AXIS Capital Reports Third Quarter Net Income of $43 Million, or $0.52 Per Diluted Common Share; Operating Income of $81 Million, or $0.96 Per Diluted Common Share; Ex-PGAAP Operating Income of $90 Million, or $1.07 Per Diluted Common Share
Business Wire 24-Oct-2018 4:15 PM
For the third quarter of 2018, the Company reports:
-
Return on average common equity of 3.9% and ex-PGAAP operating
return on average common equity ("ex-PGAAP operating ROACE") of 8.0%
-
Estimated pre-tax catastrophe and weather-related losses, net of
reinsurance and reinstatement premiums, of $92 million, or 7.5 points,
compared to $617 million, or 61.4 points, in the prior year
-
Pre-tax cost savings of $17 million, $68 million on an annualized
basis, related to transformation and integration initiatives and on
track to deliver $100 million of savings by year-end 2020
AXIS Capital Holdings Limited ("AXIS Capital" or "the Company") (NYSE: AXS) today reported net income available to common shareholders for the
third quarter of 2018 of $43 million, or $0.52 per diluted common share,
compared to net loss of $468 million, or $(5.61) per diluted common
share, for the third quarter of 2017. Net income available to common
shareholders for the nine months ended September 30, 2018 was $199
million, or $2.37 per diluted common share, compared to net loss of $378
million, or $(4.47) per diluted common share, for the same period in
2017. Operating income1 for the third quarter of 2018 was $81
million, or $0.96 per diluted common share1, compared to an
operating loss of $446 million, or $(5.35) per diluted common share, for
the third quarter of 2017. For the nine months ended September 30, 2018,
AXIS Capital reported operating income of $310 million, or $3.69 per
diluted common share, compared to operating loss of $284 million, or
$(3.37) per diluted common share for the same period in 2017.
Commenting on the third quarter 2018 financial results, Albert
Benchimol, President and CEO of AXIS Capital, said:
"In the third quarter we continued to see positive momentum, as our
efforts to optimize our business and invest in growing our market
leadership have generated real traction. Our year-to-date ex-PGAAP
operating ROACE2 of 10.2%, which includes the impact of
catastrophes and weather as well as higher attritional property losses,
demonstrates our ongoing progress in delivering more consistent,
attractive returns for shareholders.
We advanced our positioning and relevance in key markets requiring our
specialist expertise and are seeing ongoing benefits from the further
integration of Novae into our business. We also continued to drive
forward the implementation of our transformation program, which is
helping to improve our efficiency and position AXIS to be profitable
under a wide range of market conditions.
In recent weeks, our industry has been challenged by natural
catastrophes in the Southeastern United States and Asia. Our foremost
thoughts are with those impacted by these storms, and our team is
working closely with our clients and partners so that we can
expeditiously resolve claims and help communities rebuild - this is our
Company's mission."
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1Operating income (loss) and operating income (loss) per
diluted common share are non-GAAP financial measures as defined in
SEC Regulation G. The reconciliations of non-GAAP measures to the
most comparable GAAP financial measures (net income (loss) available
(attributable) to common shareholders and earnings per diluted
common share, respectively) and a discussion of the rationale for
the presentation of these items is included later in this press
release.
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|
2Ex-PGAAP operating income, ex-PGAAP operating income per
diluted common share and annualized ex-PGAAP return on average
common equity are non-GAAP financial measures as defined in SEC
Regulation G. The reconciliation to the most comparable GAAP
financial measures, (net income (loss) available (attributable) to
common shareholders, earnings per diluted common share, and
annualized return on average common equity, respectively) and a
discussion of the rationale for the presentation of these items is
included later in this press release.
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Third Quarter Highlights3
-
Gross premiums written increased by $238 million, or 20%, to $1.4
billion, with an increase of 49% in the insurance segment, primarily
attributable to the acquisition of Novae Group plc ("Novae") on
October 2, 2017 (the "closing date" or the "acquisition date"),
partially offset by a decrease of 15% in the reinsurance segment.
-
Adjusting for the impact of the Novae acquisition, gross premiums
written decreased by $92 million, or 8%, with a decrease of $2 million
in the insurance segment and a decrease of $90 million, or 17% in the
reinsurance segment.
-
Net premiums written increased by 10% to $920 million.
