Axis Posts $195.2 Million Q1 Net

Bermuda-based AXIS Capital Holdings Limited reported net income available to common shareholders for the quarter ended March 31, 2006 of $195.2 million, or $1.19 per diluted common share, compared with $151.8 million, or $0.95 per diluted common share, for the quarter ended March 31, 2005.

Excluding net realized losses on investments, net of tax, the Company earned $205.2 million in the first quarter, or $1.25 per diluted share, compared with $152.7 million, or $0.95 per diluted common share, for the quarter ended March 31, 2005. “This same item excluding foreign exchange gains (losses), net of tax, for the first quarter of 2006 was $196.2 million, or $1.20 per diluted common share, compared with $175.7 million, or $1.10 per diluted common share, for the quarter ended March 31, 2005,” the bulletin indicated.

Other Q1 “Operating highlights” summarized in the report included the following:
— Gross premiums written of $1,164.7 million were in line with gross premiums written of $1,198.7 million in the first quarter of 2005;
— Net premiums earned of $633.6 million were in line with net premiums earned of $625.6 million in the first quarter of 2005;
— Combined ratio of 79.5 percent included favorable prior period reserve development of $61.1 million, or 9.6 percentage points.
— Total pre-tax investment income, including net realized losses, increased by 60.9 percent to $82.6 million. The increase was primarily due to a combination of higher investment balances, higher investment yields and increased investment income from other investments;
— Net income available to common shareholders of $195.2 million increased 28.6 percent due to stable underwriting income and increased investment income;
— Annualized return on average common shareholders’ equity of 25.4 percent was achieved during the quarter; and
— Diluted book value per common share increased 2.8 percent from December 31, 2005 to $19.72.

CEO and President John Charman commented: “Our annualized return on average common equity of 25.4 percent for this first quarter of 2006 is a powerful testament to the core earnings power of our franchise and includes strong underwriting income and substantially increased investment income.”

He stressed Axis’ early response to last fall’s hurricanes, indicating that “within a week of Hurricane Katrina, we immediately repositioned our underwriting and risk management at AXIS to maximize the inevitable opportunities in the catastrophe-exposed areas of our business and to simultaneously mitigate volatility in the portfolio throughout the year.

“Our uncompromising pricing strategy coupled with our more refined determination of risk have been adjusted to take into account the increased cost of capital associated with catastrophe-exposed business. Excluding the impact of unfavorable exchange movements, our gross premiums were in line with those of last year. Competition increased in geographies and lines of business not exposed to peak natural perils, but we have remained committed to maintaining the highest standards of underwriting discipline, we continue to be strategically and financially well placed to select the very best opportunities in all areas. We expect that the structural shift in the marketplace commenced last year will intensify and broaden throughout the year and our underwriting operations are prepared to take advantage of these positive developments.”

As previously announced (See IJ Website May 4), Axis will host a conference call today, Friday May 5, 2006 at 8:00 AM (Eastern) to discuss the first quarter financial results and related matters. The presentation will be available through an audio webcast accessible through the Investor Information section of the Company’s Website at: www.axiscapital.com. The complete financial report is also available on the Website.

Topics Profit Loss