Exhibit 99.1
| | | | |
Investor Contacts | | Media Contacts | | |
Linda Ventresca | | Joseph Kuo | | |
AXIS Capital Holdings Limited | | Kekst and Company | | |
investorrelations@axiscapital.com | | (212) 521-4800 | | |
(441) 405-2727 | | | | |
AXIS Capital Announces Record Fourth Quarter Net Income of $306 Million and
Full Year Net Income of $1.1 Billion
Fourth Quarter Diluted Earnings Per Share of $1.89 and
Annualized Return on Average Common Equity of 26.9%
Pembroke, Bermuda, February 4, 2008—AXIS Capital Holdings Limited (“AXIS Capital”) (NYSE: AXS) today reported net income available to common shareholders for the fourth quarter of 2007 of $306 million, or $1.89 per diluted share, compared with net income of $281 million, or $1.69 per diluted share, for the corresponding period in 2006. Net income available to common shareholders for the full year of 2007 was $1,055 million, or $6.41 per diluted common share, compared with net income of $926 million, or $5.63 per diluted common share, for the prior year.
Operating income for the fourth quarter of 2007 was $296 million, or $1.83 per diluted share, compared with $284 million, or $1.71 per diluted common share, for the fourth quarter of 2006. This same item excluding foreign exchange gains, net of tax, for the fourth quarter of 2007 was also $296 million, or $1.83 per diluted common share, compared with $278 million, or $1.67 per diluted common share, for the same period in 2006.
Operating income for the full year of 2007 was $1,050 million, or $6.38 per diluted share, compared with $950 million, or $5.78 per diluted common share for 2006. This same item excluding foreign exchange gains, net of tax, for 2007 was $1,035 million, or $6.29 per diluted common share, compared with $919 million, or $5.59 per diluted common share, for 2006.
AXIS Capital Holdings Limited 92 Pitts Bay Road Pembroke, Bermuda HM08
Tel. 441.496.2600 Fax 441.296.3140
www.axiscapital.com
1
Fourth Quarter and Full Year Operating Highlights
AXIS Capital delivered an exceptionally strong performance this quarter and year:
| | • | | Operating income increased 4% to a record $296 million for the quarter and 11% to a record $1,050 million for the year. |
| | • | | Net premiums earned decreased 3% to $669 million in the quarter and increased 1% to $2,734 million for the year. |
| | • | | Our combined ratio improved by 2.9 ratio points to 70.8% for the quarter and by 2.0 ratio points to 75.3% for the year. |
| | • | | Pre-tax net investment income increased 2% to $125 million in the quarter and 19% for the year to a record $483 million. |
| | • | | Return on average common shareholders’ equity was 26.9% for the quarter (annualized) and 24.6% for the year. |
| | • | | Diluted book value per common share increased 23% from December 31, 2006 to $28.79. |
| | • | | Shareholders’ equity increased 17% from December 31, 2006 to $5.2 billion. |
| | • | | Capital management initiatives during the year included $305 million of share repurchases. Also, in December 2007, our Board approved a 12% increase in the quarterly common dividend to $0.185 per common share. |
Commenting on the fourth quarter results, John Charman, Chief Executive Officer and President of AXIS Capital stated: “I am proud that our established, high-quality global franchise in both the insurance and reinsurance markets has delivered over $1 billion in annual earnings in just the sixth year since our inception. This achievement is unparalleled in our sector. During this milestone year, AXIS increased diluted book value per share by 23% and we returned more than $400 million to shareholders through share repurchases and dividends. During this extraordinarily turbulent times throughout the financial services sector, the strength and solidity of the AXIS balance sheet speaks for itself. The consistency, stability and diversity of our management team, our operations and our earnings stand us in extremely good stead for the challenging times ahead.”
AXIS Capital Holdings Limited 92 Pitts Bay Road Pembroke, Bermuda HM08
Tel. 441.496.2600 Fax 441.296.3140
www.axiscapital.com
2
Segment Highlights
Insurance Segment
Our insurance segment reported underwriting income for the quarter of $105 million, up 11%, from the fourth quarter of 2006. This increase primarily reflected a 10.6 ratio point reduction in the segment’s loss ratio, driven by a higher level of net favorable prior year reserve development. For the full year, our insurance segment reported underwriting income of $374 million, up 3% from the prior year. This increase was also driven by a higher level of net favorable prior year reserve development. Our loss ratio before net favorable development was 61.9% and 61.6% in 2007 and 2006, respectively.
