Exhibit 99.2
AXIS Capital Holdings Limited
INVESTOR FINANCIAL SUPPLEMENT
FOURTH QUARTER 2010
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 Statements of Income - Year | 3 | |||||
| c. Consolidated Segment Data | 4 | |||||
| d. Gross Premium Written by Segment by Line of Business | 5 | |||||
| e. Segment Consecutive Quarters | 6-7 | |||||
| III. | Balance Sheets | |||||
| a. Consolidated Balance Sheets | 8 | |||||
| b. Cash and Invested Assets* | 9 | |||||
| c. Cash and Invested Assets Composition - Quarterly | 10 | |||||
| d. Investment Portfolio: Ten Largest Issuer Holdings in Fixed Maturity Portfolio | 11 | |||||
| e. Net Investment Income | 12 | |||||
| f. Reinsurance Recoverable Analysis | 13-14 | |||||
| IV. | Loss Reserve Analysis | |||||
| a. Paid to Incurred Analysis | 15 | |||||
| b. Paid to Incurred Analysis by Segment | 16 | |||||
| c. Segment Consecutive Quarters | 17-18 | |||||
| d. 2010 Impact of Major Catastrophe Events | 19 | |||||
| e. Estimated Exposures to Peak Zone Property Catastrophe Losses | 20 | |||||
| V. | Share Analysis | |||||
| a. Earnings Per Common Share Analysis - As Reported, GAAP | 21 | |||||
| b. Earnings Per Common Share Analysis and Common Share Rollforward - Quarterly | 22 | |||||
| c. Diluted Book Value Per Common Share Analysis | 23 | |||||
| VI. | Non-GAAP Financial Measures | |||||
| a. Non-GAAP Financial Measure Reconciliation | 24 | |||||
| * | Refer also to Investment Portfolio Supplemental Information and Data for more details. |
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 sheets at December 31, 2009 and December 31, 2008 and consolidated statements of income for the years then ended. |
| • | 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 of natural and man-made disasters, |
| • | actual claims exceeding our loss reserves, |
| • | general economic, capital and credit market conditions and the persistence of the recent financial crisis, |
| • | 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, |
| • | 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 Q1 2010, “Other” primarily relates to 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 or excess basis, with aggregate and/or per person deductibles. Prior to this, “Other” related primarily 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 December 31, | Year ended December 31, | |||||||||||||||||||||||||
| 2010 | 2009 | Change | 2010 | 2009 | Change | |||||||||||||||||||||
| HIGHLIGHTS | Gross premiums written | $ | 634,774 | $ | 573,845 | 10.6 | % | $ | 3,750,536 | $ | 3,587,295 | 4.6 | % | |||||||||||||
| Gross premiums written - Insurance | 78.3 | % | 82.0 | % | (3.7 | ) pts | 51.1 | % | 49.5 | % | 1.6 | pts | ||||||||||||||
| Gross premiums written - Reinsurance | 21.7 | % | 18.0 | % | 3.7 | pts | 48.9 | % | 50.5 | % | (1.6 | ) pts | ||||||||||||||
| Net premiums written | $ | 488,644 | $ | 357,971 | 36.5 | % | $ | 3,147,540 | $ | 2,816,429 | 11.8 | % | ||||||||||||||
| Net premiums earned | $ | 757,318 | $ | 713,610 | 6.1 | % | $ | 2,947,410 | $ | 2,791,764 | 5.6 | % | ||||||||||||||
| Net premiums earned - Insurance | 43.4 | % | 42.7 | % | 0.7 | pts | 40.9 | % | 41.5 | % | (0.6 | ) pts | ||||||||||||||
| Net premiums earned - Reinsurance | 56.6 | % | 57.3 | % | (0.7 | ) pts | 59.1 | % | 58.5 | % | 0.6 | pts | ||||||||||||||
| Net income available to common shareholders | $ | 264,343 | 282,063 | (6.3 | )% | $ | 819,848 | 461,011 | 77.8 | % | ||||||||||||||||
| Operating income[a] | 187,345 | 276,238 | (32.2 | )% | 626,724 | 766,241 | (18.2 | )% | ||||||||||||||||||
| Reserve for losses and loss expenses | 7,032,375 | 6,564,133 | 7.1 | % | 7,032,375 | 6,564,133 | 7.1 | % | ||||||||||||||||||
| Total shareholders’ equity | 5,624,970 | 5,500,244 | 2.3 | % | 5,624,970 | 5,500,244 | 2.3 | % | ||||||||||||||||||
| PER COMMON SHARE AND | Basic earnings per common share | $ | 2.26 | $ | 2.07 | 9.1 | % | $ | 6.74 | $ | 3.36 | 100.4 | % | |||||||||||||
| COMMON SHARE DATA | Diluted earnings per common share | $ | 1.99 | $ | 1.87 | 6.4 | % | $ | 6.02 | $ | 3.07 | 96.1 | % | |||||||||||||
| Operating diluted earnings per common share [b] | $ | 1.41 | $ | 1.83 | (23.0 | )% | $ | 4.60 | $ | 5.10 | (9.8 | )% | ||||||||||||||
| Weighted average common shares outstanding | 117,101 | 136,049 | (13.9 | )% | 121,728 | 137,279 | (11.3 | )% | ||||||||||||||||||
| Diluted weighted average common shares outstanding | 132,799 | 150,718 | (11.9 | )% | 136,199 | 150,371 | (9.4 | )% | ||||||||||||||||||
| Book value per common share | $ | 45.60 | $ | 37.84 | 20.5 | % | $ | 45.60 | $ | 37.84 | 20.5 | % | ||||||||||||||
| Diluted book value per common share (treasury stock method) | $ | 39.37 | $ | 33.65 | 17.0 | % | $ | 39.37 | $ | 33.65 | 17.0 | % | ||||||||||||||
| Accumulated dividends paid per common share | $ | 4.73 | $ | 3.89 | 21.6 | % | $ | 4.73 | $ | 3.89 | 21.6 | % | ||||||||||||||
| FINANCIAL RATIOS | ROACE[c] | 20.2 | % | 22.8 | % | (2.6 | ) pts | 16.2 | % | 10.3 | % | 5.9 | pts | |||||||||||||
| Operating ROACE[b] | 14.3 | % | 22.3 | % | (8.0 | ) pts | 12.4 | % | 17.1 | % | (4.7 | ) pts | ||||||||||||||
| Net loss and loss expense ratio | 50.6 | % | 48.6 | % | 2.0 | pts | 56.9 | % | 51.0 | % | 5.9 | pts | ||||||||||||||
| Acquisition cost ratio | 16.4 | % | 14.3 | % | 2.1 | pts | 16.6 | % | 15.1 | % | 1.5 | pts | ||||||||||||||
| General and administrative expense ratio | 18.6 | % | 14.6 | % | 4.0 | pts | 15.2 | % | 13.2 | % | 2.0 | pts | ||||||||||||||
| Combined ratio | 85.6 | % | 77.5 | % | 8.1 | pts | 88.7 | % | 79.3 | % | 9.4 | pts | ||||||||||||||
| INVESTMENT DATA | Total assets | $ | 16,445,731 | $ | 15,306,524 | 7.4 | % | $ | 16,445,731 | $ | 15,306,524 | 7.4 | % | |||||||||||||
| Total cash and invested assets[d] | 12,645,634 | 11,588,457 | 9.1 | % | 12,645,634 | 11,588,457 | 9.1 | % | ||||||||||||||||||
| Net investment income | 107,889 | 118,178 | (8.7 | )% | 406,892 | 464,478 | (12.4 | )% | ||||||||||||||||||
| Net realized investment gains (losses) | 77,772 | 6,056 | nm | 195,098 | (311,584 | ) | nm | |||||||||||||||||||
| Total return on cash and investments[e] | (0.3 | )% | 1.1 | % | nm | 5.5 | % | 8.5 | % | (3.0 | ) pts | |||||||||||||||
| Return on other investments[f] | 4.9 | % | 4.5 | % | 0.4 | pts | 12.1 | % | 15.8 | % | (3.7 | ) pts | ||||||||||||||
| Book yield of fixed maturities | 3.3 | % | 3.9 | % | (0.6 | ) pts | 3.3 | % | 3.9 | % | (0.6 | ) pts | ||||||||||||||
| [a] | Operating income is a “Non-GAAP financial measure” as defined by Regulation G. See page 24 for reconciliation of operating income to net income available to common shareholders. |
| [b] | Operating return on average common equity (“ROACE”), also a “Non-GAAP financial measure”, is calculated by dividing operating income 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 for the quarter-periods is annualized. Operating diluted earnings per share is calculated by dividing operating income for the period by weighted average common shares and share equivalents. |
