AXIS Capital Reports Q4 Operating Income of $120 Million, $563 Million for 2014

February 4, 2015

AXIS Capital Holdings Limited reported a net income available to common shareholders for the fourth quarter of 2014 of $164 million, or $1.60 per diluted common share, compared with net income of $172 million, or $1.52 per diluted common share, for the fourth quarter of 2013. Net income available to common shareholders for the full year 2014 was $771 million, or $7.29 per diluted common share, compared with $684 million, or $5.93 per diluted common share, for 2013.

Operating income for the fourth quarter of 2014 was $120 million, or $1.18 per diluted common share, compared with an operating income of $159 million, or $1.41 per diluted common share, for the fourth quarter of 2013. For the full year 2014, AXIS Capital reported operating income of $563 million, or $5.32 per diluted common share, compared with operating income of $633 million, or $5.49 per diluted common share, for 2013.

On January 25, 2015, the company announced the signing of a definitive amalgamation agreement with PartnerRe Ltd. The transaction is expected to close in the second half of 2015, subject to approval by the shareholders of both companies, regulatory clearance and customary closing conditions.

Commenting on the fourth quarter 2014 financial results, Albert Benchimol, president and CEO of AXIS Capital, said: “Each of our segments performed well and delivered solid underwriting results, reflecting low cat activity, ongoing favorable reserve development and a broadly diversified, well-constructed portfolio of risks. In addition, our fourth quarter results showed meaningful positive results from the targeted portfolio enhancements on which we have worked diligently throughout the year.”

He went on to say that the market environment has become increasingly competitive, particularly in the reinsurance sector, “but AXIS has leveraged its attributes to mitigate the worst effects of a highly competitive market.”

AXIS has financial strength, coupled with innovation and technical strength, to provide clients with a meaningful, multi-faceted relationship and full-scale services, he said in a company press release.

“Nevertheless, we determined that greater scale and resources would provide even more benefit to our clients and shareholders, and last week we announced an exciting merger of equals with PartnerRe that would create a top 20 global P&C leader with more than $10 billion in gross premiums written and $14 billion in capital. The union of our two strong companies will allow us to do even more for our clients and partners in distribution, develop and convert on more business opportunities, generate significant expense and capital synergies, and deliver greater value creation for our shareholders,” according to Benchimol.

Full Year Highlights
  • Gross premiums written were flat at $4.7 billion, with growth of $38 million, or 2 percent, in the reinsurance segment offset by a decrease of $24 million, or 1 percent, in the insurance segment;
  • Net premiums written decreased 1 percent to $3.9 billion and net premiums earned increased by 4 percent to $3.9 billion;
  • Combined ratio of 91.6 percent (including 2.4 points related to 2014 natural catastrophe and weather-related losses), compared with 91.0 percent (including 5.4 points related to 2013 natural catastrophe and weather-related events);
  • Net favorable prior year reserve development of $259 million (benefiting the combined ratio by 6.7 points), compared to $219 million (benefiting the combined ratio by 5.9 points);
  • Net investment income decreased 16 percent to $343 million;
  • Pre-tax total return on cash and investments of 2.0 percent, compared to 1.6 percent;
  • Net income available to common shareholders of $771 million and return on average common equity of 14.8 percent, compared to $684 million and 13.1 percent;
  • Operating income of $563 million, representing an operating return on average common equity of 10.8 percent, compared to operating income of $633 million, representing an operating return on average common equity of 12.1 percent;
  • Net cash flows from operations of $887 million, compared to $1.1 billion in 2013;
  • Share repurchases total of $543 million for the year;
  • Diluted book value per common share of $50.63, an 11 percent increase from December 31, 2013;
  • Total dividends declared during the year of $1.10 per common share;
  • Growth in diluted book value per share, adjusted for dividends declared during the year, of $5.93, or 13 percent, per common share.
Fourth Quarter Highlights
  • Gross premiums written decreased 8 percent to $762 million;
  • Net premiums written decreased 14 percent to $555 million and net premiums earned increased 2 percent to $959 million;
  • Natural catastrophe and weather-related losses of $21 million;
  • Net favorable prior year reserve development of $66 million (benefiting the combined ratio by 6.9 points) compared to $43 million (benefiting the combined ratio by 4.6 points);
  • Net investment income decreased 31 percent to $79 million;
  • Net cash flows from operations of $152 million, compared to $208 million;
  • Share repurchases totaled $75 million in the quarter. During the quarter, we announced that effective January 1, 2015, the share repurchase authorization program was increased to $750 million of the Company’s common shares effective through December 31, 2016;
  • Quarterly common share dividend declared increased 7 percent to $0.29 per share;
  • Repaid $500 million of senior unsecured notes that matured on December 1, 2014.

Source: AXIS Capital Holdings Limited

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