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KEY RATIOS
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|
|
Q3 2018
|
|
Q3 2017
|
|
Change
|
|
Current accident year loss ratio excluding catastrophe and
weather-related losses
|
|
|
|
61.2
|
%
|
|
64.8
|
%
|
|
(3.6
|
)
|
|
Catastrophe and weather-related losses ratio
|
|
|
|
7.5
|
%
|
|
61.4
|
%
|
|
(53.9
|
)
|
|
Current accident year loss ratio
|
|
|
|
68.7
|
%
|
|
126.2
|
%
|
|
(57.5
|
)
|
|
Prior year reserve development
|
|
|
|
(3.8
|
%)
|
|
(4.7
|
%)
|
|
0.9
|
|
|
Net loss and loss expense ratio
|
|
|
|
64.9
|
%
|
|
121.5
|
%
|
|
(56.6
|
)
|
|
Acquisition cost ratio
|
|
|
|
20.3
|
%
|
|
19.1
|
%
|
|
1.2
|
|
|
General and administrative expense ratio
|
|
|
|
12.7
|
%
|
|
12.3
|
%
|
|
0.4
|
|
|
Combined ratio
|
|
|
|
97.9
|
%
|
|
152.9
|
%
|
|
(55.0
|
)
|
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|
|
|
|
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|
|
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|
|
|
-
Underwriting income included the recognition of premium attributable
to Novae's balance sheet at October 2, 2017, without the recognition
of the associated acquisition costs, which were written off at the
closing date. The absence of $29 million of acquisition expense
related to premiums earned in the quarter benefited our acquisition
cost ratio by 2.4 points.
-
Net favorable prior year reserve development of $46 million (Insurance
$13 million; Reinsurance $32 million), compared to $48 million.
-
Amortization of value of business acquired ("VOBA") recognized in the
quarter of $39 million. This expense affected the Company's operating
income, but was not included in the results of the Company's insurance
and reinsurance segments.
-
Pre-tax cost savings of $17 million, $68 million on an annualized
basis, related to the Company's transformation initiative and the
integration of Novae recognized in the quarter. The Company has
incurred cumulative pre-tax reorganization expenses of $75 million
since the third quarter 2017.
-
Adjusted for dividends, book value per diluted common share increased
by $0.62, or 1%, compared to June 30, 2018 and decreased by $1.07 or
2%, over the past twelve months.
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3 All comparisons are with the same period of the prior
year, unless otherwise stated.
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Segment Highlights
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Insurance Segment
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|
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|
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|
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Three Months Ended September 30,
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|
($ in thousands)
|
|
|
|
2018
|
|
2017
|
|
Change
|
|
Gross premiums written
|
|
|
|
$
|
969,364
|
|
|
$
|
651,145
|
|
|
48.9
|
%
|
|
Net premiums written
|
|
|
|
602,070
|
|
|
407,054
|
|
|
47.9
|
%
|
|
Net premiums earned
|
|
|
|
614,795
|
|
|
420,775
|
|
|
46.1
|
%
|
|
Underwriting income (loss)
|
|
|
|
(11,711)
|
|
|
(288,159)
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|
|
(96)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting ratios:
|
|
|
|
|
|
|
|
|
|
Current accident year loss ratio excluding catastrophe and
weather-related losses
|
|
|
|
59.7
|
%
|
|
63.5
|
%
|
|
(3.8)
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|
|
Catastrophe and weather-related losses ratio
|
|
|
|
10.1
|
%
|
|
75.4
|
%
|
|
(65.3)
|
|
|
Current accident year loss ratio
|
|
|
|
69.8
|
%
|
|
138.9
|
%
|
|
(69.1)
|
|
|
Prior period reserve development
|
|
|
|
(2.2
|
%)
|
|
(1.8
|
%)
|
|
(0.4)
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|
|
Net loss and loss expense ratio
|
|
|
|
67.6
|
%
|
|
137.1
|
%
|
|
(69.5)
|
|
|
Acquisition cost ratio
|
|
|
|
18.2
|
%
|
|
14.6
|
%
|
|
3.6
|
|
|
Underwriting-related general and administrative expense ratio
|
|
|
|
16.4
|
%
|
|
16.9
|
%
|
|
(0.5)
|
|
|
Combined ratio
|
|
|
|
102.2
|
%
|
|
168.6
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%
|
|
(66.4)
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|
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|
|
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-
Gross premiums written increased by $318 million, or 49%, which
included gross premiums written of $320 million attributable to
property, marine, professional lines, and credit and political risk
lines associated with the acquisition of Novae. Excluding the impact
of the acquisition of Novae, gross premiums written decreased by $2
million, largely attributable to accident and health due to
non-renewals and property lines following our exit from onshore energy
business last year, partially offset by an increase in premiums
written in professional lines and liability lines driven by new
business.
-
Net premiums written increased by $195 million, or 48%. Excluding the
impact of the acquisition of Novae, net premiums written decreased by
4% (4% on a constant currency basis4) primarily reflecting
an increase in premiums ceded in liability and property lines.