Our insurance segment reported gross premiums written in the quarter of $509 million, down 8% from the fourth quarter of 2006. The reduction reflects our strong underwriting discipline in the face of competitive market conditions and rate pressures across most of our lines. For the full year, our insurance segment reported gross premiums written of $2,039 million, down 2% from 2006. Net premiums written in our insurance segment decreased 21% to $322 million in the quarter and by 9% to $1,327 million for the full year. These reductions were due to reductions in gross premiums written, the purchase of additional reinsurance coverage at attractive costs and also a shift in business mix towards lines with higher levels of ceded premiums.
Reinsurance Segment
Our reinsurance segment reported underwriting income for the quarter of $102 million, which was comparable with the fourth quarter of 2006. The segment’s combined ratio was 73.0% compared with 71.4% in the prior period quarter. For the full year, our reinsurance segment reported underwriting income of $364 million, up 17% from the prior year. This increase was primarily due to a higher level of net favorable prior year reserve development. Our loss ratio before net favorable development was 62.8% and 60.3% in 2007 and 2006, respectively.
Our reinsurance segment reported gross premiums written in the quarter of $64 million, down 61% from the fourth quarter of 2006. The reduction was primarily related to increased retentions by cedants as well as a property proportional treaty written in the fourth quarter of 2006 with a 16-month term. For the full year, our reinsurance segment reported gross premiums written of $1,551 million, which was in line with the prior year.
AXIS Capital Holdings Limited 92 Pitts Bay Road Pembroke, Bermuda HM08
Tel. 441.496.2600 Fax 441.296.3140
www.axiscapital.com
3
Investments
Pre-tax net investment income increased 2% to $125 million in the quarter, largely reflecting higher average investment balances in our fixed income portfolio. For the full year, net investment income increased 19% to a record $483 million, reflecting both higher average investment balances and average investment yields. We experienced net realized gains of $11 million and $5 million in the fourth quarter and full year of 2007, respectively, compared to net realized losses of $3 million and $26 million, for the corresponding periods of 2006. Our investment portfolio has $76 million in direct exposure to subprime mortgages, representing less than 1% of our total cash and investments. Virtually all of these are AAA-rated by major rating agencies, and includes $26 million which are backed by U.S. Government sponsored agencies. Overall, there has been no material adverse impact on our investment portfolio to date as a result of this exposure or our exposure to the broader credit deterioration in the markets.
Capitalization/Shareholders’ Equity
Total capitalization at December 31, 2007 was $5.7 billion, including $0.5 billion of long-term debt and $0.5 billion of preferred equity, compared to $4.9 billion at December 31, 2006. During the quarter, we repurchased 3.2 million shares of common stock at an average price of $38.58 per share, for a total cost of $125 million. During the year, we repurchased 8.2 million shares of common stock at an average price of $37.38 per share, for a total cost of $305 million. In December, our Board approved a new share repurchase authorization of up to $400 million of our common shares, which is set to expire on December 31, 2009. Our current total authorization for share repurchases through December 31, 2008 is $495 million and includes $95 million of common shares remaining under our 2006 authorization.
At December 31, 2007, diluted book value per common share, on a treasury stock basis, was $28.79 and book value per common share was $32.69, compared to $23.45 and $26.09 respectively, as of December 31, 2006.
AXIS Capital Holdings Limited 92 Pitts Bay Road Pembroke, Bermuda HM08
Tel. 441.496.2600 Fax 441.296.3140
www.axiscapital.com
4
Conference Call
We will host a conference call on Tuesday, February 5, 2008 at 8:00 AM (Eastern) to discuss the fourth quarter financial results and related matters. The teleconference can be accessed by dialing (866) 356-3093 (U.S. callers) or (617) 597-5381 (international callers) and entering the pass code 15928142 approximately ten minutes in advance of the call. A live, listen-only webcast of the call will be available via the Investor Information section of our website atwww.axiscapital.com. In addition, a financial supplement relating to our financial results for the quarter ended December 31, 2007 is available in the Investor Information section of our website.
AXIS Capital is a Bermuda-based global provider of specialty lines insurance and treaty reinsurance with shareholders’ equity at December 31, 2007 of $5.2 billion and locations in Bermuda, the United States, Europe and Singapore. 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. AXIS Capital has been assigned a senior unsecured debt rating of Baa1 (stable) by Moody’s Investors Service and BBB+ (stable) by Standard & Poor’s. For more information about AXIS Capital, visit our website atwww.axiscapital.com.
