.0 | % |
[a] | The debt to capital ratio is calculated by dividing our senior notes by the total capital. Total capital represents the sum of total shareholders equity and our senior notes. |
8
AXIS Capital Holdings Limited
CASH AND INVESTED ASSETS PORTFOLIO
At March 31, 2011
Cost or Amortized Cost |
Unrealized Gains |
Unrealized Losses |
Fair Value | Percentage | ||||||||||||||||
Fixed Maturities, available for sale |
||||||||||||||||||||
U.S. government and agency |
$ | 1,068,362 | $ | 2,764 | $ | (2,176 | ) | $ | 1,068,950 | 8 | % | |||||||||
Non-U.S. government |
822,952 | 18,497 | (3,110 | ) | 838,339 | 7 | % | |||||||||||||
Corporate debt |
3,963,915 | 108,577 | (19,808 | ) | 4,052,684 | 31 | % | |||||||||||||
Agency RMBS |
2,608,846 | 38,574 | (24,723 | ) | 2,622,697 | 20 | % | |||||||||||||
CMBS |
460,320 | 23,460 | (1,534 | ) | 482,246 | 4 | % | |||||||||||||
Non-Agency RMBS |
231,382 | 3,545 | (7,290 | ) | 227,637 | 2 | % | |||||||||||||
ABS |
660,796 | 11,837 | (15,014 | ) | 657,619 | 5 | % | |||||||||||||
Municipals |
774,725 | 10,006 | (8,513 | ) | 776,218 | 6 | % | |||||||||||||
Total fixed maturities |
10,591,298 | 217,260 | (82,168 | ) | 10,726,390 | 83 | % | |||||||||||||
Equities, available for sale |
466,429 | 41,524 | (5,857 | ) | 502,096 | 4 | % | |||||||||||||
Total available for sale investments |
$ | 11,057,727 | $ | 258,784 | $ | (88,025 | ) | 11,228,486 | 87 | % | ||||||||||
Other investments (see below) |
554,113 | 4 | % | |||||||||||||||||
Short-term investments |
132,512 | 1 | % | |||||||||||||||||
Total investments |
11,915,111 | 92 | % | |||||||||||||||||
Cash and cash equivalents [a] |
1,086,189 | 8 | % | |||||||||||||||||
Accrued interest receivable |
94,013 | 1 | % | |||||||||||||||||
Net receivable/(payable) for investments sold (purchased) |
|
(164,903 | ) | (1 | )% | |||||||||||||||
Total cash and invested assets |
$ | 12,930,410 | 100 | % | ||||||||||||||||
Other Investments: | Fair Value | Percentage | ||||||||||||||||||
Fund of hedge funds |
$ | 238,519 | 43 | % | ||||||||||||||||
Hedge funds |
151,125 | 27 | % | |||||||||||||||||
Credit funds |
104,208 | 19 | % | |||||||||||||||||
Collateralized loan obligations - equity tranches |
60,261 | 11 | % | |||||||||||||||||
Total |
$ | 554,113 | 100 | % | ||||||||||||||||
[a] | Includes $123 million of restricted cash and cash equivalents. |
9
AXIS Capital Holdings Limited
CASH AND INVESTED ASSETS COMPOSITION - QUARTERLY
Q1 2011 | Q4 2010 | Q3 2010 | Q2 2010 | Q1 2010 | Q1 2009 | |||||||||||||||||||
CASH AND INVESTED ASSETS PORTFOLIO | Fair Value % | Fair Value % | Fair Value % | Fair Value % | Fair Value % | Fair Value % | ||||||||||||||||||
Fixed Maturities: |
||||||||||||||||||||||||
U.S. government and agency |
8.3 | % | 6.8 | % | 10.7 | % | 11.7 | % | 11.0 | % | 13.6 | % | ||||||||||||
Non-U.S. government |
6.5 | % | 6.1 | % | 6.2 | % | 6.2 | % | 5.6 | % | 2.4 | % | ||||||||||||
Corporate debt |
31.3 | % | 32.9 | % | 33.7 | % | 33.4 | % | 31.9 | % | 21.7 | % | ||||||||||||
MBS: |
||||||||||||||||||||||||
Agency RMBS |
20.3 | % | 20.5 | % | 16.4 | % | 14.0 | % | 14.0 | % | 23.7 | % | ||||||||||||
CMBS |
3.7 | % | 3.8 | % | 3.9 | % | 5.0 | % | 5.6 | % | 7.1 | % | ||||||||||||
Non-agency RMBS |
1.8 | % | 1.9 | % | 1.7 | % | 1.7 | % | 1.6 | % | 2.7 | % | ||||||||||||
ABS |
5.1 | % | 5.2 | % | 5.2 | % | 5.1 | % | 4.4 | % | 3.4 | % | ||||||||||||
Municipals |
6.0 | % | 5.6 | % | 5.6 | % | 5.2 | % | 5.4 | % | 3.9 | % | ||||||||||||
Total Fixed Maturities |
83.0 | % | 82.8 | % | 83.4 | % | 82.3 | % | 79.5 | % | 78.5 | % | ||||||||||||
Equities |
3.9 | % | 2.8 | % | 2.0 | % | 1.7 | % | 1.7 | % | 0.7 | % | ||||||||||||
Other investments |
4.3 | % | 4.1 | % | 4.2 | % | 4.5 | % | 4.4 | % | 4.7 | % | ||||||||||||
Short-term investments |
1.0 | % | 1.4 | % | 1.0 | % | 1.1 | % | 1.2 | % | 2.3 | % | ||||||||||||
Total investments |