| [c] | ROACE is calculated by dividing net income 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 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
| Q4 2010 | Q3 2010 | Q2 2010 | Q1 2010 | Q4 2009 | Q4 2008 | |||||||||||||||||||
UNDERWRITING REVENUES | ||||||||||||||||||||||||
Gross premiums written | $ | 634,774 | $ | 750,687 | $ | 939,873 | $ | 1,425,201 | $ | 573,845 | $ | 526,755 | ||||||||||||
Premiums ceded | (146,130 | ) | (124,365 | ) | (150,935 | ) | (181,566 | ) | (215,874 | ) | (187,282 | ) | ||||||||||||
Net premiums written | 488,644 | 626,322 | 788,938 | 1,243,635 | 357,971 | 339,473 | ||||||||||||||||||
Gross premiums earned | 917,480 | 920,954 | 905,137 | 888,607 | 912,520 | 830,975 | ||||||||||||||||||
Ceded premiums amortized | (160,162 | ) | (162,081 | ) | (170,110 | ) | (192,415 | ) | (198,910 | ) | (172,689 | ) | ||||||||||||
Net premiums earned | 757,318 | 758,873 | 735,027 | 696,192 | 713,610 | 658,286 | ||||||||||||||||||
Other insurance related income (loss) | 345 | 884 | 217 | 626 | 29,713 | (19,594 | ) | |||||||||||||||||
Total underwriting revenues | 757,663 | 759,757 | 735,244 | 696,818 | 743,323 | 638,692 | ||||||||||||||||||
UNDERWRITING EXPENSES | ||||||||||||||||||||||||
Net losses and loss expenses | 383,345 | 422,154 | 403,370 | 468,262 | 346,512 | 273,837 | ||||||||||||||||||
Acquisition costs | 124,098 | 123,788 | 124,176 | 116,649 | 101,787 | 83,916 | ||||||||||||||||||
General and administrative expenses | 117,674 | 86,439 | 86,862 | 83,461 | 79,507 | 65,437 | ||||||||||||||||||
Total underwriting expenses | 625,117 | 632,381 | 614,408 | 668,372 | 527,806 | 423,190 | ||||||||||||||||||
UNDERWRITING INCOME | 132,546 | 127,376 | 120,836 | 28,446 | 215,517 | 215,502 | ||||||||||||||||||
OTHER OPERATING REVENUE (EXPENSES) | ||||||||||||||||||||||||
Net investment income (loss) | 107,889 | 111,800 | 82,584 | 104,619 | 118,178 | (26,012 | ) | |||||||||||||||||
Net realized investment gains (losses) | 77,772 | 76,531 | 24,619 | 16,176 | 6,056 | (33,425 | ) | |||||||||||||||||
Interest expense and financing costs | (15,690 | ) | (15,800 | ) | (15,697 | ) | (8,688 | ) | (8,162 | ) | (7,884 | ) | ||||||||||||
Total other operating revenues (expenses) | 169,971 | 172,531 | 91,506 | 112,107 | 116,072 | (67,321 | ) | |||||||||||||||||
OTHER (EXPENSES) REVENUE | ||||||||||||||||||||||||
Foreign exchange (losses) gains | 5,120 | (24,961 | ) | 27,229 | 8,147 | 2,018 | 22,347 | |||||||||||||||||
Corporate expenses[a] | (22,946 | ) | (16,996 | ) | (19,200 | ) | (16,308 | ) | (25,135 | ) | (21,896 | ) | ||||||||||||
Total other (expenses) revenue | (17,826 | ) | (41,957 | ) | 8,029 | (8,161 | ) | (23,117 | ) | 451 | ||||||||||||||
INCOME BEFORE INCOME TAXES | 284,691 | 257,950 | 220,371 | 132,392 | 308,472 | 148,632 | ||||||||||||||||||
Income tax expense | (11,129 | ) | (9,890 | ) | (6,300 | ) | (11,361 | ) | (17,190 | ) | (8,555 | ) | ||||||||||||
NET INCOME | 273,562 | 248,060 | 214,071 | 121,031 | 291,282 | 140,077 | ||||||||||||||||||
Preferred share dividends | (9,219 | ) | (9,218 | ) | (9,219 | ) | (9,219 | ) | (9,219 | ) | (9,219 | ) | ||||||||||||
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS | $ | 264,343 | $ | 238,842 | $ | 204,852 | $ | 111,812 | $ | 282,063 | $ | 130,858 | ||||||||||||
KEY RATIOS/PER SHARE DATA | ||||||||||||||||||||||||
Net loss and loss expense ratio | 50.6 | % | 55.6 | % | 54.9 | % | 67.3 | % | 48.6 | % | 41.6 | % | ||||||||||||
Acquisition cost ratio | 16.4 | % | 16.3 | % | 16.9 | % | 16.7 | % | 14.3 | % | 12.7 | % | ||||||||||||
General and administrative expense ratio[a] | 18.6 | % | 13.7 | % | 14.4 | % | 14.3 | % | 14.6 | % | 13.3 | % | ||||||||||||
Combined ratio | 85.6 | % | 85.6 | % | 86.2 | % | 98.3 | % | 77.5 | % | 67.6 | % | ||||||||||||
Weighted average basic shares outstanding | 117,101 | 120,091 | 121,766 | 128,202 | 136,049 | 136,433 | ||||||||||||||||||
Weighted average diluted shares outstanding | 132,799 | 134,406 | 135,665 | 142,176 | 150,718 | 149,363 | ||||||||||||||||||
Basic earnings per common share | $ | 2.26 | $ | 1.99 | $ | 1.68 | $ | 0.87 | $ | 2.07 | $ | 0.96 | ||||||||||||
Diluted earnings per common share | $ | 1.99 | $ | 1.78 | $ | 1.51 | $ | 0.79 | $ | 1.87 | $ | 0.88 | ||||||||||||
ROACE (annualized) | 20.2 | % | 18.5 | % | 16.6 | % | 9.1 | % | 22.8 | % | 13.0 | % | ||||||||||||
Operating ROACE (annualized) | 14.3 | % | 12.6 | % | 14.6 | % | 7.7 | % | 22.3 | % | 16.2 | % | ||||||||||||
| [a] | Corporate expenses are included in the calculation of the general and administrative expense ratio. |
2
AXIS Capital Holdings Limited
CONSOLIDATED STATEMENTS OF INCOME - YTD
| Year ended December 31, | ||||||||||||
| 2010 | 2009 | 2008 | ||||||||||
UNDERWRITING REVENUES | ||||||||||||
Gross premiums written | $ | 3,750,536 | $ | 3,587,295 | $ | 3,390,388 | ||||||
Premiums ceded | (602,996 | ) | (770,866 | ) | (723,508 | ) | ||||||
Net premiums written | 3,147,540 | 2,816,429 | 2,666,880 | |||||||||
Gross premiums earned | 3,632,177 | 3,540,298 | 3,374,076 | |||||||||
Ceded premiums amortized | (684,767 | ) | (748,534 | ) | (686,895 | ) | ||||||
Net premiums earned | 2,947,410 | 2,791,764 | 2,687,181 | |||||||||
Other insurance related income (loss) | 2,073 | (129,681 | ) | (38,667 | ) | |||||||
Total underwriting revenues | 2,949,483 | 2,662,083 | 2,648,514 | |||||||||
UNDERWRITING EXPENSES | ||||||||||||
Net losses and loss expenses | 1,677,132 | 1,423,872 | 1,712,766 | |||||||||
Acquisition costs | 488,712 | 420,495 | 366,509 | |||||||||
General and administrative expenses | 374,436 | 293,081 | 262,571 | |||||||||
Total underwriting expenses | 2,540,280 | 2,137,448 | 2,341,846 | |||||||||
UNDERWRITING INCOME | 409,203 | 524,635 | 306,668 | |||||||||
OTHER OPERATING REVENUE (EXPENSES) | ||||||||||||
Net investment income | 406,892 | 464,478 | 247,237 | |||||||||
Net realized investment gains (losses) | 195,098 | (311,584 | ) | (85,267 | ) | |||||||
Interest expense and financing costs | (55,876 | ) | (32,031 | ) | (31,673 | ) | ||||||
Total other operating revenues | 546,114 | 120,863 | 130,297 | |||||||||
OTHER (EXPENSES) REVENUE | ||||||||||||
Foreign exchange (losses) gains | 15,535 | (28,561 | ) | 43,707 | ||||||||
Corporate expenses[a] | (75,449 | ) | (77,076 | ) | (73,187 | ) | ||||||
Total other expenses | (59,914 | ) | (105,637 | ) | (29,480 | ) | ||||||
INCOME BEFORE INCOME TAXES | 895,403 | 539,861 | 407,485 | |||||||||
Income tax expense | (38,680 | ) | (41,975 | ) | (20,109 | ) | ||||||
NET INCOME | 856,723 | 497,886 | 387,376 | |||||||||
Preferred share dividends | (36,875 | ) | (36,875 | ) | (36,875 | ) | ||||||
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS | $ | 819,848 | $ | 461,011 | $ | 350,501 | ||||||
KEY RATIOS/PER SHARE DATA | ||||||||||||
Net loss and loss expense ratio | 56.9 | % | 51.0 | % | 63.7 | % | ||||||
Acquisition cost ratio | 16.6 | % | 15.1 | % | 13.6 | % | ||||||
General and administrative expense ratio[a] | 15.2 | % | 13.2 | % | 12.5 | % | ||||||
Combined ratio | 88.7 | % | 79.3 | % | 89.8 | % | ||||||
