Exhibit 99.1
|
Investor Contacts | Media Contacts | |
Andrew Cook / Linda Ventresca |
| Laura LeClair / Caroline Gentile |
AXIS Capital Holdings Limited |
| Kekst and Company |
info@axiscapital.com |
| (212) 521-4859 |
(441) 297-9513 |
|
|
AXIS CAPITAL REPORTS NET INCOME OF $117.8 MILLION FOR SECOND QUARTER 2003
Pembroke, Bermuda, August 6, 2003 – AXIS Capital Holdings Limited (“AXIS Capital”) (NYSE: AXS) today reported net income for the quarter of $117.8 million, or $0.81 per diluted share, compared to $30.0 million, or $0.22 per diluted share, for the second quarter ended June 30, 2002, an increase of $87.8 million, or $0.59 per diluted share. Net income for the six months ended June 30, 2003 rose 264% to $224.9 million, or $1.55 per diluted share, from $61.7 million, or $0.46 per diluted share, for the corresponding period in 2002.
Net income excluding net realized gains and losses on investments, net of tax for the second quarter of 2003 was $102.3 million, or $0.70 per diluted share, compared with $21.3 million, or $0.16 per diluted share, for the quarter ended June 30, 2002. Net income excluding net realized gains and losses on investments, net of tax for the six months ended June 30, 2003 was $198.4 million, or $1.36 per diluted share, compared with $52.3 million, or $0.39 per diluted share, for the six months ended June 30, 2002. Net income excluding net realized gains and losses on investments, net of tax is a non-GAAP financial measure. A reconciliation of this measure to net income is presented at the end of this release.
AXIS Capital Holdings Limited 106 Pitts Bay Road Pembroke, Bermuda HM08
Tel. 441.296.2600 Fax 441.296.3140
www.axiscapital.com
Shareholders’ equity has grown to $2.2 billion as at June 30, 2003. Diluted book value per share was $15.44, an increase of $1.48 or 10.6% from December 31, 2002. Diluted book value per share is a non-GAAP financial measure. A reconciliation of this measure to shareholders’ equity is presented at the end of this release.
John Charman, President and CEO, commented “We are delighted to have produced such a strong set of financial results for our first reporting period as a public company. These results clearly demonstrate the differentiating AXIS franchise that has been built over the last eighteen months. All four of our underwriting segments are now fully operational, each has top quality ratings, excellent staff and well capitalized platforms from which we can not only sustain our profitability but, more importantly, from which we can generate future growth.”
Gross premiums written for the second quarter of 2003 were $551.5 million compared to $260.7 million for the second quarter 2002. Of these premiums written: $207.7 million were derived from global insurance compared to $163.5 million in the corresponding quarter of 2002; $120.1 million from global reinsurance compared to $97.2 million in the corresponding quarter of 2002; $171.1 million from U.S. insurance; and $52.6 million from U.S. reinsurance. The latter two segments began underwriting at the start of 2003; therefore, there are no comparatives for the periods in 2002. For the quarter ended June 30, 2003 compared to the quarter ended June 30, 2002, net premiums written rose to $449.8 million from $234.0 million and net premiums earned increased to $335.6 million from $94.5 million.
For the quarter ended June 30, 2003, net investment income, including realized gains of $15.7 million, was $31.6 million compared with $22.7 million, including realized gains of $8.7 million, for the quarter ended June 30, 2002.
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During the second quarter of 2003, the Company generated a combined ratio of 81.5%, a loss ratio of 58.3% and an expense ratio of 23.2% compared to 92.4%, 58.7% and 33.7%, respectively, for the second quarter of 2002.
Gross premiums written for the first six months of 2003 were $1,160.0 million compared to $526.4 million for the first six months of 2002. Of these premiums written: $451.3 million were derived from global insurance compared to $304.8 million in the corresponding period of 2002; $331.6 million from global reinsurance compared to $221.6 million in the corresponding period of 2002; $263.0 million from U.S. insurance; and $114.1 million from U.S. reinsurance. For the six months ended June 30, 2003 compared to the six months ended June 30, 2002, net premiums written increased to $990.0 million from $494.6 million and net premiums earned rose to $638.0 million from $150.1 million.