AXIS Capital Holdings Limited 92 Pitts Bay Road Pembroke, Bermuda HM08
Tel. 441.496.2600 Fax 441.296.3140
www.axiscapital.com
5
AXIS CAPITAL HOLDINGS LIMITED
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2007 (UNAUDITED) AND 2006
| | | | | | | | |
| | | 2007 | | | 2006 | |
| | | (in thousands) | |
Assets | | | | |
Investments: | | | | | | | | |
Fixed maturity investments available for sale, at fair value | | $ | 8,331,666 | | | $ | 6,532,723 | |
Other investments, at fair value | | | 645,987 | | | | 1,130,664 | |
| | | | | | | | |
Total investments | | | 8,977,653 | | | | 7,663,387 | |
Cash and cash equivalents | | | 1,332,921 | | | | 1,989,287 | |
Accrued interest receivable | | | 87,338 | | | | 76,967 | |
Insurance and reinsurance premium balances receivable | | | 1,231,494 | | | | 1,125,822 | |
Reinsurance recoverable balances | | | 1,280,295 | | | | 1,293,660 | |
Reinsurance recoverable balances on paid losses | | | 76,598 | | | | 65,494 | |
Deferred acquisition costs | | | 276,801 | | | | 251,799 | |
Prepaid reinsurance premiums | | | 242,940 | | | | 241,821 | |
Securities lending collateral | | | 865,256 | | | | 794,149 | |
Net receivable for investments sold | | | 86,356 | | | | — | |
Goodwill and intangible assets | | | 61,653 | | | | 29,041 | |
Other assets | | | 156,004 | | | | 133,860 | |
| | | | | | | | |
Total assets | | $ | 14,675,309 | | | $ | 13,665,287 | |
| | | | | | | | |
| |
Liabilities | | | | |
Reserve for losses and loss expenses | | $ | 5,587,311 | | | $ | 5,015,113 | |
Unearned premiums | | | 2,146,087 | | | | 2,015,556 | |
Insurance and reinsurance balances payable | | | 244,988 | | | | 294,374 | |
Securities lending payable | | | 863,906 | | | | 791,744 | |
Senior notes | | | 499,261 | | | | 499,144 | |
Other liabilities | | | 175,134 | | | | 174,524 | |
Liability under repurchase agreement | | | — | | | | 400,000 | |
Net payable for investments purchased | | | — | | | | 62,185 | |
| | | | | | | | |
Total liabilities | | | 9,516,687 | | | | 9,252,640 | |
| | | | | | | | |
| |
Shareholders’ Equity | | | | |
Preferred shares—Series A and B | | | 500,000 | | | | 500,000 | |
Common shares | | | 1,850 | | | | 1,875 | |
Additional paid-in capital | | | 1,869,810 | | | | 1,929,406 | |
Accumulated other comprehensive income (loss) | | | 22,668 | | | | (44,638 | ) |
Retained earnings | | | 2,968,900 | | | | 2,026,004 | |
Treasury shares, at cost | | | (204,606 | ) | | | — | |
| | | | | | | | |
Total shareholders’ equity | | | 5,158,622 | | | | 4,412,647 | |
| | | | | | | | |
Total liabilities and shareholders’ equity | | $ | 14,675,309 | | | $ | 13,665,287 | |
| | | | | | | | |
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 STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE QUARTERS AND YEARS ENDED DECEMBER 31, 2007 AND 2006
| | | | | | | | | | | | | | | | |
| | | Quarters ended | | | Years ended | |
| | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
| | | (in thousands, except per share amounts) | |
Revenues | | | | | | | | | | | | | | | | |
Net premiums earned | | $ | 669,320 | | | $ | 688,797 | | | $ | 2,734,410 | | | $ | 2,694,270 | |
Net investment income | | | 125,000 | | | | 123,082 | | | | 482,873 | | | | 407,100 | |
Net realized investment gains (losses) | | | 10,778 | | | | (3,274 | ) | | | 5,230 | | | | (25,702 | ) |
Other insurance related income | | | 273 | | | | 1,027 | | | | 3,911 | | | | 2,893 | |
| | | | | | | | | | | | | | | | |
Total revenues | | | 805,371 | | | | 809,632 | | | | 3,226,424 | | | | 3,078,561 | |
| | | | | | | | | | | | | | | | |
Expenses | | | | | | | | | | | | | | | | |
Net losses and loss expenses | | | 290,546 | | | | 329,257 | | | | 1,370,260 | | | | 1,425,855 | |