92.2 | % | 91.1 | % | 90.6 | % | 89.6 | % | 86.8 | % | 86.2 | % | ||||||||||||
Cash and cash equivalents |
8.4 | % | 8.3 | % | 9.4 | % | 9.9 | % | 12.4 | % | 13.5 | % | ||||||||||||
Accrued interest receivable |
0.7 | % | 0.8 | % | 0.7 | % | 1.2 | % | 0.8 | % | 0.8 | % | ||||||||||||
Net receivable/(payable) for investments sold or purchased |
(1.3 | )% | (0.2 | )% | (0.7 | )% | (0.7 | )% | | (0.5 | )% | |||||||||||||
Total Cash and Invested Assets |
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||
CREDIT QUALITY | Fair Value % | Fair Value % | Fair Value % | Fair Value % | Fair Value % | Fair Value % | ||||||||||||||||||
Cash and cash equivalents |
9.2 | % | 8.9 | % | 10.1 | % | 10.5 | % | 13.4 | % | 14.2 | % | ||||||||||||
U.S. government and agency |
9.0 | % | 7.4 | % | 11.4 | % | 12.5 | % | 11.8 | % | 14.9 | % | ||||||||||||
AAA |
40.3 | % | 42.6 | % | 38.4 | % | 37.9 | % | 36.4 | % | 47.1 | % | ||||||||||||
AA |
8.9 | % | 9.3 | % | 9.4 | % | 9.5 | % | 9.1 | % | 6.5 | % | ||||||||||||
A |
19.0 | % | 18.5 | % | 17.6 | % | 17.0 | % | 16.5 | % | 10.2 | % | ||||||||||||
BBB |
9.6 | % | 10.0 | % | 10.5 | % | 11.3 | % | 11.2 | % | 5.7 | % | ||||||||||||
Below BBB |
3.9 | % | 3.3 | % | 2.6 | % | 1.3 | % | 1.6 | % | 1.4 | % | ||||||||||||
Total |
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||
MATURITY PROFILE | Fair Value % | Fair Value % | Fair Value % | Fair Value % | Fair Value % | Fair Value % | ||||||||||||||||||
Within one year (includes cash & cash equivalents) |
13.4 | % | 14.6 | % | 16.8 | % | 18.4 | % | 20.7 | % | 18.4 | % | ||||||||||||
From one to five years |
38.1 | % | 35.4 | % | 38.4 | % | 36.2 | % | 33.9 | % | 28.2 | % | ||||||||||||
From five to ten years |
13.1 | % | 14.1 | % | 13.9 | % | 14.8 | % | 14.7 | % | 10.6 | % | ||||||||||||
Above ten years |
1.5 | % | 1.9 | % | 1.9 | % | 2.6 | % | 3.0 | % | 2.5 | % | ||||||||||||
Asset-backed and mortgage-backed securities |
33.9 | % | 34.0 | % | 29.0 | % | 28.0 | % | 27.7 | % | 40.3 | % | ||||||||||||
Total |
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||
CASH AND INVESTED ASSETS PORTFOLIO CHARACTERISTICS |
||||||||||||||||||||||||
Book yield of fixed maturities |
3.3 | % | 3.3 | % | 3.3 | % | 3.6 | % | 3.7 | % | 4.2 | % | ||||||||||||
Yield to maturity of fixed maturities |
2.9 | % | 2.8 | % | 2.3 | % | 3.2 | % | 3.5 | % | 4.6 | % | ||||||||||||
Average duration of fixed maturities |
3.1 yrs | 3.2 yrs | 3.1 yrs | 3.0 yrs | 2.9 yrs | 3.1 yrs | ||||||||||||||||||
Average credit quality |
AA | AA | AA | AA | AA | AA |
10
AXIS Capital Holdings Limited
CORPORATE DEBT COMPOSITION
At March 31, 2011
Fair Value | Percentage of Corporate Debt |
Percentage of Total Cash and Invested Assets |
||||||||||
Composition by sector - Investment grade [a] |
||||||||||||
US banking |
$ | 962,239 | 23.7 | % | 7.4 | % | ||||||
Foreign banking |
437,043 | 10.8 | % | 3.4 | % | |||||||
Communications |
421,653 | 10.4 | % | 3.3 | % | |||||||
Utilities |
334,655 | 8.3 | % | 2.6 | % | |||||||
Consumer non cyclicals |
331,168 | 8.2 | % | 2.6 | % | |||||||
Finance |
272,912 | 6.7 | % | 2.1 | % | |||||||
Industrial |
228,425 | 5.6 | % | 1.8 | % | |||||||
Non US government guaranteed |
211,498 | 5.2 | % | 1.6 | % | |||||||
Energy |
194,536 | 4.8 | % | 1.5 | % | |||||||
Consumer cyclicals |
106,365 | 2.6 | % | 0.8 | % | |||||||
Technology |
64,638 | 1.6 | % | 0.5 | % | |||||||
Insurance |
55,836 | 1.4 | % | 0.4 | % | |||||||
Transportation |
36,484 | 0.9 | % | 0.3 | % | |||||||
Other |
8,806 | 0.2 | % | 0.1 | % | |||||||
Total investment grade |
3,666,258 | 90.4 | % | 28.3 | % | |||||||
Total non-investment grade |
386,426 | 9.6 | % | 3.0 | % | |||||||
Total corporate debt |
$ | 4,052,684 | 100 | % | 31.3 | % | ||||||
Investment Grade |
Non-Investment Grade |
|||||||
Corporate debt characteristics |
||||||||
Average S&P credit rating |
A | B+ | ||||||
Average duration |