-
The current accident year loss ratio excluding catastrophe and
weather-related losses decreased by 3.8 points in the third quarter
compared to the same period in 2017, primarily due to favorable
changes in business mix (predominantly related to the acquisition of
Novae), partially offset by an increase in attritional loss experience
in property lines.
-
Pre-tax catastrophe and weather-related losses were $62 million
primarily attributable to Hurricane Florence and weather events this
quarter, compared to $317 million in the same period in 2017.
-
Net favorable prior year reserve development was $13 million this
quarter, compared to $8 million in the same period in 2017.
-
The acquisition cost ratio increased by 3.6 points in the quarter
primarily due to changes in business mix.
-
Underwriting income included the recognition of premium attributable
to Novae's balance sheet at October 2, 2017, without the recognition
of the associated acquisition costs, which were written off at the
closing date. The absence of $29 million of acquisition expense
related to premiums earned in the quarter benefited our acquisition
cost ratio by 4.7 points.
-
The general and administrative expense ratio decreased in the quarter
largely attributable to an increase in net premiums earned, partially
offset by an increase in general and administrative expenses
associated with the acquisition of Novae and an increase in
performance-related compensation costs.
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|
|
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|
|
Nine Months Ended September 30,
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($ in thousands)
|
|
|
|
2018
|
|
2017
|
|
Change
|
|
Gross premiums written
|
|
|
|
$
|
2,876,856
|
|
|
$
|
1,960,608
|
|
|
46.7
|
%
|
|
Net premiums written
|
|
|
|
1,748,142
|
|
|
1,259,999
|
|
|
38.7
|
%
|
|
Net premiums earned
|
|
|
|
1,772,126
|
|
|
1,230,279
|
|
|
44.0
|
%
|
|
Underwriting income (loss)
|
|
|
|
114,210
|
|
|
(279,431
|
)
|
|
nm
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting ratios:
|
|
|
|
|
|
|
|
|
|
Current accident year loss ratio excluding catastrophe and
weather-related losses
|
|
|
|
57.3
|
%
|
|
61.0
|
%
|
|
(3.7
|
)
|
|
Catastrophe and weather-related losses ratio
|
|
|
|
6.3
|
%
|
|
30.8
|
%
|
|
(24.5
|
)
|
|
Current accident year loss ratio
|
|
|
|
63.6
|
%
|
|
91.8
|
%
|
|
(28.2
|
)
|
|
Prior period reserve development
|
|
|
|
(3.5
|
%)
|
|
(2.9
|
%)
|
|
(0.6
|
)
|
|
Net loss and loss expense ratio
|
|
|
|
60.1
|
%
|
|
88.9
|
%
|
|
(28.8
|
)
|
|
Acquisition cost ratio
|
|
|
|
16.4
|
%
|
|
14.4
|
%
|
|
2.0
|
|
|
Underwriting-related general and administrative expense ratio
|
|
|
|
17.2
|
%
|
|
19.5
|
%
|
|
(2.3
|
)
|
|
Combined ratio
|
|
|
|
93.7
|
%
|
|
122.8
|
%
|
|
(29.1
|
)
|
nm - not meaningful
-
Gross premiums written increased by $916 million, or 47%, which
included gross premiums written of $914 million attributable to
property, marine, professional lines, and credit and political risk
lines associated with the acquisition of Novae.
-
Net premiums written increased by $488 million or 39%. Excluding the
impact of the acquisition of Novae, net premiums written decreased by
7% (9% on a constant currency basis) reflecting the increase in
premiums ceded in property and professional lines.
-
Underwriting income increased in the nine months ended September 30,
2018 principally associated with an increase in net premiums earned, a
decrease in catastrophe and weather-related losses, an increase in net
favorable prior year development, a decrease in the current accident
year loss ratio excluding catastrophe and weather-related losses and a
decrease in general and administrative expense ratio.
-
Underwriting income included the recognition of premium attributable
to Novae's balance sheet at October 2, 2017, without the recognition
of the associated acquisition costs, which were written off at the
closing date. The absence of $105 million of acquisition expense
related to premiums earned in the quarter benefited our acquisition
cost ratio by 5.9 points.
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4Amounts presented on a constant currency basis are
non-GAAP financial measures as defined in SEC Regulation G. The
constant currency basis is calculated by applying the average
foreign exchange rate from the current year to prior year amounts.
The reconciliations to the most comparable GAAP financial measures
are provided in this release, as is a discussion of the rationale
for the presentation of these items.
