AXIS Capital John Charman CEO & President September 3, 2008 Keefe, Bruyette & Woods 2008 Insurance Conference Exhibit 99.1 |
2 Safe Harbor Disclosure 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 hurricanes and other catastrophes, our expectations regarding pricing and other market conditions, our growth prospects, the amount of our acquisition costs, the amount of our net losses and loss reserves, the projected amount of our capital expenditures, management of interest rate and foreign currency risks, valuations of potential interest rate shifts and foreign currency rate changes and measurements of potential losses in fair market values of our investment portfolio. Forward-looking statements only reflect our expectations and are not guarantees of performance. 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) loss of business provided to us by our major brokers, (9) changes in accounting policies or practices, (10) changes in governmental regulations, (11) increased competition, (12) changes in the political environment of certain countries in which we operate or underwrite business, (13) interest rate and/or currency value fluctuations, (14) general economic conditions and (15) other matters that can be found in our filings with the Securities and Exchange Commission. Forward-looking statements are only as of the date they are made, and we do not undertake any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Cautionary Statement Regarding Forward-looking Statements |
3 Well-diversified leader in the global wholesale P&C markets Established global insurance and reinsurance platforms Well-diversified mix of specialty and niche businesses Geographic diversification globally Disciplined and proven underwriter Proven steward of capital (generated profitability in every year-since inception in 2001) Conservative reserving practices Well-managed exposure Platform built to execute in all phases of (re)insurance cycle Strong balance sheet with solid financial performance Conservative balance sheet with total assets of $15.6 billion and total capitalization of $5.8 billion High-quality, conservative investment portfolio Ratings of A (S&P - positive), A2 (Moody’s - stable) and A (AM Best - stable) 17% compound annual growth in diluted book value and accumulated dividends since 2002 Experienced management team with significant stock ownership Investment Highlights |
4 AXIS Insurance GPW and Combined Ratio Since Inception 0 300 600 900 1,200 1,500 1,800 2,100 2002 2003 2004 2005 2006 2007 LTM 6/30/2008 ($ in millions) $794 $1,607 $1,920 Property Marine Terrorism Aviation & Aerospace $1,875 $2,070 Political Risk Professional Lines Casualty Accident & Health $2,039 Focus on underwriting profitability 62% 68% 81% 93% 72% 69% 72% Combined Ratio $1,980 |
5 AXIS Re GPW and Combined Ratio Since Inception 0 300 600 900 1,200 1,500 1,800 2002 2003 2004 2005 2006 2007 LTM 6/30/2008 ($ in millions) $667 $1,093 $1,519 (1) $1,539 Catastrophe Property Professional Lines Credit & Bond Motor Liability Engineering/Other $314 (1) Includes KRW reinstatement premiums of $88 million. $1,551 Focus on underwriting profitability 76% 76% 78% 106% 85% 66% 62% Combined Ratio $1,486 $314 |
6 Quality, Sustainability and Profitability 27.7% 22.5% 23.0% 21.5% 24.4% 25.2% 26.3% 42.7% 51.1% 61.4% 80.3% 52.9% 50.1% 54.8% 0% 25% 50% 75% 100% 2002 2003 2004 2005 2006 2007 2008 YTD 19.9% 24.6% 26.7% 2.9% 16.3% 22.3% 14.7% 0% 10% 20% 30% 2002 2003 2004 2005 2006 2007 2008 YTD $1,055.2 $925.8 $90.1 $495.0 $532.4 $265.1 $0 $250 $500 $750 $1,000 $1,250 2002 2003 2004 2005 2006 2007 LTM 6/30/2008 ($ in millions) 70.4% 73.6% 84.4% 101.8% 77.3% Total Expense Ratio Loss Ratio AVERAGE= 81% AVERAGE= 18% Return on Average Common Equity Net Income Combined Ratio 75.3% 81.2% $1,045.1 |
7 Favorable Reserve Development since Inception 27.7 106.8 268.7 167.5 214.0 100.7 28.1 74.9 114.3 49.0 123.0 74.2 $0 $100 $200 $300 $400 2003 2004 2005 2006 2007 2008 YTD ($ in millions) Reinsurance Insurance $55.8 $181.7 $383.0 $216.5 $322 excluding adverse KRW development of $105 $337.0 We mitigate reserve risk by limiting overall exposure to long-tail business, integrating third-party actuarial input into our prudent reserving practices and utilizing institutional knowledge from participation in both insurance and reinsurance markets $174.9 |
8 Strong Net Reserve Position $399 $48 $65 $361 $260 $84 $572 $290 $627 $429 $537 $558 $0 $400 $800 $1,200 Property and Other Liability Professional Lines Cat, Property & other Credit & Bond, Motor & Liability Professional Lines Net Case Reserves Net IBNR Reserve ($ in millions) AXIS Insurance Net IBNR Reserves = $1,489 Total Net Reserves = $2,001 AXIS Re Net IBNR Reserves = $1,524 Total Net Reserves = $2,229 $971 $338 $692 $790 $797 $643 Note: Information as of December 31, 2007 |
9 Modest Financial Leverage = Financial Flexibility 1,961 2,817 3,238 3,012 3,913 4,659 4,763 250 250 250 250 250 250 250 250 499 499 499 499 499 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 2002 2003 2004 2005 2006 2007 6/30/2008 ($ in millions) $2,817 $3,737 $4,011 $4,912 Common Equity Series A Preferred Equity Series B Preferred Equity Debt $1,961 $5,658 Capitalization Ratios Debt / Total Capital 8.7% Debt + Preferred / Total Capital 17.3% $5,762 |
10 Driving Shareholder Value Creation Diluted Book Value Per Share (1) (1) Calculated using the treasury stock method. Accumulated Dividends Paid Diluted book value per share + Accumulated dividends 2002 – Q2 08 Average ROACE = 18% Diluted book value per share plus accumulated dividends have grown at an annualized rate of 17.0% from 2002 through June 30, 2008 First half 2008 share repurchases of $175 M $13.90 $16.81 $19.81 $19.43 $25.14 $31.14 ’02-Q2 08 CAGR = 17.0% $33.02 $30.30 $28.79 $23.45 $18.34 $19.29 $16.74 $13.90 $0.00 $7.00 $14.00 $21.00 $28.00 $35.00 2002 2003 2004 2005 2006 2007 Q2 08 |