AXIS Capital Bank of America Merrill Lynch Insurance Conference 2012 New York, NY John Charman, CEO and President February 15, 2012 Exhibit 99.1 |
2 Safe Harbor Disclosure Forward-looking statements only reflect our expectations and are not guarantees of performance. Accordingly, there are or will be important factors that could cause actual results to differ materially from those indicated in such statements. We believe that these factors include, but are not limited to, the following: • The occurrence and magnitude of natural and man-made disasters, • Actual claims exceeding our loss reserves, • General economic, capital and credit market conditions, • The failure of any of the loss limitation methods we employ, • The effects of emerging claims, coverage and regulatory issues, • The failure of our cedants to adequately evaluate risks, • Inability to obtain additional capital on favorable terms, or at all, • The loss of one or more key executives, • A decline in our ratings with rating agencies, • Loss of business provided to us by our major brokers, • Changes in accounting policies or practices, • The use of industry catastrophe models and changes to these models, • Changes in governmental regulations, • Increased competition, • Changes in the political environment of certain countries in which we operate or underwrite business, and • Fluctuations in interest rates, credit spreads, equity prices and/or currency values. 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. 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 value of our investment portfolio, our expectations regarding pricing and other market conditions and valuations of the potential impact of movements in interest rates, equity prices, credit spreads and foreign currency rates. |
3 Our Mission To become the Leading Global Specialty Insurer and Reinsurer as defined by Quality, Sustainability and Profitability |
4 Diversified Global Insurer AXIS Insurance 2011 GPW by LOB = $2,122 million 52% of Consolidated GPW AXIS Insurance 2002-2011 GPW AXIS Insurance Aggregate 2002-2011 2011 GPW $18.0 Bn $2.1 Bn NPW $12.2 Bn $1.5 Bn Combined Ratio 81% 98% Underwriting Profit $2.0 Bn $35 M Property 30% Marine 11% Terrorism 2% Aviation 3% Credit and political risk 2% Professional lines 36% Liability 10% A&H 6% $0 $500 $1,000 $1,500 $2,000 $2,500 A&H/Other Liability Professional lines Credit and political risk Aviation Terrorism Marine Property |
5 Diversified Global Reinsurer AXIS Reinsurance 2011 GPW by LOB = $1,974 million 48% of Consolidated GPW AXIS Reinsurance 2002-2011 GPW AXIS Reinsurance Aggregate 2002-2011 2011 GPW $13.9 Bn $2.0 Bn NPW $13.7 Bn $2.0 Bn Combined Ratio 89% 119% Underwriting Profit(Loss) $1.4 Bn $(362) M $0 $500 $1,000 $1,500 $2,000 $2,500 Other Engineering Liability Motor Credit and bond Professional lines Property Catastrophe Catastrophe 24% Property 18% Professional lines 14% Credit and bond 15% Motor 12% Liability 12% Engineering 3% Other 2% |
6 Excellent Financial Performance ROACE and Diluted Book Value per Share (1) Common Dividends Per Share 2003 2004 2005 2006 2007 2008 2009 2010 2011 (1) Diluted book value per share calculated using Treasury stock method. Note 12/31/02 diluted book value per share is pro forma for AXIS Capital IPO (2) Value creation calculated on change in diluted book value per share and cumulative declared dividends 10-Year Average ROACE 14.2% 10-Year BVPS (1) CAGR 11.8% 10-Year Value Creation (2) CAGR 13.7% Excellent returns over time, despite several unprecedented industry stresses, and consistent dividend increases since IPO $0 $5 $10 $15 $20 $25 $30 $35 $40 $45 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 BVPS (1) ROACE 0% 5% 10% 15% 20% 25% 30% $0.14 $0.50 $0.60 $0.62 $0.68 $0.76 $0.81 $0.86 $0.93 $0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 $0.80 $0.90 $1.00 |
7 7 AXIS Strategy In Current Market Environment Underwriting Investments Capital Manage risk appetite Incorporate lessons from recent experience Prepare to accelerate underwriting Continue to cultivate distribution footprint and new initiatives (e.g. A&H) Maintain exposure to investment-grade spread assets Maintain liquidity and shorter duration Optimize total return through continued diversification away from interest rate sensitive assets Maintain financial flexibility Maintain financial strength but “right size” to opportunity Dividend policy characterized by consistent increase and attractive yield Focused on a strong foundation for underwriting execution and a strong, stable and competitive capital base with financial flexibility appropriate for this phase of the P&C cycle |
8 AXIS is Well Positioned Global insurance and reinsurance platform Diversified book of business by product and geography Excellent market reputation Deep relationships Ability to access and underwrite complex risks Strong entrepreneurial and underwriting culture Strong capital and ratings and conservative balance sheet Successful track record |
Conclusion Capacity for greater-than-industry growth in favorable markets and less-than-industry revenue reduction in difficult markets Sufficient scale to provide larger capacity – competitive advantage Not so large as to lose agility Sufficient diversity to manage cycle and volatility successfully Continued investment in franchise Focused on delivering long-term value for our shareholders Industry-leading underwriting results Industry-leading ROACEs with industry-average volatility Industry-leading book value growth with industry-average volatility Financial goal of 15% average ROACE, but recognize difficulty of achieving in a record low interest-rate environment 9 |