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|
|
|
|
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|
|
Reinsurance Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
($ in thousands)
|
|
|
|
2018
|
|
2017
|
|
Change
|
|
Gross premiums written
|
|
|
|
$
|
454,343
|
|
|
$
|
534,429
|
|
|
(15.0)
|
%
|
|
Net premiums written
|
|
|
|
317,868
|
|
|
425,689
|
|
|
(25.3)
|
%
|
|
Net premiums earned
|
|
|
|
609,280
|
|
|
596,356
|
|
|
2.2
|
%
|
|
Underwriting income (loss)
|
|
|
|
70,737
|
|
|
(224,694
|
)
|
|
nm
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting ratios:
|
|
|
|
|
|
|
|
|
|
Current accident year loss ratio excluding catastrophe and
weather-related losses
|
|
|
|
62.6
|
%
|
|
65.8
|
%
|
|
(3.2
|
)
|
|
Catastrophe and weather-related losses ratio
|
|
|
|
5.0
|
%
|
|
51.3
|
%
|
|
(46.3
|
)
|
|
Current accident year loss ratio
|
|
|
|
67.6
|
%
|
|
117.1
|
%
|
|
(49.5
|
)
|
|
Prior period reserve development
|
|
|
|
(5.3
|
%)
|
|
(6.6
|
%)
|
|
1.3
|
|
|
Net loss and loss expense ratio
|
|
|
|
62.3
|
%
|
|
110.5
|
%
|
|
(48.2
|
)
|
|
Acquisition cost ratio
|
|
|
|
22.4
|
%
|
|
22.3
|
%
|
|
0.1
|
|
|
Underwriting-related general and administrative expense ratio
|
|
|
|
4.8
|
%
|
|
4.3
|
%
|
|
0.5
|
|
|
Combined ratio
|
|
|
|
89.5
|
%
|
|
137.1
|
%
|
|
(47.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
nm - not meaningful
-
Gross premiums written decreased by $80 million, or 15%, which
included gross premiums written of $10 million attributable to
catastrophe, marine and aviation lines associated with the acquisition
of Novae. Excluding the impact of the acquisition of Novae, gross
premiums written decreased by $90 million, or 17% (17% on a constant
currency basis) primarily attributable to accident and health,
catastrophe, and motor lines. The decrease in accident and health was
largely due to premium adjustments. The decrease in catastrophe lines
was attributable to the recognition of reinstatement premiums in the
prior year attributable to the significant catastrophe losses. The
decrease in motor was driven by timing differences.
-
Net premiums written decreased by $108 million, or 25%. Excluding the
impact of the acquisition of Novae, net premiums written decreased by
27% (26% on a constant currency basis) reflecting the decrease in
gross premiums written in the quarter, together with an increase in
premiums ceded in accident and health, and liability lines, partially
offset by agriculture lines.
-
The current accident year loss ratio excluding catastrophe and
weather-related losses decreased in the third quarter primarily due to
favorable changes in business mix together with the favorable impact
of rate and trend.
-
Pre-tax catastrophe and weather-related losses were $30 million
primarily attributable to Hurricane Florence, Typhoon Jebi and U.S.
weather-related events this quarter, compared to $299 million reported
during the same period in 2017.
-
Net favorable prior year reserve development was $32 million this
quarter compared to $40 million in the third quarter of 2017.
-
The general and administrative expense ratio increased in the quarter
largely attributable to higher performance related compensation costs
and general and administrative expenses associated with the
acquisition of Novae, partially offset by benefits related to
arrangements with strategic capital partners.