3.51 | 0.94 |
[a] | Included in investment grade corporate debt are $30 million of FDIC guaranteed bonds |
11
AXIS Capital Holdings Limited
INVESTMENT PORTFOLIO
TEN LARGEST ISSUER HOLDINGS IN FIXED MATURITY PORTFOLIO
At March 31, 2011
ISSUER [a] | Amortized Cost |
Unrealized Gain |
Fair Value |
% of Total Fixed Maturities |
Government Guaranteed [b] |
|||||||||||||||
BANK OF AMERICA CORP |
$ | 164,529 | $ | 3,857 | $ | 168,386 | 1.6 | % | $ | 7,022 | ||||||||||
MORGAN STANLEY |
155,721 | 3,450 | 159,171 | 1.5 | % | 2,260 | ||||||||||||||
CITIGROUP INC |
149,150 | 6,011 | 155,161 | 1.4 | % | 10,516 | ||||||||||||||
JPMORGAN CHASE & CO |
133,738 | 2,784 | 136,522 | 1.3 | % | | ||||||||||||||
GOLDMAN SACHS GROUP |
120,306 | 3,593 | 123,899 | 1.2 | % | 1,017 | ||||||||||||||
GENERAL ELECTRIC CO |
116,300 | 938 | 117,238 | 1.1 | % | 3,528 | ||||||||||||||
VERIZON COMMUNICATIONS INC |
83,420 | 6,447 | 89,867 | 0.8 | % | | ||||||||||||||
WELLS FARGO & COMPANY |
80,010 | 2,040 | 82,050 | 0.8 | % | | ||||||||||||||
HSBC HOLDINGS PLC |
77,980 | 2,116 | 80,096 | 0.7 | % | | ||||||||||||||
ANHEUSER-BUSCH INBEV NV |
68,113 | 174 | 68,287 | 0.6 | % | |
[a] | The holdings represent direct investments in fixed maturities of the parent issuer and its major subsidiaries. These investments exclude asset and mortgage backed securities that were issued, sponsored or serviced by the parent. |
[b] | Amounts guaranteed by the U.S. Federal Deposit Insurance Corporation (FDIC) and foreign government and agencies included in Fair Value. |
12
AXIS Capital Holdings Limited
MORTGAGE-BACKED AND ASSET-BACKED SECURITIES COMPOSITION
At March 31, 2011
Agencies | AAA | AA | A | BBB | Non Investment Grade |
Total | ||||||||||||||||||||||
Residential MBS |
$ | 2,622,697 | $ | 154,467 | $ | 6,575 | $ | 2,313 | $ | 11,064 | $ | 53,218 | $ | 2,850,334 | ||||||||||||||
Commercial MBS |
| 363,146 | 38,626 | 78,886 | 1,588 | | 482,246 | |||||||||||||||||||||
ABS |
| 612,286 | 221 | 13,669 | 13,945 | 17,498 | 657,619 | |||||||||||||||||||||
Total mortgage-backed and asset-backed securities |
$ | 2,622,697 | $ | 1,129,899 | $ | 45,422 | $ | 94,868 | $ | 26,597 | $ | 70,716 | $ | 3,990,199 | ||||||||||||||
Percentage of total |
65.7 | % | 28.3 | % | 1.1 | % | 2.4 | % | 0.7 | % | 1.8 | % | 100.0 | % |
13
AXIS Capital Holdings Limited
REINSURANCE RECOVERABLE ANALYSIS
Q1 2011 | Q4 2010 | Q3 2010 | Q2 2010 | Q1 2010 | Q1 2009 | |||||||||||||||||||
Reinsurance recoverable on paid losses and loss expenses: |
||||||||||||||||||||||||
Insurance |
$ | 26,525 | $ | 41,077 | $ | 31,007 | $ | 46,511 | $ | 26,447 | $ | 47,512 | ||||||||||||
Reinsurance |
| | 5,000 | 4,995 | 4,995 | 4,995 | ||||||||||||||||||
Total |
$ | 26,525 | $ | 41,077 | $ | 36,007 | $ | 51,506 | $ | 31,442 | $ | 52,507 | ||||||||||||
Reinsurance recoverable on unpaid losses and loss expenses: OSLR |
||||||||||||||||||||||||
Insurance |
$ | 477,084 | $ | 432,426 | $ | 424,234 | $ | 445,871 | $ | 377,826 | $ | 430,115 | ||||||||||||
Reinsurance |
| | | | | | ||||||||||||||||||
Total |
$ | 477,084 | $ | 432,426 | $ | 424,234 | $ | 445,871 | $ | 377,826 | $ | 430,115 | ||||||||||||
Reinsurance recoverable on unpaid losses and loss expenses: IBNR |
||||||||||||||||||||||||
Insurance |
$ | 1,152,784 | $ | 1,073,960 | $ | 1,067,630 | $ | 1,029,475 | $ | 1,020,877 | $ | 939,382 | ||||||||||||
Reinsurance |
49,479 | 47,204 | 46,020 | 43,514 | 40,653 | 31,079 | ||||||||||||||||||
Total |
$ | 1,202,263 | $ | 1,121,164 | $ | 1,113,650 | $ | 1,072,989 | $ | 1,061,530 | $ | 970,461 | ||||||||||||
Provision against reinsurance recoverables: |
||||||||||||||||||||||||
Insurance |
$ | (16,706 | ) | $ | (16,737 | ) | $ | (16,911 | ) | $ | (19,941 | ) | $ | (19,563 | ) | $ | (13,623 | ) | ||||||
Reinsurance |
(388 | ) | (383 | ) | (5,368 | ) | (5,345 | ) | (5,317 | ) | (6,810 | ) | ||||||||||||
Total |
