AXIS Reports $147 Million Q3 Net

November 6, 2003

Another of Bermuda’s newer insurers, AXIS Capital, has reported excellent third quarter results. The company announced that its net income for the period rose to $147 million, or $0.90 per diluted share, compared to $92.1 million, or $0.68 per diluted share, for the third quarter ended September 30, 2002, an increase of $54.9 million, or $0.22 per diluted share.

AXIS’ latest earnings report confirms its strong growth. Net income for the nine months ended September 30, 2003 rose 142% to $371.9 million, or $2.46 per diluted share, from $153.8 million, or $1.13 per diluted share, for the corresponding period in 2002.

Operating income, which excludes net realized gains and losses on investments, net of tax for the third quarter of 2003 was $152.6 million, or $0.93 per diluted share, compared with $85.3 million, or $0.63 per diluted share, for the quarter ended September 30, 2002. Net income excluding net realized gains and losses on investments, net of tax for the nine months ended September 30, 2003 was $351.0 million, or $2.32 per diluted share, compared with $137.6 million, or $1.01 per diluted share, for the nine months ended September 30, 2002.

The announcement noted that “Shareholders’ equity has grown to approximately $2.7 billion at September 30, 2003.” AXIS’ original founders included Marsh’s Trident II investment fund, CSFB, Blackstone, J.P. Morgan, Thomas Llee & Partners and other investors. Their “diluted book value per share was $16.72, an increase of $2.76, or 20%, from December 31, 2002,” said the announcement. The shareholders’ equity also includes the net proceeds received from the Company’s initial public offering completed in July.

John Charman, President and CEO, commented, “We are delighted to show continuing significant high quality premium growth in all four of our underwriting segments despite the third quarter being a traditionally slow production period for many of our business lines. As the irreversible flight of quality to quality continues unabated, AXIS is appropriately recognized across all our business lines as security that is safe, capable, consistent and highly service-oriented. Hence, our global AXIS Capital franchise has been able to produce for our shareholders strong, real net income for the quarter.

“We will commence expensing stock options under the transitional provisions of FAS 148 in the fourth quarter of 2003. This is consistent with our actions that have put us at the forefront of direct, effective corporate governance and transparent financial reporting since our inception,” he added.

Other earning highlights included the following: “Gross premiums written for the third quarter of 2003 were $633.9 million compared to $252.3 million for the third quarter 2002. Of these premiums written: $249.3 million were derived from global insurance compared to $179.1 million in the corresponding quarter of 2002; $114.6 million from global reinsurance compared to $73.2 million in the corresponding quarter of 2002; $188.0 million from U.S. insurance; and $82.0 million from U.S. reinsurance. The latter two segments began underwriting at the start of 2003; therefore, there are no comparatives for the periods in 2002. For the quarter ended September 30, 2003 compared to the quarter ended September 30, 2002, net premiums written rose to $534.4 million from $200.0 million and net premiums earned increased to $397.5 million from $167.7 million.

“For the quarter ended September 30, 2003, net investment income was $19.3 million and realized losses were $5.7 million, compared with $21.5 million in net investment income and $6.9 million in realized gains, for the quarter ended September 30, 2002.

“For the third quarter of 2003, the Company generated a combined ratio of 69.2%, a loss ratio of 46.3% and an expense ratio of 22.9% compared to 63.3%, 38.1% and 25.2%, respectively, for the third quarter of 2002.

“Gross premiums written for the first nine months of 2003 were $1,794.0 million compared to $778.7 million for the first nine months of 2002. Of these premiums written: $700.6 million were derived from global insurance compared to $483.9 million in the corresponding period of 2002; $446.2 million from global reinsurance compared to $294.8 million in the corresponding period of 2002; $451.1 million from U.S. insurance; and $196.1 million from U.S. reinsurance. For the nine months ended September 30, 2003 compared to the nine months ended September 30, 2002, net premiums written increased to $1,524.3 million from $694.6 million and net premiums earned rose to $1,035.5 million from $317.8 million.
For the nine months ended September 30, 2003, net investment income was $46.6 million and realized gains were $21.2 million, compared with $55.3 million in net investment income and $16.3 million in realized gains, for the nine months ended September 30, 2002.

“For the first nine months of 2003, the Company generated a combined ratio of 74.3%, a loss ratio of 50.8% and an expense ratio of 23.5% compared to 74.9%, 46.8% and 28.1%, respectively, for the first nine months in 2002.”

AXIS said it will “host a conference call on Thursday, November 6, 2003 at 8:30 AM (Eastern) to discuss the third quarter financial results. This presentation will be available through an audio webcast accessible through the Investor Information section of the Company’s website at www.axiscapital.com.

“In addition, a financial supplement relating to the Company’s financial results for the third quarter is available in the Investor Information section of our website.”

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