For the six months ended June 30, 2003, net investment income, including realized gains of $26.9 million, was $54.2 million compared with $43.3 million, including realized gains of $9.5 million, for the six months ended June 30, 2002.
During the first six months of 2003, the Company generated a combined ratio of 77.5%, a loss ratio of 53.6% and an expense ratio of 23.9% compared to 87.8%, 56.5% and 31.3%, respectively, for the first six months in 2002.
Subsequent to the end of the second quarter, the Company completed an initial public offering, which raised total net proceeds for the Company of $316.0 million from the sale of 15.4 million common shares.
AXIS Capital will host a conference call on Thursday, August 7, 2003 at 8:30 AM (Eastern) to discuss the second quarter financial results. This presentation will be available through an audio webcast accessible through the Investor Information section of the Company’s website at www.axiscapital.com.
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In addition, a financial supplement relating to the Company’s financial results for the second quarter is available in the Investor Information section of our website.
AXIS Capital is a Bermuda-based global provider of specialty lines insurance and treaty reinsurance with shareholders’ equity in excess of $2.2 billion and locations in Bermuda, the United States and Europe. Its operating subsidiaries have been assigned a rating of “A” (“Excellent”) by A.M. Best and a rating of “A” (“Strong”) by Standard & Poor’s. For more information about AXIS Capital, visit the Company’s website at www.axiscapital.com.
Cautionary Note Regarding Forward-Looking Statements
This release may include forward-looking statements within the meaning of the U.S. federal securities laws. These statements involve risks, uncertainties and assumptions. Actual events or results may differ materially from the Company’s expectations. Important factors that could cause actual events or results to be materially different from the Company’s expectations include (1) the occurrence of natural and man-made disasters, (2) actual claims exceeding our loss reserves, (3), failure of any of the loss limitation methods we employ, (4) effects of emerging claims and coverage issues, (5) a decline in our ratings with Standard & Poor’s and A.M. Best, (6) loss of business provided to us by our major brokers, (7) general economic conditions, (8) increased competition on the basis of pricing, capacity, coverage terms or other factors, and (9) changes in governmental regulations. The Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
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AXIS CAPITAL HOLDINGS LIMITED
CONSOLIDATED BALANCE SHEETS
(Expressed in thousands of U.S. dollars, except share and per share amounts)
|
| June 30, 2003 |
| December 31, 2002 |
| ||
|
| (Unaudited) |
|
|
| ||
Assets |
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 927,087 |
| $ | 729,296 |
|
Investments at fair market value |
| 2,394,606 |
| 1,702,990 |
| ||
(Amortized cost 2003:$2,355,341; 2002:$1,677,506) |
|
|
|
|
| ||
Accrued interest receivable |
| 15,236 |
| 16,502 |
| ||
Insurance and reinsurance premium balances receivable |
| 663,758 |
| 375,508 |
| ||
Deferred acquisition costs |
| 139,445 |
| 77,166 |
| ||
Prepaid reinsurance premiums |
| 145,704 |
| 49,673 |
| ||
Reinsurance recoverable |
| 51,841 |
| 1,703 |
| ||
Intangible assets |
| 27,579 |
| 14,079 |
| ||
Other assets |
| 20,973 |
| 19,204 |
| ||
Total Assets |
| $ | 4,386,229 |
| $ | 2,986,121 |
|
|
|
|
|
|
| ||
Liabilities |
|
|
|
|
| ||
Reserve for losses and loss expenses |
| $ | 569,253 |
| $ | 215,934 |
|
Unearned premiums |
| 1,001,225 |
| 555,962 |
| ||
Insurance and reinsurance balances payable |
| 214,739 |
| 142,696 |
| ||
Accounts payable and accrued expenses |
| 54,375 |
| 24,119 |
| ||
Net payable for investments purchased |
| 334,082 |
| 86,377 |
| ||
Total Liabilities |
| 2,173,674 |
| 1,025,088 |
| ||
|
|
|
|
|
| ||
Shareholders’ Equity |
|
|
|
|
| ||
Share capital |
|
|
|
|
| ||
(Authorized 800,000,000 common shares, par value $0.0125; issued and outstanding 2003; 138,925,528: 2002; 138,168,520) |
| 1,737 |
| 1,727 |
| ||
Additional paid-in capital |
| 1,697,824 |