$ | (17,094 | ) | $ | (17,120 | ) | $ | (22,279 | ) | $ | (25,286 | ) | $ | (24,880 | ) | $ | (20,433 | ) | ||||||
Net reinsurance recoverables: |
||||||||||||||||||||||||
Insurance |
$ | 1,639,687 | $ | 1,530,726 | $ | 1,505,960 | $ | 1,501,916 | $ | 1,405,587 | $ | 1,403,386 | ||||||||||||
Reinsurance |
49,091 | 46,821 | 45,652 | 43,164 | 40,331 | 29,264 | ||||||||||||||||||
Total |
$ | 1,688,778 | $ | 1,577,547 | $ | 1,551,612 | $ | 1,545,080 | $ | 1,445,918 | $ | 1,432,650 | ||||||||||||
14
AXIS Capital Holdings Limited
REINSURANCE RECOVERABLE ANALYSIS
Consolidated Reinsurance |
March 31, 2011 | |||||||||||||||||||||||||||||||
Categories | Gross Recoverable |
Collateral | Gross Recoverable Net of Collateral |
% of Total Gross Recoverable Net of Collateral |
%
of Total Shareholders Equity |
Provision Against Reinsurance Recoverables |
Provision Against Reinsurance Recoverable as % of Gross Recoverable |
Net Recoverable |
||||||||||||||||||||||||
Top 10 reinsurers based on gross recoverables |
$ | 1,198,309 | $ | (24,291 | ) | $ | 1,174,018 | 72.5 | % | 22.6 | % | $ | (8,714 | ) | 0.7 | % | $ | 1,189,595 | ||||||||||||||
Other reinsurers balances > $20 million |
223,999 | (12,640 | ) | 211,359 | 13.0 | % | 4.1 | % | (1,275 | ) | 0.6 | % | 222,724 | |||||||||||||||||||
Other reinsurers balances < $20 million |
283,564 | (49,129 | ) | 234,435 | 14.5 | % | 4.5 | % | (7,105 | ) | 2.5 | % | 276,459 | |||||||||||||||||||
Total |
$ | 1,705,872 | $ | (86,060 | ) | $ | 1,619,812 | 100.0 | % | 31.2 | % | $ | (17,094 | ) | 1.0 | % | $ | 1,688,778 | ||||||||||||||
At March 31, 2011, 98.1% (December 31, 2010, 97.9%) of our gross recoverables were collectible from reinsurers rated the equivalent of A- or better by internationally recognised rating agencies.
Top 10 Reinsurers (net of collateral) |
% of Total Gross Recoverable Net of Collateral |
% of Total Shareholders Equity |
||||||
Transatlantic Reinsurance Co. |
13.3 | % | 4.1 | % | ||||
Swiss Reinsurance America Corporation |
11.5 | % | 3.6 | % | ||||
Partner Reinsurance Co of US |
11.0 | % | 3.4 | % | ||||
Berkley Insurance Company |
8.3 | % | 2.6 | % | ||||
Lloyds of London |
7.3 | % | 2.3 | % | ||||
Ace Property & Casualty Ins |
6.4 | % | 2.0 | % | ||||
XL Reinsurance America Inc |
6.1 | % | 1.9 | % | ||||
Munchener Ruckversicherungs Gesellschaft |
3.1 | % | 1.0 | % | ||||
Liberty Mutual Insurance Co. |
3.1 | % | 0.9 | % | ||||
Munich Re America, Inc 3/4 |
2.4 | % | 0.8 | % | ||||
72.5 | % | 22.6 | % | |||||
15
AXIS Capital Holdings Limited
RESERVE FOR LOSSES AND LOSS EXPENSES: PAID TO INCURRED ANALYSIS
Quarter ended March 31, 2011 | Quarter ended March 31, 2010 | |||||||||||||||||||||||
Reserve for unpaid losses and loss expenses | Gross | Recoveries | Net | Gross | Recoveries | Net | ||||||||||||||||||
Beginning of period |
$ | 7,032,375 | $ | (1,540,633 | ) | $ | 5,491,742 | $ | 6,564,133 | $ | (1,381,058 | ) | $ | 5,183,075 | ||||||||||
Incurred |
1,192,849 | (173,048 | ) | 1,019,801 | 555,596 | (87,334 | ) | 468,262 | ||||||||||||||||
Paid |
(276,463 | ) | 49,676 | (226,787 | ) | (300,316 | ) | 39,283 | (261,033 | ) | ||||||||||||||
Foreign exchange and other |
65,100 | (2,410 | ) | 62,690 | (59,891 | ) | 1,747 | (58,144 | ) | |||||||||||||||
End of period [a] |
$ | 8,013,861 | $ | (1,666,415 | ) | $ | 6,347,446 | $ | 6,759,522 | $ | (1,427,362 | ) | $ | 5,332,160 | ||||||||||
[a] | At March 31, 2011, the gross reserve for losses and loss expenses included IBNR of $5,480 million, or 68%, of total gross reserves for loss and loss expenses. At December 31, 2010, the comparable amount was $4,935 million, or 70%. |
16
AXIS Capital Holdings Limited
RESERVE FOR LOSSES AND LOSS EXPENSES: PAID TO INCURRED ANALYSIS BY SEGMENT
Quarter ended March 31, 2011 | Quarter ended March 31, 2010 | |||||||||||||||||||||||
Insurance | Reinsurance | Total | Insurance | Reinsurance | Total | |||||||||||||||||||