Weighted average basic shares outstanding | 121,728 | 137,279 | 140,322 | |||||||||
Weighted average diluted shares outstanding | 136,199 | 150,371 | 155,320 | |||||||||
Basic earnings per common share | $ | 6.74 | $ | 3.36 | $ | 2.50 | ||||||
Diluted earnings per common share | $ | 6.02 | $ | 3.07 | $ | 2.26 | ||||||
ROACE | 16.2 | % | 10.3 | % | 8.1 | % | ||||||
Operating ROACE | 12.4 | % | 17.1 | % | 10.1 | % | ||||||
| [a] | Corporate expenses are included in the calculation of the general and administrative expense ratio. |
3
AXIS Capital Holdings Limited
CONSOLIDATED SEGMENT DATA
| Quarter ended December 31, 2010 | Year ended December 31, 2010 | |||||||||||||||||||||||
| Insurance | Reinsurance | Total | Insurance | Reinsurance | Total | |||||||||||||||||||
UNDERWRITING REVENUES | ||||||||||||||||||||||||
Gross premiums written | $ | 496,744 | $ | 138,030 | $ | 634,774 | $ | 1,916,116 | $ | 1,834,420 | $ | 3,750,536 | ||||||||||||
Net premiums written | 349,250 | 139,394 | 488,644 | 1,332,220 | 1,815,320 | 3,147,540 | ||||||||||||||||||
Gross premiums earned | 485,188 | 432,291 | 917,479 | 1,872,014 | 1,760,163 | 3,632,177 | ||||||||||||||||||
Ceded premiums amortized | (156,813 | ) | (3,348 | ) | (160,161 | ) | (665,521 | ) | (19,246 | ) | (684,767 | ) | ||||||||||||
Net premiums earned | 328,375 | 428,943 | 757,318 | 1,206,493 | 1,740,917 | 2,947,410 | ||||||||||||||||||
Other insurance related income | 345 | — | 345 | 2,073 | — | 2,073 | ||||||||||||||||||
Total underwriting revenues | 328,720 | 428,943 | 757,663 | 1,208,566 | 1,740,917 | 2,949,483 | ||||||||||||||||||
UNDERWRITING EXPENSES | ||||||||||||||||||||||||
Net losses and loss expenses | 132,811 | 250,534 | 383,345 | 569,869 | 1,107,263 | 1,677,132 | ||||||||||||||||||
Acquisition costs | 41,553 | 82,545 | 124,098 | 152,223 | 336,489 | 488,712 | ||||||||||||||||||
General and administrative expenses | 86,633 | 31,041 | 117,674 | 276,435 | 98,001 | 374,436 | ||||||||||||||||||
Total underwriting expenses | 260,997 | 364,120 | 625,117 | 998,527 | 1,541,753 | 2,540,280 | ||||||||||||||||||
UNDERWRITING INCOME | $ | 67,723 | $ | 64,823 | $ | 132,546 | $ | 210,039 | $ | 199,164 | $ | 409,203 | ||||||||||||
KEY RATIOS | ||||||||||||||||||||||||
Net loss and loss expense ratio | 40.4 | % | 58.4 | % | 50.6 | % | 47.2 | % | 63.6 | % | 56.9 | % | ||||||||||||
Acquisition cost ratio | 12.7 | % | 19.2 | % | 16.4 | % | 12.6 | % | 19.3 | % | 16.6 | % | ||||||||||||
General and administrative expense ratio | 26.4 | % | 7.3 | % | 15.6 | % | 23.0 | % | 5.7 | % | 12.7 | % | ||||||||||||
Corporate expense ratio | 3.0 | % | 2.5 | % | ||||||||||||||||||||
Combined ratio | 79.5 | % | 84.9 | % | 85.6 | % | 82.8 | % | 88.6 | % | 88.7 | % | ||||||||||||
4
AXIS Capital Holdings Limited
GROSS PREMIUM WRITTEN BY SEGMENT BY LINE OF BUSINESS
| Year ended December 31, | ||||||||||||||||||||||||||||||||
| Q4 2010 | Q3 2010 | Q2 2010 | Q1 2010 | Q4 2009 | Q4 2008 | 2010 | 2009 | |||||||||||||||||||||||||
| INSURANCE SEGMENT | ||||||||||||||||||||||||||||||||
Property | $ | 125,285 | $ | 150,123 | $ | 207,184 | $ | 118,214 | $ | 121,860 | $ | 99,413 | $ | 600,806 | $ | 551,536 | ||||||||||||||||
Marine | 33,556 | 46,403 | 77,996 | 66,859 | 32,618 | 22,625 | 224,814 | 200,867 | ||||||||||||||||||||||||
Terrorism | 7,047 | 8,029 | 17,079 | 5,091 | 12,330 | 6,215 | 37,246 | 36,023 | ||||||||||||||||||||||||
Aviation | 44,118 | 9,891 | 18,649 | 3,136 | 40,857 | 29,825 | 75,794 | 76,198 | ||||||||||||||||||||||||
Credit and political risk | 13,169 | 10,754 | 9,444 | (2,698 | ) | 16,639 | 38,012 | 30,669 | 19,450 | |||||||||||||||||||||||
Professional lines | 208,400 | 156,276 | 219,432 | 127,945 | 184,491 | 180,945 | 712,053 | 671,618 | ||||||||||||||||||||||||
Liability | 62,266 | 50,448 | 61,817 | 53,716 | 61,951 | 71,467 | 228,247 | 219,869 | ||||||||||||||||||||||||
Other | 2,903 | 1,626 | 1,292 | 666 | — | 439 | 6,487 | 29 | ||||||||||||||||||||||||
| TOTAL INSURANCE SEGMENT | 496,744 | 433,550 | 612,893 | 372,929 | 470,746 | 448,941 | 1,916,116 | 1,775,590 | ||||||||||||||||||||||||
| REINSURANCE SEGMENT | ||||||||||||||||||||||||||||||||
Catastrophe | 8,631 | 92,479 | 124,168 | 227,781 | 9,448 | 9,298 | 453,059 | 466,566 | ||||||||||||||||||||||||
Property | 27,424 | 73,080 | 75,527 | 178,498 | 11,993 | 3,609 | 354,528 | 326,728 | ||||||||||||||||||||||||
Professional lines | 66,106 | 56,963 | 58,368 | 106,799 | 59,546 | 52,208 | 288,236 | 328,509 | ||||||||||||||||||||||||
Credit and bond | 5,997 | 17,527 | 2,532 | 228,073 | 9,556 | 5,610 | 254,130 | 223,564 | ||||||||||||||||||||||||
Motor | 9,408 | 11,872 | 9,289 | 118,114 | (2,168 | ) | 1,033 | 148,683 | 104,850 | |||||||||||||||||||||||
Liability | 11,565 | 56,437 | 36,680 | 133,379 | 7,979 | (2,212 | ) | 238,062 | 272,702 | |||||||||||||||||||||||
Engineering | 8,443 | 7,424 | 7,972 | 44,376 | 5,434 | 4,856 | 68,215 | 61,518 | ||||||||||||||||||||||||
Other | 456 | 1,355 | 12,444 | 15,252 | 1,311 | 3,412 | 29,507 | 27,268 | ||||||||||||||||||||||||
| TOTAL REINSURANCE SEGMENT | 138,030 | 317,137 | 326,980 | 1,052,272 | 103,099 | 77,814 | 1,834,420 | 1,811,705 | ||||||||||||||||||||||||
| CONSOLIDATED TOTAL | $ | 634,774 | $ | 750,687 | $ | 939,873 | $ | 1,425,201 | $ | 573,845 | $ | 526,755 | $ | 3,750,536 | $ | 3,587,295 | ||||||||||||||||
5
AXIS Capital Holdings Limited
INSURANCE SEGMENT DATA - QUARTERLY
| Q4 2010 | Q3 2010 | Q2 2010 | Q1 2010 | Q4 2009 | Q4 2008 | |||||||||||||||||||
UNDERWRITING REVENUES | ||||||||||||||||||||||||
Gross premiums written | $ | 496,744 | $ | 433,550 | $ | 612,893 | $ | 372,929 | $ | 470,746 | $ | 448,941 | ||||||||||||
Net premiums written | 349,250 | 309,277 | 466,880 | 206,812 | 260,129 | 260,934 | ||||||||||||||||||
Gross premiums earned | 485,188 | 477,149 | 466,627 | 443,050 | 494,580 | 461,931 | ||||||||||||||||||
Ceded premiums amortized | (156,813 | ) | (156,965 | ) | (164,975 | ) | (186,769 | ) | (189,849 | ) | (169,346 | ) | ||||||||||||
Net premiums earned | 328,375 | 320,184 | 301,652 | 256,281 | 304,731 | 292,585 | ||||||||||||||||||
Other insurance related income (loss) | 345 | 884 | 217 | 626 | 29,713 | (19,789 | ) | |||||||||||||||||
Total underwriting revenues | 328,720 | 321,068 | 301,869 | 256,907 | 334,444 | 272,796 | ||||||||||||||||||
UNDERWRITING EXPENSES | ||||||||||||||||||||||||
Net losses and loss expenses | 132,811 | 150,860 | 155,494 | 130,703 | 161,551 | 109,945 | ||||||||||||||||||
Acquisition costs | 41,553 | 38,962 | 40,567 | 31,141 | 29,065 | 17,677 | ||||||||||||||||||
General and administrative expenses | 86,633 | 64,147 | 64,045 | 61,610 | 57,895 | 48,560 | ||||||||||||||||||
Total underwriting expenses | 260,997 | 253,969 | 260,106 | 223,454 | 248,511 | 176,182 | ||||||||||||||||||
UNDERWRITING INCOME | $ | 67,723 | $ | 67,099 | $ | 41,763 | $ | 33,453 | $ | 85,933 | $ | 96,614 | ||||||||||||
KEY RATIOS | ||||||||||||||||||||||||
Net loss and loss expense ratio | 40.4 | % | 47.1 | % | 51.6 | % | 51.0 | % | 53.0 | % | 37.6 | % | ||||||||||||
Acquisition cost ratio | 12.7 | % | 12.2 | % | 13.4 | % | 12.2 | % | 9.6 | % | 6.0 | % | ||||||||||||