| 1,686,599 |
| ||
Deferred compensation |
| (17,397 | ) | (20,576 | ) | ||
Accumulated other comprehensive income |
| 37,720 |
| 25,484 |
| ||
Retained earnings |
| 492,671 |
| 267,799 |
| ||
Total Shareholders’ Equity |
| 2,212,555 |
| 1,961,033 |
| ||
|
|
|
|
|
| ||
Total Liabilities & Shareholders’ Equity |
| $ | 4,386,229 |
| $ | 2,986,121 |
|
|
|
|
|
|
| ||
Book value per common share |
| $ | 15.93 |
| $ | 14.19 |
|
5
AXIS CAPITAL HOLDINGS LIMITED
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
For the quarter and six months ended June 30, 2003 and 2002
(Expressed in thousands of U.S. dollars, except share and per share amounts)
|
| Quarters ended |
| Six months ended |
| ||||||||
|
| June 30, 2003 |
| June 30, 2002 |
| June 30, 2003 |
| June 30, 2002 |
| ||||
Revenues |
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|
|
|
|
|
|
|
| ||||
Gross premiums written |
| $ | 551,450 |
| $ | 260,721 |
| $ | 1,160,037 |
| $ | 526,400 |
|
Premiums ceded |
| (101,626 | ) | (26,758 | ) | (170,069 | ) | (31,812 | ) | ||||
Change in unearned premiums |
| (114,232 | ) | (139,493 | ) | (351,949 | ) | (344,516 | ) | ||||
Net premiums earned |
| 335,592 |
| 94,470 |
| 638,019 |
| 150,072 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net investment income |
| 15,904 |
| 14,055 |
| 27,256 |
| 33,837 |
| ||||
Net realized gains |
| 15,705 |
| 8,690 |
| 26,903 |
| 9,463 |
| ||||
Other insurance related income |
| 10,102 |
| — |
| 11,208 |
| — |
| ||||
Total revenues |
| 377,303 |
| 117,215 |
| 703,386 |
| 193,372 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Expenses |
|
|
|
|
|
|
|
|
| ||||
Net losses and loss expenses |
| 195,620 |
| 55,437 |
| 341,955 |
| 84,786 |
| ||||
Acquisition costs |
| 55,945 |
| 20,008 |
| 108,980 |
| 28,900 |
| ||||
General and administrative expenses |
| 21,719 |
| 11,859 |
| 43,297 |
| 18,052 |
| ||||
Foreign exchange gains |
| (12,855 | ) | (115 | ) | (14,742 | ) | (109 | ) | ||||
Total expenses |
| 260,429 |
| 87,189 |
| 479,490 |
| 131,629 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Income before income taxes |
| 116,874 |
| 30,026 |
| 223,896 |
| 61,743 |
| ||||
Income tax recovery (expense) |
| 880 |
| (19 | ) | 976 |
| (19 | ) | ||||
Net Income |
| $ | 117,754 |
| $ | 30,007 |
| $ | 224,872 |
| $ | 61,724 |
|
|
|
|
|
|
|
|
|
|
| ||||
Weighted average common shares and common share equivalents - basic |
| 136,509,891 |
| 135,181,081 |
| 136,440,383 |
| 135,158,314 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Weighted average common shares and common share equivalents - diluted |
| 145,701,443 |
| 135,311,032 |
| 145,045,136 |
| 135,288,513 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net income per share - basic |
| $ | 0.86 |
| $ | 0.22 |
| $ | 1.65 |
| $ | 0.46 |
|
|
|
|
|
|
|
|
|
|
| ||||
Net income per share - diluted |
| $ | 0.81 |
| $ | 0.22 |
| $ | 1.55 |
| $ | 0.46 |
|
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|
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Insurance Ratios |
|
|
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|
|
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Loss ratio |
| 58.3 | % | 58.7 | % | 53.6 | % | 56.5 | % | ||||
Expense ratio |
| 23.2 | % | 33.7 | % | 23.9 | % | 31.3 | % | ||||
Combined ratio |
| 81.5 | % | 92.4 | % | 77.5 | % | 87.8 | % | ||||
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Non-GAAP Financial Measures
In addition to the GAAP financial measures included within this release, the Company has presented “net income excluding net realized gains and losses on investments, net of tax” and “diluted book value per share,” which are non-GAAP financial measures. The Company has included the first measure as it believes that security analysts, rating agencies and investors believe that realized gains and losses are largely opportunistic and are a function of economic and interest rate conditions. As a result, the Company believes that they evaluate earnings before realized gains and losses, adjusted for tax to make performance comparisons with the Company’s industry peers. The Company has included the second measure relating to diluted book value per share as it believes that this is a valid method of assessing shareholder return.