Gross losses paid |
$ | 89,390 | $ | 187,073 | $ | 276,463 | $ | 179,490 | $ | 120,826 | $ | 300,316 | ||||||||||||
Reinsurance recoveries |
(49,676 | ) | | (49,676 | ) | (39,283 | ) | | (39,283 | ) | ||||||||||||||
Net losses paid |
39,714 | 187,073 | 226,787 | 140,207 | 120,826 | 261,033 | ||||||||||||||||||
Change in: |
||||||||||||||||||||||||
Reported case reserves |
211,857 | 194,207 | 406,064 | (82,590 | ) | 20,158 | (62,432 | ) | ||||||||||||||||
IBNR |
136,165 | 374,157 | 510,322 | 118,721 | 198,991 | 317,712 | ||||||||||||||||||
Reinsurance recoveries on unpaid loss and loss expense reserves |
(121,102 | ) | (2,270 | ) | (123,372 | ) | (45,635 | ) | (2,416 | ) | (48,051 | ) | ||||||||||||
Total net incurred losses and loss expenses |
$ | 266,634 | $ | 753,167 | $ | 1,019,801 | $ | 130,703 | $ | 337,559 | $ | 468,262 | ||||||||||||
Gross reserve for losses and loss expenses |
$ | 3,865,548 | $ | 4,148,313 | $ | 8,013,861 | $ | 3,533,040 | $ | 3,226,482 | $ | 6,759,522 | ||||||||||||
Prior years net favorable reserve development |
$ | 14,728 | $ | 34,976 | $ | 49,704 | $ | 25,369 | $ | 56,097 | $ | 81,466 | ||||||||||||
Key Ratios |
||||||||||||||||||||||||
Net paid to net incurred percentage |
14.9 | % | 24.8 | % | 22.2 | % | 107.3 | % | 35.8 | % | 55.7 | % | ||||||||||||
Net paid losses / Net premiums earned |
12.1 | % | 40.6 | % | 28.8 | % | 54.7 | % | 27.4 | % | 37.5 | % | ||||||||||||
Change in net loss and loss expense reserves / Net premiums earned |
69.3 | % | 122.9 | % | 100.6 | % | (3.7 | %) | 49.3 | % | 29.8 | % | ||||||||||||
Net loss and loss expense ratio |
81.4 | % | 163.5 | % | 129.4 | % | 51.0 | % | 76.7 | % | 67.3 | % | ||||||||||||
17
AXIS Capital Holdings Limited
RESERVE FOR LOSSES AND LOSS EXPENSES: PAID TO INCURRED ANALYSIS
INSURANCE - QUARTERLY
Quarter ended | ||||||||||||||||||||||||
Q1 2011 | Q4 2010 | Q3 2010 | Q2 2010 | Q1 2010 | Q1 2009 | |||||||||||||||||||
Gross losses paid |
$ | 89,390 | $ | 203,863 | $ | 218,495 | $ | 384,703 | $ | 179,490 | $ | 199,058 | ||||||||||||
Reinsurance recoveries |
(49,676 | ) | (78,224 | ) | (63,619 | ) | (87,703 | ) | (39,283 | ) | (36,760 | ) | ||||||||||||
Net losses paid |
39,714 | 125,639 | 154,876 | 297,000 | 140,207 | 162,298 | ||||||||||||||||||
Change in: |
||||||||||||||||||||||||
Reported case reserves |
211,857 | 13,991 | (88,805 | ) | 81,219 | (62,590 | ) | (30,628 | ) | |||||||||||||||
IBNR |
136,165 | 5,653 | 95,595 | (143,990 | ) | 98,721 | 91,850 | |||||||||||||||||
Reinsurance recoveries on unpaid loss and loss expense reserves |
(121,102 | ) | (12,472 | ) | (10,806 | ) | (78,735 | ) | (45,635 | ) | (70,816 | ) | ||||||||||||
Total net incurred losses and loss expenses |
$ | 266,634 | $ | 132,811 | $ | 150,860 | $ | 155,494 | $ | 130,703 | $ | 152,704 | ||||||||||||
Gross reserve for losses and loss expenses |
$ | 3,865,548 | $ | 3,512,002 | $ | 3,488,114 | $ | 3,460,339 | $ | 3,533,040 | $ | 3,603,197 | ||||||||||||
Prior years net favorable reserve development |
$ | 14,728 | $ | 34,603 | $ | 27,823 | $ | 30,541 | $ | 25,369 | $ | 35,906 | ||||||||||||
Key Ratios |
||||||||||||||||||||||||
Net paid to net incurred percentage |
14.9 | % | 94.6 | % | 102.7 | % | 191.0 | % | 107.3 | % | 106.3 | % | ||||||||||||
Net paid losses / Net premiums earned |
12.1 | % | 38.2 | % | 48.4 | % | 98.5 | % | 54.7 | % | 58.9 | % | ||||||||||||
Change in net loss and loss expense reserves / Net premiums earned |
69.3 | % | 2.2 | % | (1.3 | %) | (46.9 | %) | (3.7 | %) | (3.5 | %) | ||||||||||||
Net loss and loss expense ratio |
81.4 | % | 40.4 | % | 47.1 | % | 51.6 | % | 51.0 | % | 55.4 | % | ||||||||||||
18
AXIS Capital Holdings Limited
RESERVE FOR LOSSES AND LOSS EXPENSES: PAID TO INCURRED ANALYSIS
REINSURANCE - QUARTERLY
Quarter ended | ||||||||||||||||||||||||
Q1 2011 | Q4 2010 | Q3 2010 | Q2 2010 | Q1 2010 | Q1 2009 | |||||||||||||||||||