General and administrative expense ratio | 26.4 | % | 20.0 | % | 21.2 | % | 24.0 | % | 19.0 | % | 16.6 | % | ||||||||||||
Combined ratio | 79.5 | % | 79.3 | % | 86.2 | % | 87.2 | % | 81.6 | % | 60.2 | % | ||||||||||||
6
AXIS Capital Holdings Limited
REINSURANCE SEGMENT DATA - QUARTERLY
| Q4 2010 | Q3 2010 | Q2 2010 | Q1 2010 | Q4 2009 | Q4 2008 | |||||||||||||||||||
UNDERWRITING REVENUES | ||||||||||||||||||||||||
Gross premiums written | $ | 138,030 | $ | 317,137 | $ | 326,980 | $ | 1,052,272 | $ | 103,099 | $ | 77,814 | ||||||||||||
Net premiums written | 139,394 | 317,045 | 322,058 | 1,036,823 | 97,842 | 78,539 | ||||||||||||||||||
Gross premiums earned | 432,291 | 443,805 | 438,510 | 445,557 | 417,940 | 369,044 | ||||||||||||||||||
Ceded premiums amortized | (3,348 | ) | (5,116 | ) | (5,135 | ) | (5,646 | ) | (9,061 | ) | (3,343 | ) | ||||||||||||
Net premiums earned | 428,943 | 438,689 | 433,375 | 439,911 | 408,879 | 365,701 | ||||||||||||||||||
Other insurance related income | — | — | — | — | — | 195 | ||||||||||||||||||
Total underwriting revenues | 428,943 | 438,689 | 433,375 | 439,911 | 408,879 | 365,896 | ||||||||||||||||||
UNDERWRITING EXPENSES | ||||||||||||||||||||||||
Net losses and loss expenses | 250,534 | 271,294 | 247,876 | 337,559 | 184,961 | 163,892 | ||||||||||||||||||
Acquisition costs | 82,545 | 84,826 | 83,609 | 85,508 | 72,722 | 66,239 | ||||||||||||||||||
General and administrative expenses | 31,041 | 22,292 | 22,817 | 21,851 | 21,612 | 16,877 | ||||||||||||||||||
Total underwriting expenses | 364,120 | 378,412 | 354,302 | 444,918 | 279,295 | 247,008 | ||||||||||||||||||
UNDERWRITING INCOME (LOSS) | $ | 64,823 | $ | 60,277 | $ | 79,073 | $ | (5,007 | ) | $ | 129,584 | $ | 118,888 | |||||||||||
KEY RATIOS | ||||||||||||||||||||||||
Net loss and loss expense ratio | 58.4 | % | 61.8 | % | 57.2 | % | 76.7 | % | 45.2 | % | 44.8 | % | ||||||||||||
Acquisition cost ratio | 19.2 | % | 19.4 | % | 19.3 | % | 19.4 | % | 17.8 | % | 18.1 | % | ||||||||||||
General and administrative expense ratio | 7.3 | % | 5.1 | % | 5.3 | % | 5.0 | % | 5.3 | % | 4.6 | % | ||||||||||||
Combined ratio | 84.9 | % | 86.3 | % | 81.8 | % | 101.1 | % | 68.3 | % | 67.5 | % | ||||||||||||
7
AXIS Capital Holdings Limited
CONSOLIDATED BALANCE SHEETS
| Dec 31, 2010 | Sep 30, 2010 | Jun 30, 2010 | Mar 31, 2010 | Dec 31, 2009 | Dec 31, 2008 | |||||||||||||||||||
ASSETS | ||||||||||||||||||||||||
Investments: | ||||||||||||||||||||||||
Fixed maturities, available for sale, at fair value | $ | 10,482,897 | $ | 10,664,824 | $ | 10,064,335 | $ | 9,649,199 | $ | 9,718,355 | $ | 7,750,654 | ||||||||||||
Equities, available for sale, at fair value | 349,254 | 251,005 | 201,173 | 201,920 | 204,375 | 107,283 | ||||||||||||||||||
Other investments, at fair value | 519,296 | 533,072 | 547,873 | 538,917 | 570,276 | 492,082 | ||||||||||||||||||
Short-term investments, at amortized cost | 172,719 | 129,042 | 131,104 | 143,937 | 129,098 | 261,879 | ||||||||||||||||||
Total investments | 11,524,166 | 11,577,943 | 10,944,485 | 10,533,973 | 10,622,104 | 8,611,898 | ||||||||||||||||||
Cash and cash equivalents | 1,045,355 | 1,205,393 | 1,197,543 | 1,510,027 | 864,054 | 1,820,673 | ||||||||||||||||||
Accrued interest receivable | 96,364 | 92,758 | 94,686 | 84,407 | 89,559 | 79,232 | ||||||||||||||||||
Insurance and reinsurance premium balances receivable | 1,343,665 | 1,536,944 | 1,722,586 | 1,708,400 | 1,292,877 | 1,185,785 | ||||||||||||||||||
Reinsurance recoverable on paid and unpaid losses | 1,577,547 | 1,551,612 | 1,545,080 | 1,445,918 | 1,424,172 | 1,378,630 | ||||||||||||||||||
Deferred acquisition costs | 359,300 | 402,887 | 419,191 | 420,283 | 302,320 | 273,096 | ||||||||||||||||||
Prepaid reinsurance premiums | 221,396 | 234,850 | 271,700 | 291,382 | 301,885 | 279,553 | ||||||||||||||||||
Securities lending collateral | — | — | 107,167 | 86,975 | 129,814 | 412,823 | ||||||||||||||||||
Net receivable for investments sold | — | — | — | — | 12,740 | — | ||||||||||||||||||
Goodwill and intangible assets | 103,231 | 89,744 | 90,473 | 91,217 | 91,505 | 60,417 | ||||||||||||||||||
Other assets | 174,707 | 154,399 | 165,369 | 156,588 | 175,494 | 180,727 | ||||||||||||||||||
TOTAL ASSETS | $ | 16,445,731 | $ | 16,846,530 | $ | 16,558,280 | $ | 16,329,170 | $ | 15,306,524 | $ | 14,282,834 | ||||||||||||
LIABILITIES | ||||||||||||||||||||||||
Reserve for losses and loss expenses | $ | 7,032,375 | $ | 6,934,528 | $ | 6,718,776 | $ | 6,759,522 | $ | 6,564,133 | $ | 6,244,783 | ||||||||||||
Unearned premiums | 2,333,676 | 2,614,239 | 2,781,101 | 2,748,283 | 2,209,397 | 2,162,401 | ||||||||||||||||||
Insurance and reinsurance balances payable | 164,927 | 123,127 | 199,463 | 144,679 | 173,156 | 202,145 | ||||||||||||||||||
Securities lending payable | — | — | 107,167 | 87,975 | 132,815 | 415,197 | ||||||||||||||||||
Senior notes | 994,110 | 993,976 | 993,843 | 993,712 | 499,476 | 499,368 | ||||||||||||||||||
Other liabilities | 275,422 | 240,338 | 182,959 | 215,835 | 227,303 | 233,082 | ||||||||||||||||||
Net payable for investments purchased | 20,251 | 91,384 | 79,669 | 3,145 | — | 64,817 | ||||||||||||||||||
TOTAL LIABILITIES | 10,820,761 | 10,997,592 | 11,062,978 | 10,953,151 | 9,806,280 | 9,821,793 | ||||||||||||||||||
SHAREHOLDERS’ EQUITY | ||||||||||||||||||||||||
Series A and B preferred shares | 500,000 | 500,000 | 500,000 | 500,000 | 500,000 | 500,000 | ||||||||||||||||||
Common shares | 1,934 | 1,931 | 1,930 | 1,929 | 1,903 | 1,878 | ||||||||||||||||||
Additional paid-in capital | 2,059,708 | 2,046,297 | 2,038,158 | 2,027,950 | 2,014,815 | 1,962,779 | ||||||||||||||||||
Accumulated other comprehensive income (loss) | 176,821 | 371,625 | 221,856 | 165,455 | 85,633 | (706,499 | ) | |||||||||||||||||
Retained earnings | 4,267,608 | 4,033,018 | 3,824,111 | 3,649,770 | 3,569,411 | 3,198,492 | ||||||||||||||||||
Treasury shares, at cost | (1,381,101 | ) | (1,103,933 | ) | (1,090,753 | ) | (969,085 | ) | (671,518 | ) | (495,609 | ) | ||||||||||||
TOTAL SHAREHOLDERS’ EQUITY | 5,624,970 | 5,848,938 | 5,495,302 | 5,376,019 | 5,500,244 | 4,461,041 | ||||||||||||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 16,445,731 | $ | 16,846,530 | $ | 16,558,280 | $ | 16,329,170 | $ | 15,306,524 | $ | 14,282,834 | ||||||||||||
Basic common shares outstanding | 112,393 | 119,958 | 120,254 | 124,155 | 132,140 | 136,212 | ||||||||||||||||||
Diluted common shares outstanding | 130,189 | 137,115 | 136,613 | 141,076 | 148,596 | 153,588 | ||||||||||||||||||
Book value per common share | $ | 45.60 | $ | 44.59 | $ | 41.54 | $ | 39.27 | $ | 37.84 | $ | 29.08 | ||||||||||||
Diluted book value per common share | $ | 39.37 | $ | 39.01 | $ | 36.57 | $ | 34.56 | $ | 33.65 | $ | 25.79 | ||||||||||||
Debt (Senior notes) to total capital[a] | 15.0 | % | 14.5 | % | 15.3 | % | 15.6 | % | 8.3 | % | 10.1 | % | ||||||||||||
Debt plus preferred shares to total capital | 22.6 | % | 21.8 | % | 23.0 | % | 23.5 | % | 16.7 | % | 20.1 | % | ||||||||||||