Acquisition costs | | | 90,574 | | | | 91,808 | | | | 384,497 | | | | 386,959 | |
General and administrative expenses | | | 92,838 | | | | 86,858 | | | | 303,831 | | | | 268,396 | |
Foreign exchange gains | | | (349 | ) | | | (7,078 | ) | | | (16,826 | ) | | | (32,505 | ) |
Interest expense and financing costs | | | 7,912 | | | | 8,315 | | | | 51,153 | | | | 32,954 | |
| | | | | | | | | | | | | | | | |
Total expenses | | | 481,521 | | | | 509,160 | | | | 2,092,915 | | | | 2,081,659 | |
| | | | | | | | | | | | | | | | |
Income before income taxes | | | 323,850 | | | | 300,472 | | | | 1,133,509 | | | | 996,902 | |
Income tax expense | | | 8,547 | | | | 10,302 | | | | 41,491 | | | | 33,842 | |
| | | | | | | | | | | | | | | | |
Net income | | | 315,303 | | | | 290,170 | | | | 1,092,018 | | | | 963,060 | |
Preferred share dividends | | | 9,203 | | | | 9,212 | | | | 36,775 | | | | 37,295 | |
| | | | | | | | | | | | | | | | |
| | | | |
Net income available to common shareholders | | $ | 306,100 | | | $ | 280,958 | | | $ | 1,055,243 | | | $ | 925,765 | |
| | | | | | | | | | | | | | | | |
| | | | |
Weighted average common shares and common share equivalents: | | | | | | | | | | | | | | | | |
Basic | | | 143,877 | | | | 150,006 | | | | 147,524 | | | | 149,745 | |
| | | | | | | | | | | | | | | | |
Diluted | | | 161,732 | | | | 165,986 | | | | 164,515 | | | | 164,394 | |
| | | | | | | | | | | | | | | | |
| | | | |
Earnings per common share: | | | | | | | | | | | | | | | | |
Basic | | $ | 2.13 | | | $ | 1.87 | | | $ | 7.15 | | | $ | 6.18 | |
| | | | | | | | | | | | | | | | |
Diluted | | $ | 1.89 | | | $ | 1.69 | | | $ | 6.41 | | | $ | 5.63 | |
| | | | | | | | | | | | | | | | |
| | | | |
Cash dividends declared per common share | | $ | 0.185 | | | $ | 0.165 | | | $ | 0.68 | | | $ | 0.615 | |
| | | | | | | | | | | | | | | | |
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 SEGMENTAL DATA (UNAUDITED)
FOR THE QUARTERS ENDED DECEMBER 31, 2007 AND 2006
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2007 | | | 2006 | |
| | | Insurance | | | Reinsurance | | | Total | | | Insurance | | | Reinsurance | | | Total | |
Gross premiums written | | $ | 509,326 | | | $ | 63,539 | | | $ | 572,865 | | | $ | 550,696 | | | $ | 163,310 | | | $ | 714,006 | |
Net premiums written | | | 322,111 | | | | 63,044 | | | | 385,155 | | | | 406,605 | | | | 163,601 | | | | 570,206 | |
Net premiums earned | | | 293,338 | | | | 375,982 | | | | 669,320 | | | | 331,775 | | | | 357,022 | | | | 688,797 | |
Other insurance related income | | | 123 | | | | 150 | | | | 273 | | | | 284 | | | | 743 | | | | 1,027 | |
Net losses and loss expenses | | | (101,652 | ) | | | (188,894 | ) | | | (290,546 | ) | | | (150,449 | ) | | | (178,808 | ) | | | (329,257 | ) |
Acquisition costs | | | (28,911 | ) | | | (61,663 | ) | | | (90,574 | ) | | | (34,996 | ) | | | (56,812 | ) | | | (91,808 | ) |
General and administrative expenses | | | (57,858 | ) | | | (23,927 | ) | | | (81,785 | ) | | | (51,847 | ) | | | (19,281 | ) | | | (71,128 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Underwriting income | | $ | 105,040 | | | $ | 101,648 | | | | 206,688 | | | $ | 94,767 | | | $ | 102,864 | | | | 197,631 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Corporate expenses | | | | | | | | | | | (11,053 | ) | | | | | | | | | | | (15,730 | ) |
Net investment income | | | | | | | | | | | 125,000 | | | | | | | | | | | | 123,082 | |
Net realized investment gains (losses) | | | | | | | | | | | 10,778 | | | | | | | | | | | | (3,274 | ) |
Foreign exchange gains | | | | | | | | | | | 349 | | | | | | | | | | | | 7,078 | |