Gross losses paid |
$ | 187,073 | $ | 173,651 | $ | 182,404 | $ | 148,580 | $ | 120,826 | $ | 111,795 | ||||||||||||
Reinsurance recoveries |
| | | | | | ||||||||||||||||||
Net losses paid |
187,073 | 173,651 | 182,404 | 148,580 | 120,826 | 111,795 | ||||||||||||||||||
Change in: |
||||||||||||||||||||||||
Reported case reserves |
194,207 | 161,567 | 36,785 | 34,429 | 20,158 | 38,417 | ||||||||||||||||||
IBNR |
374,157 | (83,515 | ) | 54,589 | 67,699 | 198,991 | 86,136 | |||||||||||||||||
Reinsurance recoveries on unpaid loss and loss expense reserves |
(2,270 | ) | (1,169 | ) | (2,484 | ) | (2,832 | ) | (2,416 | ) | (1,053 | ) | ||||||||||||
Total net incurred losses and loss expenses |
$ | 753,167 | $ | 250,534 | $ | 271,294 | $ | 247,876 | $ | 337,559 | $ | 235,295 | ||||||||||||
Gross reserve for losses and loss expenses |
$ | 4,148,313 | $ | 3,520,373 | $ | 3,446,414 | $ | 3,258,437 | $ | 3,226,482 | $ | 2,789,081 | ||||||||||||
Prior years net favorable reserve development |
$ | 34,976 | $ | 46,673 | $ | 43,884 | $ | 48,065 | $ | 56,097 | $ | 48,428 | ||||||||||||
Key Ratios |
||||||||||||||||||||||||
Net paid to net incurred percentage |
24.8 | % | 69.3 | % | 67.2 | % | 59.9 | % | 35.8 | % | 47.5 | % | ||||||||||||
Net paid losses / Net premiums earned |
40.6 | % | 40.5 | % | 41.6 | % | 34.3 | % | 27.4 | % | 28.7 | % | ||||||||||||
Change in net loss and loss expense reserves / Net premiums earned |
122.9 | % | 17.9 | % | 20.2 | % | 22.9 | % | 49.3 | % | 31.7 | % | ||||||||||||
Net loss and loss expense ratio |
163.5 | % | 58.4 | % | 61.8 | % | 57.2 | % | 76.7 | % | 60.4 | % | ||||||||||||
19
AXIS Capital Holdings Limited
2011 IMPACT OF MAJOR CATASTROPHE EVENTS
Australia[a] | Christchurch New Zealand |
Japan | Total | |||||||||||||
Gross loss and loss expenses |
||||||||||||||||
Insurance |
$ | 2,650 | $ | 20,000 | $ | 77,500 | $ | 100,150 | ||||||||
Reinsurance |
85,820 | 184,410 | 263,600 | 533,830 | ||||||||||||
Total |
88,470 | 204,410 | 341,100 | 633,980 | ||||||||||||
Net loss and loss expenses |
||||||||||||||||
Insurance |
2,650 | 20,000 | 25,000 | 47,650 | ||||||||||||
Reinsurance |
85,820 | 184,410 | 263,600 | 533,830 | ||||||||||||
Total |
88,470 | 204,410 | 288,600 | 581,480 | ||||||||||||
Gross premiums earned [b] |
||||||||||||||||
Reinsurance |
1,810 | 1,533 | 4,005 | 7,348 | ||||||||||||
Ceded premiums expensed [c] |
||||||||||||||||
Insurance |
| | 2,430 | 2,430 | ||||||||||||
Total impact before income tax |
86,660 | 202,877 | 287,025 | 576,562 | ||||||||||||
Income tax benefit |
(230 | ) | (520 | ) | (2,220 | ) | (2,970 | ) | ||||||||
Total impact after income tax |
$ | 86,430 | $ | 202,357 | $ | 284,805 | $ | 573,592 | ||||||||
[a] | Includes January floods and Cyclone Yasi. |
[b] | The impact of the catastrophes on gross premiums earned relates to the accelerated recognition of unearned premiums on impacted contracts in our reinsurance segment, as well as the applicable earnings for reinstatement premiums covering the remaining risk period. |
[c] | The impact of the catastrophes on ceded premiums expensed relates to the accelerated recognition of prepaid reinsurance premiums on the reinsurance protection program in our insurance segment, as well as the applicable expense related to the reinstatement premiums payable for coverage during the remaining risk period. |
20
AXIS Capital Holdings Limited
ESTIMATED NET MODELED LOSSES TO PEAK TERRITORY CATASTROPHE EXPOSURES - AS OF APRIL 1, 2011
Group Estimated Net Exposures (in millions of U.S. dollars) | Estimated Industry Exposures (in billions of U.S. dollars) | |||||||||||||||||||||||||
Territory |
Peril | 50 Year Return Period |
100 Year Return Period |
250 Year Return Period |
50 Year Return Period |
100 Year Return Period |
250 Year Return Period |
|||||||||||||||||||
United States |
Hurricane | $ | 779 | $ | 1,074 | $ | 1,425 | $ | 83 | $ | 125 | $ | 204 | |||||||||||||