| [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
At December 31, 2010
| Cost or Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | Percentage | ||||||||||||||||
Fixed Maturities, available for sale | ||||||||||||||||||||
U.S. government and agency | $ | 856,711 | $ | 7,101 | $ | (3,692 | ) | $ | 860,120 | 7 | % | |||||||||
Non-U.S. government | 777,236 | 9,321 | (13,759 | ) | 772,798 | 6 | % | |||||||||||||
Corporate debt | 4,054,048 | 144,956 | (36,096 | ) | 4,162,908 | 33 | % | |||||||||||||
Agency MBS[a] | 2,571,124 | 43,160 | (20,702 | ) | 2,593,582 | 20 | % | |||||||||||||
Non-Agency CMBS | 454,288 | 21,998 | (1,501 | ) | 474,785 | 4 | % | |||||||||||||
Non-Agency RMBS | 252,460 | 3,287 | (11,545 | ) | 244,202 | 2 | % | |||||||||||||
ABS | 668,037 | 8,856 | (15,050 | ) | 661,843 | 5 | % | |||||||||||||
Municipals | 712,339 | 11,870 | (11,550 | ) | 712,659 | 6 | % | |||||||||||||
Total fixed maturities | 10,346,243 | 250,549 | (113,895 | ) | 10,482,897 | 83 | % | |||||||||||||
Equities, available for sale | 327,207 | 26,761 | (4,714 | ) | 349,254 | 3 | % | |||||||||||||
Total available for sale investments | $ | 10,673,450 | $ | 277,310 | $ | (118,609 | ) | 10,832,151 | 86 | % | ||||||||||
Other investments (see below) | 519,296 | 4 | % | |||||||||||||||||
Short-term investments | 172,719 | 1 | % | |||||||||||||||||
Total investments | 11,524,166 | 91 | % | |||||||||||||||||
Cash and cash equivalents [b] | 1,045,355 | 8 | % | |||||||||||||||||
Accrued interest receivable | 96,364 | 1 | % | |||||||||||||||||
Net receivable/(payable) for investments sold (purchased) |
| (20,251 | ) | — | ||||||||||||||||
Total Cash and Invested Assets | $ | 12,645,634 | 100 | % | ||||||||||||||||
| Fair Value | Percentage | |||||||||||||||||||
Other Investments: | ||||||||||||||||||||
Hedge funds | $ | 358,277 | 69 | % | ||||||||||||||||
Credit funds | 104,756 | 20 | % | |||||||||||||||||
Collateralized loan obligations - equity tranches | 56,263 | 11 | % | |||||||||||||||||
Total | $ | 519,296 | 100 | % | ||||||||||||||||
| [a] | Agency motgage-backed securities include both agency RMBS and agency CMBS. |
| [b] | Includes $116 million of restricted cash and cash equivalents. |
9
AXIS Capital Holdings Limited
CASH AND INVESTED ASSETS COMPOSITION - QUARTERLY
| Q4 2010 | Q3 2010 | Q2 2010 | Q1 2010 | Q4 2009 | ||||||||||||||||
| Fair Value % | Fair Value % | Fair Value % | Fair Value % | Fair Value % | ||||||||||||||||
CASH AND INVESTED ASSETS PORTFOLIO | ||||||||||||||||||||
Fixed Maturities: | ||||||||||||||||||||
U.S. government and agency | 6.8 | % | 10.7 | % | 11.7 | % | 11.0 | % | 16.0 | % | ||||||||||
Non-U.S. government | 6.1 | % | 6.2 | % | 6.2 | % | 5.6 | % | 6.0 | % | ||||||||||
Corporate debt | 32.9 | % | 33.7 | % | 33.4 | % | 31.9 | % | 30.9 | % | ||||||||||
MBS | ||||||||||||||||||||
Agency MBS | 20.5 | % | 16.4 | % | 14.0 | % | 14.0 | % | 13.5 | % | ||||||||||
Non-agency CMBS | 3.8 | % | 3.9 | % | 5.0 | % | 5.6 | % | 5.6 | % | ||||||||||
Non-agency RMBS | 1.9 | % | 1.7 | % | 1.7 | % | 1.6 | % | 1.9 | % | ||||||||||
ABS | 5.2 | % | 5.2 | % | 5.1 | % | 4.4 | % | 3.8 | % | ||||||||||
Municipals | 5.6 | % | 5.6 | % | 5.2 | % | 5.4 | % | 6.0 | % | ||||||||||
Total Fixed Maturities | 82.8 | % | 83.4 | % | 82.3 | % | 79.5 | % | 83.7 | % | ||||||||||
Equities | 2.8 | % | 2.0 | % | 1.7 | % | 1.7 | % | 1.8 | % | ||||||||||
Other investments | 4.1 | % | 4.2 | % | 4.5 | % | 4.4 | % | 4.9 | % | ||||||||||
Short-term investments | 1.4 | % | 1.0 | % | 1.1 | % | 1.2 | % | 1.0 | % | ||||||||||
Total investments | 91.1 | % | 90.6 | % | 89.6 | % | 86.8 | % | 91.4 | % | ||||||||||
Cash and cash equivalents | 8.3 | % | 9.4 | % | 9.9 | % | 12.4 | % | 7.5 | % | ||||||||||
Accrued interest receivable | 0.8 | % | 0.7 | % | 1.2 | % | 0.8 | % | 1.0 | % | ||||||||||
Net receivable/(payable) for investments sold or purchased | (0.2 | )% | (0.7 | )% | (0.7 | )% | — | 0.1 | % | |||||||||||
Total Cash and Invested Assets | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||
| Fair Value % | Fair Value % | Fair Value % | Fair Value % | Fair Value % | ||||||||||||||||
CREDIT QUALITY | ||||||||||||||||||||
Cash and cash equivalents | 8.9 | % | 10.1 | % | 10.5 | % | 13.4 | % | 8.1 | % | ||||||||||
U.S. government and agency | 7.4 | % | 11.4 | % | 12.5 | % | 11.8 | % | 17.3 | % | ||||||||||
AAA | 42.6 | % | 38.4 | % | 37.9 | % | 36.4 | % | 38.1 | % | ||||||||||
AA | 9.3 | % | 9.4 | % | 9.5 | % | 9.1 | % | 8.6 | % | ||||||||||
A | 18.5 | % | 17.6 | % | 17.0 | % | 16.5 | % | 16.9 | % | ||||||||||
BBB | 10.0 | % | 10.5 | % | 11.3 | % | 11.2 | % | 9.7 | % | ||||||||||
Below BBB | 3.3 | % | 2.6 | % | 1.3 | % | 1.6 | % | 1.3 | % | ||||||||||
Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||
| Fair Value % | Fair Value % | Fair Value % | Fair Value % | Fair Value % | ||||||||||||||||
MATURITY PROFILE | ||||||||||||||||||||
Within one year (includes cash & cash equivalents) | 14.6 | % | 16.8 | % | 18.4 | % | 20.7 | % | 15.9 | % | ||||||||||
From one to five years | 35.4 | % | 38.4 | % | 36.2 | % | 33.9 | % | 39.0 | % | ||||||||||
From five to ten years | 14.1 | % | 13.9 | % | 14.8 | % | 14.7 | % | 14.8 | % | ||||||||||
Above ten years | 1.9 | % | 1.9 | % | 2.6 | % | 3.0 | % | 3.4 | % | ||||||||||
Asset-backed and mortgage-backed securities | 34.0 | % | 29.0 | % | 28.0 | % | 27.7 | % | 26.9 | % | ||||||||||
Total | 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 | % | 3.6 | % | 3.7 | % | 3.9 | % | ||||||||||
Yield to maturity of fixed maturities | 2.8 | % | 2.3 | % | 3.2 | % | 3.5 | % | 3.6 | % | ||||||||||
Average duration of fixed maturities | 3.2 yrs | 3.1 yrs | 3.0 yrs | 2.9 yrs | 3.1 yrs | |||||||||||||||
Average credit quality | AA | AA | AA | AA | AA | |||||||||||||||
10
AXIS Capital Holdings Limited
INVESTMENT PORTFOLIO
TEN LARGEST ISSUER HOLDINGS IN FIXED MATURITY PORTFOLIO
At December 31, 2010
| Amortized Cost | Unrealized Gain | Fair Value | % of Total Fixed Maturities | Government Guaranteed [b] | ||||||||||||||||
ISSUER [a] | ||||||||||||||||||||
JPMORGAN CHASE & CO | $ | 138,074 | $ | 3,099 | $ | 141,173 | 1.3 | % | $ | — | ||||||||||
MORGAN STANLEY | 129,827 | 2,198 | 132,025 | 1.3 | % | 7,816 | ||||||||||||||
GENERAL ELECTRIC CO | 112,357 | 40 | 112,397 | 1.1 | % | 9,887 | ||||||||||||||
BANK OF AMERICA CORP | 104,122 | 2,525 | 106,647 | 1.0 | % | 14,808 | ||||||||||||||
GOLDMAN SACHS GROUP | 86,508 | 4,289 | 90,798 | 0.9 | % | 6,070 | ||||||||||||||
CITIGROUP INC | 85,907 | 5,445 | 91,352 | 0.9 | % | 7,989 | ||||||||||||||
BP PLC | 74,985 | 3,731 | 78,716 | 0.8 | % | — | ||||||||||||||
HSBC HOLDINGS PLC | 66,285 | 1,655 | 67,941 | 0.6 | % | — | ||||||||||||||
US BANCORP | 66,155 | 228 | 66,383 | 0.6 | % | — | ||||||||||||||
KRAFT FOODS INC | 58,782 | 2,663 | 61,444 | 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. |
11
AXIS Capital Holdings Limited
NET INVESTMENT INCOME
| Q4 2010 | Q3 2010 | Q2 2010 | Q1 2010 | Q4 2009 | Q4 2008 | YTD 2010 | YTD 2009 | |||||||||||||||||||||||||
