AXIS Q2 Net up 29% to $223.4 Million

August 8, 2006

Bermuda-based AXIS Capital Holdings Limited reported net income available to common shareholders for the quarter ended June 30, 2006 of $223.4 million, or $1.37 per diluted common share, compared with $172.8 million, or $1.13 per diluted common share, for the quarter ended June 30, 2005, a 29.2 percent increase.

Net income for the six months ended June 30, 2006 was $418.6 million, or $2.56 per diluted share, compared with $324.6 million, or $2.07 per diluted share, for the corresponding period in 2005, also up nearly 29 percent.

AXIS also noted: “Financial results for the second quarter and first six months of 2006 benefited from increased investment income. Operating income for the second quarter of 2006 was $232.2 million, or $1.42 per diluted share, compared with $170.9 million, or $1.12 per diluted common share, for the quarter ended June 30, 2005. This same item excluding foreign exchange gains (losses), net of tax, for the second quarter of 2006 was $214.2 million, or $1.31 per diluted common share, compared with $197.4 million, or $1.29 per diluted common share, for the quarter ended June 30, 2005.

“Operating income for the six months ended June 30, 2006 was $437.4 million, or $2.68 per diluted share, compared with $323.7 million, or $2.07 per diluted common share, for the six months ended June 30, 2005. This same item excluding foreign exchange gains (losses), net of tax, for the six months ended June 30, 2006 was $410.4 million, or $2.52 per diluted common share, compared with $373.1 million, or $2.38 per diluted common share, for the six months ended June 30, 2005.”

Other operating highlights for the first half of the year included the following:
• Gross premiums written increased by 9.9 percent to $2.16 billion;
• Net premiums written increased by 8.1 percent to $1.813 billion;
• Net premiums earned increased by 5.0 percent to $1.312 billion;
• Combined ratio of 78.9 percent included net favorable prior period reserve development of $125.5 million, or 9.6 percentage points;
• Pre-tax net investment income increased by 67.2 percent to $185.2 million;
• Annualized return on average common shareholders’ equity of 26.4 percent; and
• Total shareholders’ equity increased from December 31, 2005 by 8.6 percent to $3.8 billion and diluted book value per common share increased 7.8 percent to $20.68.

Operating highlights for the second quarter included the following:
• Gross premiums written increased by 29.7 percent to $995.4 million;
• Net premiums written increased by 33.2 percent to $820.7 million;
• Net premiums earned increased by 8.8 percent to $679.1 million;
• Combined ratio of 78.3 percent included net favorable prior period reserve development of $64.5 million, or 9.5 percentage points;
• Pre-tax net investment income increased by 58.0 percent to $91.7 million primarily due to a combination of higher investment balances, higher investment yields and increasing contribution from other investments; and
• Annualized return on average common shareholders’ equity of 27.6 percent.

Commenting on the second quarter 2006 results, President and CEO John Charman noted: “We are pleased to report an annualized return on average common equity in the quarter of 27.6 percent and an increase in diluted book value per share relative to year-end of 7.8 percent despite the mark-to-market impact of rising interest rates on book value.

“Our results in the quarter reflect strong and stable underwriting results, increasing investment income and low large loss activity. At the end of last year, we positioned ourselves tactically for trading in the first half-year of 2006. Our goal was to substantially reduce catastrophe exposures whilst, at the same time, achieving solid growth in better-rated business. In the non-property areas of our insurance and reinsurance businesses, our specialist focus has allowed us ample access to risks at stable, attractive rating levels. We have achieved all of this without compromising our appropriate risk tolerance levels in both our insurance and reinsurance segments.”

The full report and additional comments may be obtained on the Company’s Website at: www.axiscapital.com.

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