California |
Earthquake | 471 | 718 | 1,159 | 18 | 31 | 55 | |||||||||||||||||||
Europe |
Windstorm | 340 | 457 | 650 | 17 | 23 | 31 | |||||||||||||||||||
Japan |
Earthquake | 207 | 305 | 625 | 20 | 28 | 52 | |||||||||||||||||||
Japan |
Windstorm | 62 | 119 | 146 | 20 | 28 | 45 |
We impose limits on natural peril catastrophe risk exposure at the group level. Based on our current tolerance, we are not willing to lose more than 25% of our prior quarter-end common equity for a modeled single occurrence 1-in-250 year return period probable maximum net loss. We impose these limits on probable maximum losses in any one zone from a single event. A zone is a geographical area in which insurance risks are considered to be correlated to a single catastrophe event. For example, our U.S. hurricane exposures above include hurricanes from South Eastern and North Eastern U.S. zones, amongst others. Our executive management receives regular reports on our group-wide total natural peril exposures by peril and zone to ensure active monitoring of our risk positions.
The above table shows our net modeled loss estimates to the corresponding peak natural catastrophe territories at April 1, 2011. We have developed these loss estimates using multiple commercially available catastrophe models and our own assessments for non-vendor modeled exposures. These estimates include assumptions regarding the location, size and magnitude of an event, the frequency of events, the construction type and a propertys susceptibility to damage in a zone, and the cost of rebuilding property in a territory. Loss estimates for non-U.S. territories will be subject to foreign exchange rates, although we may mitigate this currency variability from a financial statement point of view. Return period refers to the frequency with which losses of a given amount or greater are expected to occur.
The figures take into account the fact that an event may trigger claims in a number of lines of business. For instance, our U.S. hurricane modeling includes, among other things, the estimated pre-tax impact to our financial results arising from our catastrophe, property, engineering, energy, marine and aviation lines of business. As indicated in the table above, our modeled single occurrence 1-in-100 year return period U.S. hurricane probable maximum loss, net of reinsurance, is approximately $1.1 billion. According to our modeling, there is a one percent chance that on an annual basis, our losses incurred in any single U.S. hurricane event could be in excess of $1.1 billion. Conversely, there is a 99% chance that on an annual basis, the loss from a single U.S. hurricane will fall below $1.1 billion. We estimate that, an event that gave rise to such hypothetical loss levels, at this return period, would cause industry losses of approximately $125 billion, resulting in an estimated market share of insured losses for us of around 1%.
Net loss estimates are before income tax, net of reinstatement premiums, and net of reinsurance recoveries. The estimates set forth above are based on assumptions (see above) that are inherently subject to significant uncertainties and contingencies. These uncertainties and contingencies can affect actual losses and could cause actual losses to differ materially from those expressed above. In particular, modeled loss estimates do not necessarily accurately predict actual losses, and may significantly misstate actual losses. Such estimates, therefore, should not be considered as a representation of actual losses. Our estimated net losses from peak zone catastrophes may change from period to period as a result of several factors, which include but are not limited to, updates to vendor catastrophe models, changes in our own modeling, changes in our underwriting portfolios and changes in foreign exchange rates.