Fixed maturities | $ | 84,887 | $ | 89,580 | $ | 86,772 | $ | 91,118 | $ | 94,483 | $ | 109,366 | $ | 352,357 | $ | 385,418 | ||||||||||||||||
Other investments | 25,391 | 25,094 | (1,985 | ) | 16,265 | 24,658 | (138,056 | ) | 64,765 | 82,042 | ||||||||||||||||||||||
Cash and cash equivalents | 1,595 | 1,517 | 989 | 1,735 | 2,362 | 4,438 | 5,836 | 8,302 | ||||||||||||||||||||||||
Equities | 63 | 917 | 1,332 | 588 | 1,313 | 1,442 | 2,900 | 3,765 | ||||||||||||||||||||||||
Short-term investments | 706 | 308 | 207 | 220 | 127 | 461 | 1,441 | 651 | ||||||||||||||||||||||||
Gross investment income | 112,642 | 117,416 | 87,315 | 109,926 | 122,943 | (22,349 | ) | 427,299 | 480,178 | |||||||||||||||||||||||
Investment expense | (4,753 | ) | (5,616 | ) | (4,731 | ) | (5,307 | ) | (4,765 | ) | (3,663 | ) | (20,407 | ) | (15,700 | ) | ||||||||||||||||
Net investment income | $ | 107,889 | $ | 111,800 | $ | 82,584 | $ | 104,619 | $ | 118,178 | $ | (26,012 | ) | $ | 406,892 | $ | 464,478 | |||||||||||||||
12
AXIS Capital Holdings Limited
REINSURANCE RECOVERABLE ANALYSIS
| Q4 2010 | Q3 2010 | Q2 2010 | Q1 2010 | Q4 2009 | Q4 2008 | |||||||||||||||||||
Reinsurance recoverable on paid losses and loss expenses: | ||||||||||||||||||||||||
Insurance | $ | 41,077 | $ | 31,007 | $ | 46,511 | $ | 26,447 | $ | 43,119 | $ | 64,084 | ||||||||||||
Reinsurance | — | 5,000 | 4,995 | 4,995 | 4,995 | 4,995 | ||||||||||||||||||
Total | $ | 41,077 | $ | 36,007 | $ | 51,506 | $ | 31,442 | $ | 48,114 | $ | 69,079 | ||||||||||||
Reinsurance recoverable on unpaid losses and loss expenses: OSLR | ||||||||||||||||||||||||
Insurance | $ | 432,426 | $ | 424,234 | $ | 445,871 | $ | 377,826 | $ | 376,403 | $ | 422,370 | ||||||||||||
Reinsurance | — | — | — | — | — | — | ||||||||||||||||||
Total | $ | 432,426 | $ | 424,234 | $ | 445,871 | $ | 377,826 | $ | 376,403 | $ | 422,370 | ||||||||||||
Reinsurance recoverable on unpaid losses and loss expenses: IBNR | ||||||||||||||||||||||||
Insurance | $ | 1,073,960 | $ | 1,067,630 | $ | 1,029,475 | $ | 1,020,877 | $ | 984,426 | $ | 877,588 | ||||||||||||
Reinsurance | 47,204 | 46,020 | 43,514 | 40,653 | 38,186 | 30,026 | ||||||||||||||||||
Total | $ | 1,121,164 | $ | 1,113,650 | $ | 1,072,989 | $ | 1,061,530 | $ | 1,022,612 | $ | 907,614 | ||||||||||||
Provision against reinsurance recoverables: | ||||||||||||||||||||||||
Insurance | $ | (16,737 | ) | $ | (16,911 | ) | $ | (19,941 | ) | $ | (19,563 | ) | $ | (17,691 | ) | $ | (13,623 | ) | ||||||
Reinsurance | (383 | ) | (5,368 | ) | (5,345 | ) | (5,317 | ) | (5,266 | ) | (6,810 | ) | ||||||||||||
Total | $ | (17,120 | ) | $ | (22,279 | ) | $ | (25,286 | ) | $ | (24,880 | ) | $ | (22,957 | ) | $ | (20,433 | ) | ||||||
Net reinsurance recoverables: | ||||||||||||||||||||||||
Insurance | $ | 1,530,726 | $ | 1,505,960 | $ | 1,501,916 | $ | 1,405,587 | $ | 1,386,257 | $ | 1,350,419 | ||||||||||||
Reinsurance | 46,821 | 45,652 | 43,164 | 40,331 | 37,915 | 28,211 | ||||||||||||||||||
Total | $ | 1,577,547 | $ | 1,551,612 | $ | 1,545,080 | $ | 1,445,918 | $ | 1,424,172 | $ | 1,378,630 | ||||||||||||
13
AXIS Capital Holdings Limited
REINSURANCE RECOVERABLE ANALYSIS
Consolidated Reinsurance Recoverable | December 31, 2010 | |||||||||||||||||||||||||||||||
| 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 | $ | 1,119,181 | $ | (22,947 | ) | $ | 1,096,234 | 72.9 | % | 19.5 | % | $ | (9,690 | ) | 0.9 | % | $ | 1,109,491 | ||||||||||||||
Other reinsurers balances > $20 million | 185,887 | (16,205 | ) | 169,682 | 11.3 | % | 3.0 | % | (724 | ) | 0.4 | % | 185,163 | |||||||||||||||||||
Other reinsurers balances < $20 million | 289,599 | (51,174 | ) | 238,425 | 15.8 | % | 4.2 | % | (6,706 | ) | 2.3 | % | 282,893 | |||||||||||||||||||
Total | $ | 1,594,667 | $ | (90,326 | ) | $ | 1,504,341 | 100.0 | % | 26.7 | % | $ | (17,120 | ) | 1.1 | % | $ | 1,577,547 | ||||||||||||||
At December 31, 2010, 97.9% (December 31, 2009: 97.8%) 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. | 13.7 | % | 3.7 | % | ||||
Swiss Reinsurance America Corporation | 12.2 | % | 3.3 | % | ||||
Partner Reinsurance Co of US | 12.0 | % | 3.2 | % | ||||
Berkley Insurance Company | 8.3 | % | 2.2 | % | ||||
Ace Property & Casualty Ins | 6.7 | % | 1.8 | % | ||||
XL Reinsurance America Inc | 6.5 | % | 1.7 | % | ||||
Lloyds of London | 5.5 | % | 1.5 | % | ||||
Liberty Mutual Insurance Co. | 3.0 | % | 0.8 | % | ||||
Munich Re America, Inc | 2.6 | % | 0.7 | % | ||||
Everest Reinsurance Company | 2.4 | % | 0.6 | % | ||||
| 72.9 | % | 19.5 | % | |||||
14
AXIS Capital Holdings Limited
RESERVE FOR LOSSES AND LOSS EXPENSES: PAID TO INCURRED ANALYSIS
| Quarter ended December 31, 2010 | Year ended December 31, 2010 | |||||||||||||||||||||||
| Gross | Recoveries | Net | Gross | Recoveries | Net | |||||||||||||||||||
Reserve for unpaid losses and loss expenses | ||||||||||||||||||||||||
Beginning of period | $ | 6,934,528 | $ | (1,524,768 | ) | $ | 5,409,760 | $ | 6,564,133 | $ | (1,381,058 | ) | $ | 5,183,075 | ||||||||||
Incurred | 475,210 | (91,865 | ) | 383,345 | 2,102,509 | (425,377 | ) | 1,677,132 | ||||||||||||||||
Paid | (377,514 | ) | 78,224 | (299,290 | ) | (1,612,012 | ) | 268,829 | (1,343,183 | ) | ||||||||||||||
Foreign exchange and other | 151 | (2,224 | ) | (2,073 | ) | (22,255 | ) | (3,027 | ) | (25,282 | ) | |||||||||||||
End of period[a] | $ | 7,032,375 | $ | (1,540,633 | ) | $ | 5,491,742 | $ | 7,032,375 | $ | (1,540,633 | ) | $ | 5,491,742 | ||||||||||
| [a] | At December 31, 2010, the gross reserve for losses and loss expenses included IBNR of $4,935 million, or 70%, of total gross reserves for loss and loss expenses. At December 31, 2009, the comparable amount was $4,669 million, or 71%. |
15
AXIS Capital Holdings Limited
RESERVE FOR LOSSES AND LOSS EXPENSES: PAID TO INCURRED ANALYSIS BY SEGMENT
| Quarter ended December 31, 2010 | Year ended December 31, 2010 | |||||||||||||||||||||||
| Insurance | Reinsurance | Total | Insurance | Reinsurance | Total | |||||||||||||||||||
Gross losses paid | $ | 203,863 | $ | 173,651 | $ | 377,514 | $ | 986,551 | $ | 625,461 | $ | 1,612,012 | ||||||||||||
Reinsurance recoveries | (78,224 | ) | — | (78,224 | ) | (268,829 | ) | — | (268,829 | ) | ||||||||||||||
Net losses paid | 125,639 | 173,651 | 299,290 | 717,722 | 625,461 | 1,343,183 | ||||||||||||||||||
Change in: | ||||||||||||||||||||||||
Reported case reserves | 13,991 | 161,567 | 175,558 | (56,185 | ) | 252,939 | 196,754 | |||||||||||||||||
IBNR | 5,653 | (83,515 | ) | (77,862 | ) | 55,979 | 237,764 | 293,743 | ||||||||||||||||
Reinsurance recoveries on unpaid loss and loss expense reserves | (12,472 | ) | (1,169 | ) | (13,641 | ) | (147,647 | ) | (8,901 | ) | (156,548 | ) | ||||||||||||
Total net incurred losses and loss expenses | $ | 132,811 | $ | 250,534 | $ | 383,345 | $ | 569,869 | $ | 1,107,263 | $ | 1,677,132 | ||||||||||||
Gross reserve for losses and loss expenses | $ | 3,512,002 | $ | 3,520,373 | $ | 7,032,375 | $ | 3,512,002 | $ | 3,520,373 | $ | 7,032,375 | ||||||||||||
Prior years net favorable reserve development | $ | 34,603 | $ | 46,673 | $ | 81,276 | $ | 118,336 | $ | 194,719 | $ | 313,055 | ||||||||||||