AXIS CAPITAL HOLDINGS LIMITED
NON-GAAP FINANCIAL MEASURE RECONCILIATION
NET INCOME EXCLUDING REALIZED GAINS AND LOSSES ON INVESTMENTS, NET OF TAX
For the quarter and six months ended June 30, 2003 and 2002
(Expressed in thousands of U.S. dollars, except per share amounts)
|
| Quarters ended |
| Six months ended |
| ||||||||
|
| June 30, 2003 |
| June 30, 2002 |
| June 30, 2003 |
| June 30, 2002 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net income |
| 117,754 |
| 30,007 |
| 224,872 |
| 61,724 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Adjustment for net realized gains on investments |
| (15,705 | ) | (8,690 | ) | (26,903 | ) | (9,463 | ) | ||||
Adjustment for associated tax impact of net realized gains on investments |
| 325 |
| — |
| 403 |
| — |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net income excluding realized gains on investments, net of tax |
| $ | 102,374 |
| $ | 21,317 |
| $ | 198,372 |
| $ | 52,261 |
|
|
|
|
|
|
|
|
|
|
| ||||
Net income per share - diluted |
| $ | 0.81 |
| $ | 0.22 |
| $ | 1.55 |
| $ | 0.46 |
|
|
|
|
|
|
|
|
|
|
| ||||
Adjustment for net realized gains on investments |
| (0.11 | ) | (0.06 | ) | (0.19 | ) | (0.07 | ) | ||||
Adjustment for associated tax impact of net realized gains on investments |
| — |
| — |
| — |
| — |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net income excluding realized gains on investments, net of tax per diluted share |
| $ | 0.70 |
| $ | 0.16 |
| $ | 1.36 |
| $ | 0.39 |
|
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AXIS CAPITAL HOLDINGS LIMITED
NON-GAAP FINANCIAL MEASURE RECONCILIATION
DILUTED BOOK VALUE PER SHARE
As at June 30, 2003 and December 31, 2002
(Expressed in thousands of U.S. dollars, except share and per share amounts)
|
| June 30, 2003 |
| December 31, 2002 |
| ||
|
|
|
|
|
| ||
Shareholders’ equity |
| 2,212,555 |
| 1,961,033 |
| ||
|
|
|
|
|
| ||
Shares outstanding |
| 138,925,528 |
| 138,168,520 |
| ||
|
|
|
|
|
| ||
Book value per share |
| $ | 15.93 |
| $ | 14.19 |
|
|
|
|
|
|
| ||
Diluted book value on an “as if converted basis” |
|
|
|
|
| ||
|
|
|
|
|
| ||
Shareholders’ equity |
| 2,212,555 |
| 1,961,033 |
| ||
add in: |
|
|
|
|
| ||
proceeds on exercise of options |
| 61,331 |
| 58,323 |
| ||
proceeds on exercise of warrants |
| 244,784 |
| 243,166 |
| ||
|
|
|
|
|
| ||
Adjusted shareholders’ equity |
| 2,518,670 |
| 2,262,522 |
| ||
|
|
|
|
|
| ||
As if converted diluted shares outstanding |
|
|
|
|
| ||
Shares outstanding |
| 138,925,528 |
| 138,168,520 |
| ||
add in: |
|
|
|
|
| ||
exercise of options |
| 4,667,512 |
| 4,475,512 |
| ||
exercise of warrants |
| 19,582,720 |
| 19,453,304 |
| ||
|
|
|
|
|
| ||
Diluted shares outstanding |
| 163,175,760 |
| 162,097,336 |
| ||
|
|
|
|
|
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Diluted book value per share |
| $ | 15.44 |
| $ | 13.96 |
|
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