21
AXIS Capital Holdings Limited
EARNINGS PER COMMON SHARE INFORMATION AND COMMON SHARE ROLLFOWARD - QUARTERLY
Q1 2011 | Q4 2010 | Q3 2010 | Q2 2010 | Q1 2010 | Q1 2009 | |||||||||||||||||||
Net income (loss) available to common shareholders |
$ | (383,760 | ) | $ | 264,343 | $ | 238,842 | $ | 204,852 | $ | 111,812 | $ | 115,679 | |||||||||||
COMMON SHARES OUTSTANDING |
||||||||||||||||||||||||
Common shares - at beginning of period |
112,393 | 119,958 | 120,254 | 124,155 | 132,140 | 136,212 | ||||||||||||||||||
Shares issued |
1,908 | 215 | 148 | 76 | 2,008 | 1,630 | ||||||||||||||||||
Shares repurchased for treasury |
(399 | ) | (7,780 | ) | (444 | ) | (3,977 | ) | (9,993 | ) | (220 | ) | ||||||||||||
Common shares - at end of period |
113,902 | 112,393 | 119,958 | 120,254 | 124,155 | 137,622 | ||||||||||||||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING |
||||||||||||||||||||||||
Weighted average basic shares outstanding |
113,351 | 117,101 | 120,091 | 121,766 | 128,202 | 137,316 | ||||||||||||||||||
Dilutive share equivalents: |
||||||||||||||||||||||||
Warrants[a] |
| 12,873 | 12,012 | 11,866 | 11,675 | 9,729 | ||||||||||||||||||
Stock compensation plans[a] |
| 2,825 | 2,303 | 2,033 | 2,299 | 1,978 | ||||||||||||||||||
Weighted average diluted shares outstanding |
113,351 | 132,799 | 134,406 | 135,665 | 142,176 | 149,023 | ||||||||||||||||||
EARNINGS (LOSS) PER COMMON SHARE |
||||||||||||||||||||||||
Basic |
($ | 3.39 | ) | $ | 2.26 | $ | 1.99 | $ | 1.68 | $ | 0.87 | $ | 0.84 | |||||||||||
Diluted |
($ | 3.39 | ) | $ | 1.99 | $ | 1.78 | $ | 1.51 | $ | 0.79 | $ | 0.78 |
[a] | Due to the net loss incurred in the three months ended March 31, 2011, these securities were not included in the computation of diluted earnings per share, because of their anti-dilutive effect. |
22
AXIS Capital Holdings Limited
DILUTED BOOK VALUE PER COMMON SHARE ANALYSIS - TREASURY STOCK METHOD [a]
At March 31, 2011 | ||||||||||||||||
Weighted Average Strike Price |
Common Shareholders Equity |
Outstanding Common Shares net of Treasury Shares |
Per share | |||||||||||||
Closing stock price |
$ | 34.92 | ||||||||||||||
Book value per common share |
$ | 4,689,580 | 113,902 | $ | 41.17 | |||||||||||
Dilutive securities: |
||||||||||||||||
Warrants |
$ | 12.31 | | 12,820 | (4.16 | ) | ||||||||||
Restricted stocks |
| 3,458 | (0.97 | ) | ||||||||||||
Options |
$ | 21.98 | | 813 | (0.24 | ) | ||||||||||
Restricted and phantom stock units |
| 409 | (0.11 | ) | ||||||||||||
Diluted book value per common share |
$ | 4,689,580 | 131,402 | $ | 35.69 | |||||||||||
At December 31, 2010 | ||||||||||||||||
Weighted Average Strike Price |
Common Shareholders Equity |
Outstanding Common Shares net of Treasury Shares |
Per share | |||||||||||||
Closing stock price |
$ | 35.88 | ||||||||||||||
Book value per common share |
$ | 5,124,970 | 112,393 | $ | 45.60 | |||||||||||
Dilutive securities: |
||||||||||||||||
Warrants |
$ | 12.31 | | 12,999 | (4.73 | ) | ||||||||||
Restricted stocks |
| 3,592 | (1.13 | ) | ||||||||||||
Options |
$ | 22.26 | | 880 | (0.28 | ) | ||||||||||
Restricted and phantom stock units |
| 325 | (0.09 | ) | ||||||||||||
Diluted book value per common share |
$ | 5,124,970 | 130,189 | $ | 39.37 | |||||||||||
[a] | This method assumes that proceeds received upon exercise of options and warrants will be used to repurchase our common shares at the closing market price. Unvested restricted stocks and units and unrestricted phantom stock units are also added to determine the diluted common shares outstanding. |
23
AXIS Capital Holdings Limited
NON-GAAP FINANCIAL MEASURE RECONCILIATION
Quarter ended March 31, | ||||||||
2011 | 2010 | |||||||
(in thousands) | ||||||||
Net income (loss) available to common shareholders |
$ | (383,760 | ) | $ | 111,812 | |||
Adjustment for net realized investment gains |
(30,144 | ) | (16,176 | ) | ||||
Adjustment for associated tax impact |
2 | 14 | ||||||
Operating income (loss) |
(413,902 | ) | 95,650 | |||||
Adjustment for foreign exchange losses (gains) |
15,058 | (8,147 | ) | |||||
Adjustment for associated tax impact |
(22 | ) | 2,277 | |||||
Operating income (loss) excluding foreign exchange gains/losses, net of tax |
$ | (398,866 | ) | $ | 89,780 | |||
Net income (loss) per share - diluted |
$ | (3.39 | ) | $ | 0.79 | |||
Adjustment for net realized investment gains |
(0.26 | ) | (0.12 | ) | ||||
Adjustment for associated tax impact |
| | ||||||
Operating income (loss) per share - diluted |
$ | (3.65 | ) | $ | 0.67 | |||
Adjustment for foreign exchange losses (gains) |
0.13 | (0.06 | ) | |||||
Adjustment for associated tax impact |
| 0.02 | ||||||
Operating income (loss) excluding foreign exchange gains/losses, net of tax |
$ | (3.52 | ) | $ | 0.63 | |||
Weighted average common shares and common share equivalents - diluted |
113,351 | 142,176 | ||||||
24
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