| Key Ratios | ||||||||||||||||||||||||
Net paid to net incurred percentage | 94.6 | % | 69.3 | % | 78.1 | % | 125.9 | % | 56.5 | % | 80.1 | % | ||||||||||||
Net paid losses / Net premiums earned | 38.2 | % | 40.5 | % | 39.5 | % | 59.5 | % | 35.9 | % | 45.6 | % | ||||||||||||
Change in net loss and loss expense reserves / Net premiums earned | 2.2 | % | 17.9 | % | 11.1 | % | (12.3 | %) | 27.7 | % | 11.3 | % | ||||||||||||
Net loss and loss expense ratio | 40.4 | % | 58.4 | % | 50.6 | % | 47.2 | % | 63.6 | % | 56.9 | % | ||||||||||||
16
AXIS Capital Holdings Limited
RESERVE FOR LOSSES AND LOSS EXPENSES: PAID TO INCURRED ANALYSIS
INSURANCE - QUARTERLY
| Quarter ended | Year ended December 31, | |||||||||||||||||||||||||||||||
| Q4 2010 | Q3 2010 | Q2 2010 | Q1 2010 | Q4 2009 | Q4 2008 | 2010 | 2009 | |||||||||||||||||||||||||
Gross losses paid | $ | 203,863 | $ | 218,495 | $ | 384,703 | $ | 179,490 | $ | 324,989 | $ | 270,708 | $ | 986,551 | $ | 994,723 | ||||||||||||||||
Reinsurance recoveries | (78,224 | ) | (63,619 | ) | (87,703 | ) | (39,283 | ) | (89,773 | ) | (137,255 | ) | (268,829 | ) | (256,352 | ) | ||||||||||||||||
Net losses paid | 125,639 | 154,876 | 297,000 | 140,207 | 235,216 | 133,453 | 717,722 | 738,371 | ||||||||||||||||||||||||
Change in: | ||||||||||||||||||||||||||||||||
Reported case reserves | 13,991 | (88,805 | ) | 81,219 | (62,590 | ) | (122,563 | ) | 32,149 | (56,185 | ) | (289,511 | ) | |||||||||||||||||||
IBNR | 5,653 | 95,595 | (143,990 | ) | 98,721 | 47,741 | (159,195 | ) | 55,979 | 216,562 | ||||||||||||||||||||||
Reinsurance recoveries on unpaid loss and loss expense reserves | (12,472 | ) | (10,806 | ) | (78,735 | ) | (45,635 | ) | 1,157 | 103,538 | (147,647 | ) | (52,728 | ) | ||||||||||||||||||
Total net incurred losses and loss expenses | $ | 132,811 | $ | 150,860 | $ | 155,494 | $ | 130,703 | $ | 161,551 | $ | 109,945 | $ | 569,869 | $ | 612,694 | ||||||||||||||||
Gross reserve for losses and loss expenses | $ | 3,512,002 | $ | 3,488,114 | $ | 3,460,339 | $ | 3,533,040 | $ | 3,502,680 | $ | 3,547,071 | $ | 3,512,002 | $ | 3,502,680 | ||||||||||||||||
Prior years net favorable reserve development | $ | 34,603 | $ | 27,823 | $ | 30,541 | $ | 25,369 | $ | 72,694 | $ | 60,045 | $ | 118,336 | $ | 210,861 | ||||||||||||||||
Key Ratios | ||||||||||||||||||||||||||||||||
Net paid to net incurred percentage | 94.6 | % | 102.7 | % | 191.0 | % | 107.3 | % | 145.6 | % | 121.4 | % | 125.9 | % | 120.5 | % | ||||||||||||||||
Net paid losses / Net premiums earned | 38.2 | % | 48.4 | % | 98.5 | % | 54.7 | % | 77.2 | % | 45.6 | % | 59.5 | % | 63.8 | % | ||||||||||||||||
Change in net loss and loss expense reserves / Net premiums earned | 2.2 | % | (1.3 | %) | (46.9 | %) | (3.7 | %) | (24.2 | %) | (8.0 | %) | (12.3 | %) | (10.9 | %) | ||||||||||||||||
Net loss and loss expense ratio | 40.4 | % | 47.1 | % | 51.6 | % | 51.0 | % | 53.0 | % | 37.6 | % | 47.2 | % | 52.9 | % | ||||||||||||||||
17
AXIS Capital Holdings Limited
RESERVE FOR LOSSES AND LOSS EXPENSES: PAID TO INCURRED ANALYSIS REINSURANCE - QUARTERLY
| Quarter ended | Year ended December 31, | |||||||||||||||||||||||||||||||
| Q4 2010 | Q3 2010 | Q2 2010 | Q1 2010 | Q4 2009 | Q4 2008 | 2010 | 2009 | |||||||||||||||||||||||||
Gross losses paid | $ | 173,651 | $ | 182,404 | $ | 148,580 | $ | 120,826 | $ | 125,676 | $ | 139,509 | $ | 625,461 | $ | 514,676 | ||||||||||||||||
Reinsurance recoveries | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Net losses paid | 173,651 | 182,404 | 148,580 | 120,826 | 125,676 | 139,509 | 625,461 | 514,676 | ||||||||||||||||||||||||
Change in: | ||||||||||||||||||||||||||||||||
Reported case reserves | 161,567 | 36,785 | 34,429 | 20,158 | 20,902 | 41,589 | 252,939 | 96,391 | ||||||||||||||||||||||||
IBNR | (83,515 | ) | 54,589 | 67,699 | 198,991 | 45,313 | (17,585 | ) | 237,764 | 209,814 | ||||||||||||||||||||||
Reinsurance recoveries on unpaid loss and loss expense reserves | (1,169 | ) | (2,484 | ) | (2,832 | ) | (2,416 | ) | (6,930 | ) | 379 | (8,901 | ) | (9,703 | ) | |||||||||||||||||
Total net incurred losses and loss expenses | $ | 250,534 | $ | 271,294 | $ | 247,876 | $ | 337,559 | $ | 184,961 | $ | 163,892 | $ | 1,107,263 | $ | 811,178 | ||||||||||||||||
Gross reserve for losses and loss expenses | $ | 3,520,373 | $ | 3,446,414 | $ | 3,258,437 | $ | 3,226,482 | $ | 3,061,453 | $ | 2,697,712 | $ | 3,520,373 | $ | 3,061,453 | ||||||||||||||||
Prior years net favorable reserve development | $ | 46,673 | $ | 43,884 | $ | 48,065 | $ | 56,097 | $ | 47,303 | $ | 65,116 | $ | 194,719 | $ | 212,311 | ||||||||||||||||
Key Ratios | ||||||||||||||||||||||||||||||||
Net paid to net incurred percentage | 69.3 | % | 67.2 | % | 59.9 | % | 35.8 | % | 67.9 | % | 85.1 | % | 56.5 | % | 63.4 | % | ||||||||||||||||
Net paid losses / Net premiums earned | 40.5 | % | 41.6 | % | 34.3 | % | 27.4 | % | 30.7 | % | 38.1 | % | 35.9 | % | 31.5 | % | ||||||||||||||||
Change in net loss and loss expense reserves / Net premiums earned | 17.9 | % | 20.2 | % | 22.9 | % | 49.3 | % | 14.5 | % | 6.7 | % | 27.7 | % | 18.1 | % | ||||||||||||||||
Net loss and loss expense ratio | 58.4 | % | 61.8 | % | 57.2 | % | 76.7 | % | 45.2 | % | 44.8 | % | 63.6 | % | 49.6 | % | ||||||||||||||||
18
AXIS Capital Holdings Limited
2010 IMPACT OF MAJOR CATASTROPHE EVENTS
| Chile | New Zealand | Total | ||||||||||
Gross loss and loss expenses | $ | 118,366 | $ | 137,930 | $ | 256,296 | ||||||
Net loss and loss expenses | 118,366 | 137,930 | 256,296 | |||||||||
Gross and net premiums written and earned[a] | 8,234 | — | 8,234 | |||||||||
Total impact before income tax | 110,132 | 137,930 | 248,062 | |||||||||
Income tax benefit | (453 | ) | (50 | ) | (503 | ) | ||||||
Total impact after income tax | $ | 109,679 | $ | 137,880 | $ | 247,559 | ||||||
| [a] | The impact of the earthquakes on gross and net premiums written and earned in 2010 relates to recognition of reinstatement premiums in our reinsurance segment following the event. |
19
AXIS Capital Holdings Limited
ESTIMATED NET MODELED LOSSES TO PEAK ZONE CATASTROPHE EXPOSURES - AS OF JANUARY 1, 2011
| Group Estimated Net Exposures (in millions of U.S. dollars) | Estimated Industry Exposures (in billions of U.S. dollars) | |||||||||||||||||||||||||
Zones | Perils | 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 | $ | 796 | $ | 1,085 | $ | 1,459 | $ | 83 | $ | 125 | $ | 204 | |||||||||||||
| California | Earthquake | 471 | 722 | 1,128 | 18 | 31 | 55 | |||||||||||||||||||
| Europe | Windstorm | 326 | 441 | 646 | 16 | 21 | 29 | |||||||||||||||||||
| Japan | Earthquake | 203 | 316 | 663 | 20 | 28 | 51 | |||||||||||||||||||
| Japan | Windstorm | 88 | 150 | 178 | 20 | 27 | 45 | |||||||||||||||||||
For natural peril catastrophes, based on our current tolerances, we are not willing to lose more than 25% of our prior year-end capital for a modeled single occurrence 1-in-250 year return period probable maximum net loss. We reserve the right to change these thresholds at any time.