Interest expense and financing costs | | | | | | | | | | | (7,912 | ) | | | | | | | | | | | (8,315 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income before income taxes | | | | | | | | | | $ | 323,850 | | | | | | | | | | | $ | 300,472 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net loss and loss expense ratio | | | 34.7 | % | | | 50.2 | % | | | 43.4 | % | | | 45.3 | % | | | 50.1 | % | | | 47.8 | % |
Acquisition cost ratio | | | 9.9 | % | | | 16.4 | % | | | 13.5 | % | | | 10.5 | % | | | 15.9 | % | | | 13.3 | % |
General and administrative expense ratio | | | 19.7 | % | | | 6.4 | % | | | 13.9 | % | | | 15.6 | % | | | 5.4 | % | | | 12.6 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Combined ratio | | | 64.3 | % | | | 73.0 | % | | | 70.8 | % | | | 71.4 | % | | | 71.4 | % | | | 73.7 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
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 YEARS ENDED DECEMBER 31, 2007 AND 2006
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | 2007 | | | | | | | | | 2006 | | | | |
| | | Insurance | | | Reinsurance | | | Total | | | Insurance | | | Reinsurance | | | Total | |
Gross premiums written | | $ | 2,039,214 | | | $ | 1,550,876 | | | $ | 3,590,090 | | | $ | 2,070,467 | | | $ | 1,538,569 | | | $ | 3,609,036 | |
Net premiums written | | | 1,326,647 | | | | 1,537,110 | | | | 2,863,757 | | | | 1,460,399 | | | | 1,528,780 | | | | 2,989,179 | |
Net premiums earned | | | 1,208,440 | | | | 1,525,970 | | | | 2,734,410 | | | | 1,305,760 | | | | 1,388,510 | | | | 2,694,270 | |
Other insurance related income | | | 1,860 | | | | 2,051 | | | | 3,911 | | | | 1,758 | | | | 1,135 | | | | 2,893 | |
Net losses and loss expenses | | | (534,264 | ) | | | (835,996 | ) | | | (1,370,260 | ) | | | (636,684 | ) | | | (789,171 | ) | | | (1,425,855 | ) |
Acquisition costs | | | (126,423 | ) | | | (258,074 | ) | | | (384,497 | ) | | | (152,002 | ) | | | (234,957 | ) | | | (386,959 | ) |
General and administrative expenses | | | (175,810 | ) | | | (69,721 | ) | | | (245,531 | ) | | | (155,916 | ) | | | (53,658 | ) | | | (209,574 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Underwriting income | | $ | 373,803 | | | $ | 364,230 | | | | 738,033 | | | $ | 362,916 | | | $ | 311,859 | | | | 674,775 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Corporate expenses | | | | | | | | | | | (58,300 | ) | | | | | | | | | | | (58,822 | ) |
Net investment income | | | | | | | | | | | 482,873 | | | | | | | | | | | | 407,100 | |
Net realized investment gains (losses) | | | | | | | | | | | 5,230 | | | | | | | | | | | | (25,702 | ) |
Foreign exchange gains | | | | | | | | | | | 16,826 | | | | | | | | | | | | 32,505 | |
Interest expense and financing costs | | | | | | | | | | | (51,153 | ) | | | | | | | | | | | (32,954 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income before income taxes | | | | | | | | | | $ | 1,133,509 | | | | | | | | | | | $ | 996,902 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net loss and loss expense ratio | | | 44.2 | % | | | 54.8 | % | | | 50.1 | % | | | 48.8 | % | | | 56.8 | % | | | 52.9 | % |
Acquisition cost ratio | | | 10.5 | % | | | 16.9 | % | | | 14.1 | % | | | 11.6 | % | | | 16.9 | % | | | 14.4 | % |
General and administrative expense ratio | | | 14.5 | % | | | 4.6 | % | | | 11.1 | % | | | 11.9 | % | | | 3.9 | % | | | 10.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Combined ratio | | | 69.2 | % | | | 76.3 | % | | | 75.3 | % | | | 72.3 | % | | | 77.6 | % | | | 77.3 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
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
NON-GAAP FINANCIAL MEASURE RECONCILIATION
OPERATING INCOME AND OPERATING INCOME EXCLUDING
FOREIGN EXCHANGE GAINS, NET OF TAX
FOR THE QUARTERS AND YEARS ENDED DECEMBER 31, 2007 AND 2006
| | | | | | | | | | | | | | | | |
| | | Quarters Ended | | | Years Ended | |
| | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
