AXIS Reports Q2 Net Income of $63M, Compared to $191M in Q2 2014

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AXIS Capital Holdings Limited reported net income available to common shareholders for the second quarter of 2015 of $63 million, or $0.63 per diluted common share, compared with $191 million, or $1.79 per diluted common share, for the second quarter of 2014.

Net income available to common shareholders for the six months ended June 30, 2015, was $219 million or $2.17 per diluted common share, compared with $328 million, or $3.03 per diluted common share, for the corresponding period of 2014.

“We are pleased to report second quarter operating income of $94 million, or $0.93 per diluted share, and annualized operating ROE of 7.0 percent. Adjusted for dividends, diluted book value grew 7 percent over the last 12 months,” said Albert Benchimol, president and CEO of AXIS Capital, in a company statement.

This year’s second quarter operating income was a decrease from the $173 million reported for the same period in 2014, when it represented an annualized operating ROE of 13.1 percent.

For the six months ended June 30, 2015, AXIS Capital reported operating income of $230 million, or $2.27 per diluted common share, compared with $310 million, or $2.86 per diluted common share, for the first half of 2014.

“Notwithstanding a more challenging market environment, we continued to make progress on our underwriting initiatives, and deliver growth in the more attractive lines and markets,” Benchimol continued.

“Our reinsurance segment is responding to the secular and cyclical changes in the reinsurance market through proactive exposure management,” he added.

“Our insurance results this quarter reflect our recent portfolio enhancement activities, as underlying improvements allowed us to absorb the impact of rate and loss trends, as well as unusually high large loss experience in the marine line of business. We are confident our ongoing progress in distribution and portfolio management initiatives position us strongly to differentiate our value proposition for all of our stakeholders.”

Additional AXIS’ second quarter highlights include:

Net income available to common shareholders of $63 million and annualized return on average common equity of 4.7 percent, compared to $191 million and 14.5 percent;
Gross premiums written decreased 3 percent (1 percent on a constant currency basis) to $1.2 billion, with a decrease of 10 percent (9 percent on a constant currency basis) in the reinsurance segment’s premiums written, which was partially offset by growth in the insurance segment of 1 percent (3 percent on a constant currency basis);
Net premiums written decreased 5 percent (3 percent on a constant currency basis) to $947 million;
Net premiums earned decreased 6 percent (4 percent on a constant currency basis) to $941 million;
Combined ratio of 96.9 percent, compared to 90.8 percent;
Current accident year loss ratio of 68.5 percent, compared to 65.1 percent;
Estimated natural catastrophe and weather-related pre-tax net losses of $39 million, primarily related to weather losses in the U.S. and Australia, compared to $36 million incurred during the second quarter of 2014;
Pre-tax net losses of $40 million in insurance marine lines, driven by the impact of large industry events;
Net favorable prior year reserve development of $65 million (benefiting the combined ratio by 6.9 points), compared to $85 million (benefiting the combined ratio by 8.5 points);
Pre-tax merger costs related to the proposed amalgamation with PartnerRe Ltd. of $8 million included in corporate expenses;
Net investment income of $89 million, compared to $115 million;
Net cash flows from operations of $144 million, compared to $241 million;
Following the signing of a definitive amalgamation agreement with PartnerRe Ltd. on January 25, 2015, the company has suspended its open market share repurchase program until the closing date of the amalgamation transaction;
Dividends declared of $0.29 per common share, with the total common dividends declared of $1.14 per share over the past twelve months.