The above table shows our net loss estimates to the peak natural catastrophe territories at January 1, 2011. We have developed these loss estimates using multiple commercially available catastrophe models and our own assessments for non-modeled exposures. These models allow us to simulate many hypothetical loss scenarios to supplement our underwriting judgment. These estimates include assumptions regarding the location, size and magnitude of an event, the frequency of events, the construction type and damageability of property in a zone, and the cost of rebuilding property in a zone. Loss estimates for non-U.S. territories will be subject to fluctuations in currency rates, although from a financial statement point of view, we may mitigate this currency variability. 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 $1,085 million (or 19% of shareholders’ equity at December 31, 2010). According to our modeling, there is a one percent chance that our losses incurred in any single U.S. hurricane event could be in excess of $1,085 million. Conversely, there is a 99% chance that the loss from a U.S. hurricane will fall below $1,085 million. We estimate that, at such hypothetical loss levels, aggregate industry losses would be approximately $125 billion, resulting in an estimated market share of insured losses for the Company 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.
20
AXIS Capital Holdings Limited
EARNINGS PER COMMON SHARE INFORMATION - AS REPORTED, GAAP
| Quarter ended December 31, | Year ended December 31, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
Net income available to common shareholders | $ | 264,343 | $ | 282,063 | $ | 819,848 | $ | 461,011 | ||||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||||||||||||||||
Weighted average basic shares outstanding | 117,101 | 136,049 | 121,728 | 137,279 | ||||||||||||
Dilutive share equivalents: | ||||||||||||||||
Warrants | 12,873 | 11,480 | 12,106 | 10,616 | ||||||||||||
Stock compensation plans | 2,825 | 3,189 | 2,365 | 2,476 | ||||||||||||
Weighted average diluted shares outstanding | 132,799 | 150,718 | 136,199 | 150,371 | ||||||||||||
EARNINGS PER COMMON SHARE | ||||||||||||||||
Basic | $ | 2.26 | $ | 2.07 | $ | 6.74 | $ | 3.36 | ||||||||
Diluted | $ | 1.99 | $ | 1.87 | $ | 6.02 | $ | 3.07 | ||||||||
21
AXIS Capital Holdings Limited
EARNINGS PER COMMON SHARE INFORMATION AND COMMON SHARE ROLLFOWARD - QUARTERLY
| Q4 2010 | Q3 2010 | Q2 2010 | Q1 2010 | Q4 2009 | Q4 2008 | |||||||||||||||||||
Net income available to common shareholders | $ | 264,343 | $ | 238,842 | $ | 204,852 | $ | 111,812 | $ | 282,063 | $ | 130,858 | ||||||||||||
COMMON SHARES OUTSTANDING | ||||||||||||||||||||||||
Common shares - at beginning of period | 119,958 | 120,254 | 124,155 | 132,140 | 137,835 | 137,991 | ||||||||||||||||||
Shares issued | 215 | 148 | 76 | 2,008 | 158 | 13 | ||||||||||||||||||
Shares repurchased for treasury | (7,780 | ) | (444 | ) | (3,977 | ) | (9,993 | ) | (5,853 | ) | (1,792 | ) | ||||||||||||
Common shares - at end of period | 112,393 | 119,958 | 120,254 | 124,155 | 132,140 | 136,212 | ||||||||||||||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | ||||||||||||||||||||||||
Weighted average basic shares outstanding | 117,101 | 120,091 | 121,766 | 128,202 | 136,049 | 136,433 | ||||||||||||||||||
Dilutive share equivalents: | ||||||||||||||||||||||||
Warrants | 12,873 | 12,012 | 11,866 | 11,675 | 11,480 | 10,293 | ||||||||||||||||||
Stock compensation plans | 2,825 | 2,303 | 2,033 | 2,299 | 3,189 | 2,637 | ||||||||||||||||||
Weighted average diluted shares outstanding | 132,799 | 134,406 | 135,665 | 142,176 | 150,718 | 149,363 | ||||||||||||||||||
EARNINGS PER COMMON SHARE | ||||||||||||||||||||||||
Basic | $ | 2.26 | $ | 1.99 | $ | 1.68 | $ | 0.87 | $ | 2.07 | $ | 0.96 | ||||||||||||
Diluted | $ | 1.99 | $ | 1.78 | $ | 1.51 | $ | 0.79 | $ | 1.87 | $ | 0.88 | ||||||||||||
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AXIS Capital Holdings Limited
DILUTED BOOK VALUE PER COMMON SHARE ANALYSIS - TREASURY STOCK METHOD[a]
| 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 | ||||||||||||
| At December 31, 2009 | ||||||||||||||||
| Weighted Average Strike Price | Common Shareholders’ Equity | Outstanding Common Shares net of Treasury Shares | Per share | |||||||||||||
Closing stock price | $ | 28.41 | ||||||||||||||
Book value per common share | $ | 5,000,244 | 132,140 | $ | 37.84 | |||||||||||
Dilutive securities: | ||||||||||||||||
Warrants | $ | 12.36 | — | 11,165 | (2.95 | ) | ||||||||||
Restricted Stocks | — | 4,388 | (1.03 | ) | ||||||||||||
Options | $ | 21.56 | — | 669 | (0.16 | ) | ||||||||||
Restricted and phantom stock units | — | 234 | (0.05 | ) | ||||||||||||
Diluted book value per common share | 5,000,244 | 148,596 | $ | 33.65 | ||||||||||||
| [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 stock is also added to determine the diluted common shares outstanding. |
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AXIS Capital Holdings Limited
NON-GAAP FINANCIAL MEASURE RECONCILIATION
| Quarter ended December 31, | Year ended December 31, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| (in thousands) | (in thousands) | |||||||||||||||
Net income available to common shareholders | $ | 264,343 | $ | 282,063 | $ | 819,848 | $ | 461,011 | ||||||||
Adjustment for net realized investment (gains) losses | (77,772 | ) | (6,056 | ) | (195,098 | ) | 311,584 | |||||||||
Adjustment for associated tax impact | 774 | 231 | 1,974 | (6,354 | ) | |||||||||||
Operating income | 187,345 | 276,238 | 626,724 | 766,241 | ||||||||||||
Adjustment for foreign exchange (gains) losses | (5,120 | ) | (2,018 | ) | (15,535 | ) | 28,561 | |||||||||
Adjustment for associated tax impact | 234 | 278 | 153 | 1,993 | ||||||||||||
Operating income excluding foreign exchange gains/losses, net of tax | $ | 182,459 | $ | 274,498 | $ | 611,342 | $ | 796,795 | ||||||||
Net income per share - diluted | $ | 1.99 | $ | 1.87 | $ | 6.02 | $ | 3.07 | ||||||||
Adjustment for net realized investment (gains) losses | (0.59 | ) | (0.04 | ) | (1.43 | ) | 2.07 | |||||||||
Adjustment for associated tax impact | 0.01 | — | 0.01 | (0.04 | ) | |||||||||||
Operating income per share - diluted | $ | 1.41 | $ | 1.83 | $ | 4.60 | $ | 5.10 | ||||||||
Adjustment for foreign exchange (gains) losses | (0.04 | ) | (0.01 | ) | (0.11 | ) | 0.19 | |||||||||
Adjustment for associated tax impact | — | — | — | 0.01 | ||||||||||||
Operating income per share - diluted, excluding foreign exchange gains/losses, net of tax | $ | 1.37 | $ | 1.82 | $ | 4.49 | $ | 5.30 | ||||||||
Weighted average common shares and common share equivalents - for net income | 132,799 | 150,718 | 136,199 | 150,371 | ||||||||||||
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