Net income available to common shareholders | | $ | 306,100 | | | $ | 280,958 | | | $ | 1,055,243 | | | $ | 925,765 | |
| | | | |
Adjustment for net realized investment (gains) losses | | | (10,778 | ) | | | 3,274 | | | | (5,230 | ) | | | 25,702 | |
Adjustment for associated tax impact | | | 514 | | | | 99 | | | | (380 | ) | | | (1,625 | ) |
| | | | | | | | | | | | | | | | |
Operating income | | | 295,836 | | | | 284,331 | | | | 1,049,633 | | | | 949,842 | |
| | | | |
Adjustment for foreign exchange gains | | | (349 | ) | | | (7,078 | ) | | | (16,826 | ) | | | (32,505 | ) |
Adjustment for associated tax impact | | | 401 | | | | 435 | | | | 1,728 | | | | 1,619 | |
| | | | | | | | | | | | | | | | |
Operating income excluding foreign exchange gains, net of tax | | $ | 295,888 | | | $ | 277,688 | | | $ | 1,034,535 | | | $ | 918,956 | |
| | | | | | | | | | | | | | | | |
| | | | |
Net income per share—diluted | | $ | 1.89 | | | $ | 1.69 | | | $ | 6.41 | | | $ | 5.63 | |
Adjustment for net realized investment (gains) losses | | | (0.06 | ) | | | 0.02 | | | | (0.03 | ) | | | 0.16 | |
Adjustment for associated tax impact | | | — | | | | — | | | | — | | | | (0.01 | ) |
| | | | | | | | | | | | | | | | |
Operating income per share—diluted | | | 1.83 | | | | 1.71 | | | | 6.38 | | | | 5.78 | |
| | | | |
Adjustment for foreign exchange gains | | | — | | | | (0.04 | ) | | | (0.10 | ) | | | (0.20 | ) |
Adjustment for associated tax impact | | | — | | | | — | | | | 0.01 | | | | 0.01 | |
| | | | | | | | | | | | | | | | |
Operating income excluding foreign exchange gains, net of tax | | $ | 1.83 | | | $ | 1.67 | | | $ | 6.29 | | | $ | 5.59 | |
| | | | | | | | | | | | | | | | |
| | | | |
Weighted average common shares and common share equivalents—diluted | | | 161,732 | | | | 165,986 | | | | 164,515 | | | | 164,394 | |
| | | | | | | | | | | | | | | | |
AXIS Capital Holdings Limited 92 Pitts Bay Road Pembroke, Bermuda HM08
Tel. 441.496.2600 Fax 441.296.3140
www.axiscapital.com
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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 of natural and man-made disasters, (2) actual claims exceeding our loss reserves, (3) the failure of any of the loss limitation methods we employ, (4) the effects of emerging claims and coverage issues, (5) the failure of our cedants to adequately evaluate risks, (6) the loss of one or more key executives, (7) a decline in our ratings with rating agencies, (8) the loss of business provided to us by our major brokers, (9) changes in governmental regulations, (10) increased competition, (11) interest rate and/or currency value fluctuations, (12) general economic conditions, and (13) 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.
Non-GAAP Financial Measures
In this release, we have presented the following non-GAAP financial measures:
| 1. | Operating income. This represents net income available to common shareholders, before the after tax impact of net realized gains and losses on investments; |
| 2. | Operating income, excluding the after tax impact of foreign exchange gains/losses. |
We have included these measures as we believe that security analysts, rating agencies and investors believe that realized gains and losses and foreign exchange, where an actively managed foreign exchange program is not in place, are largely opportunistic and are a function of economic and interest rate conditions. As a result, we believe that they evaluate earnings before realized gains and losses and foreign exchange, adjusted for tax, to make performance comparisons with our industry peers.
AXIS Capital Holdings Limited 92 Pitts Bay Road Pembroke, Bermuda HM08
Tel. 441.496.2600 Fax 441.296.3140
www.axiscapital.com
11