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
($ in thousands)
|
|
|
|
2018
|
|
2017
|
|
Change
|
|
Gross premiums written
|
|
|
|
$
|
2,860,471
|
|
|
$
|
2,499,164
|
|
|
14.5
|
%
|
|
Net premiums written
|
|
|
|
2,158,122
|
|
|
2,037,719
|
|
|
5.9
|
%
|
|
Net premiums earned
|
|
|
|
1,804,900
|
|
|
1,706,986
|
|
|
5.7
|
%
|
|
Underwriting income (loss)
|
|
|
|
204,280
|
|
|
(160,025
|
)
|
|
nm
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting ratios:
|
|
|
|
|
|
|
|
|
|
Current accident year loss ratio excluding catastrophe and
weather-related losses
|
|
|
|
63.5
|
%
|
|
66.3
|
%
|
|
(2.8
|
)
|
|
Catastrophe and weather-related losses ratio
|
|
|
|
2.8
|
%
|
|
19.4
|
%
|
|
(16.6
|
)
|
|
Current accident year loss ratio
|
|
|
|
66.3
|
%
|
|
85.7
|
%
|
|
(19.4
|
)
|
|
Prior period reserve development
|
|
|
|
(5.5
|
%)
|
|
(6.4
|
%)
|
|
0.9
|
|
|
Net loss and loss expense ratio
|
|
|
|
60.8
|
%
|
|
79.3
|
%
|
|
(18.5
|
)
|
|
Acquisition cost ratio
|
|
|
|
23.2
|
%
|
|
24.2
|
%
|
|
(1.0
|
)
|
|
Underwriting-related general and administrative expense ratio
|
|
|
|
5.5
|
%
|
|
5.6
|
%
|
|
(0.1
|
)
|
|
Combined ratio
|
|
|
|
89.5
|
%
|
|
109.1
|
%
|
|
(19.6
|
)
|
nm - not meaningful
-
Gross premiums written increased by $361 million, or 14%, which
included gross premiums written of $93 million attributable to
catastrophe, marine and aviation lines associated with the acquisition
of Novae. In addition, gross premiums written increased by $268
million, or 11% (7% on a constant currency basis), attributable to
credit and surety, motor, accident and health, and professional lines,
partially offset by a decrease in marine lines. The increase in credit
and surety lines was largely due to timing differences, together with
the favorable impact of foreign exchange rate movements, favorable
premiums adjustments and new business. The increase in motor was
attributable to timing differences, rate increases particularly in
U.K. motor business following the reduction in the Ogden Rate during
the first quarter of 2017, together with new business. The increase in
accident and health, and professional lines was driven by new
business. These increases were partially offset by a decrease in
marine lines due to the non-renewal of a large treaty.
-
Net premiums written increased by $120 million, or 6%. Excluding the
impact of the acquisition of Novae, net premiums written increased by
3% (decrease of 1% on a constant currency basis) reflecting the
increase in gross premiums written, partially offset by an increase in
premiums ceded in accident and health, catastrophe, credit and surety,
and liability lines.
-
Underwriting income increased in the nine months ended September 30,
2018 principally associated with an increase in net premiums earned, a
decrease in catastrophe and weather-related losses, a decrease in the
current accident year loss ratio excluding catastrophe and
weather-related losses, and a decrease in the acquisition cost ratio.
-
Underwriting income included the recognition of premium attributable
to Novae's balance sheet at October 2, 2017, without the recognition
of the associated acquisition costs, which were written off at the
closing date. The absence of $4 million of acquisition expense related
to premiums earned in the period benefited our acquisition cost ratio
by 0.3 points.
Investments
Net investment income of $114 million for the quarter was comparable to
$95 million in third quarter of 2017, and $110 million in second quarter
of 2018. Net realized and unrealized investment losses recognized in net
income for the quarter were $18 million, compared to net realized
investment gains of $15 million in the third quarter of 2017, and net
realized and unrealized investment losses of $45 million in the second
quarter of 2018.
Pre-tax total return on cash and investments5 was 0.6%
including foreign exchange movements (0.7% excluding foreign exchange
movements6). The prior year period pre-tax total return was
1.1% including foreign exchange movements (0.9% excluding foreign
exchange movements). The Company's fixed income portfolio book yield at
September 30, 2018 was 2.9%, while the market yield was 3.5%.
Capitalization / Shareholders' Equity
Total capital7 at September 30, 2018 was $6.6 billion,
including $1.4 billion of senior notes and notes payable and $775
million of preferred equity, compared to $6.7 billion at December 31,
2017. The decrease in total capital is attributable to an increase in
net unrealized investment losses reported in other comprehensive income,
following a decrease in the market value of our fixed income portfolio,
and common share dividends declared. These decreases were partially
offset by the net income generated in the nine months ended
September 30, 2018.
Diluted Book Value per Common Share, calculated on a treasury stock
basis, increased by $0.23 in the current quarter and decreased by $2.63
over the past twelve months, to $52.70. The increase in the quarter was
primarily driven by net income generated in the quarter. The decrease
over the past twelve months was driven by net unrealized investment
losses reported in other comprehensive income and common share dividends
declared, partially offset by net income generated during the period
During the third quarter of 2018, the Company declared dividends of
$0.39 per common share, with total dividends declared of $1.56 per
common share over the past twelve months. Adjusted for dividends
declared, the diluted book value per common share increased by $0.62, or
1%, compared to June 30, 2018 and decreased by $1.07 or 2%, over the
past twelve months.
|
|
|
5 Pre-tax total return on cash and investments includes
net investment income (loss), net investment gains (losses),
interest in income (loss) of equity method investments and change
in unrealized investment gains (losses) generated by average cash
and investment balances. Total cash and invested assets represents
the total cash, fixed maturity securities, equity securities,
mortgage loans, other investments, equity method investments,
short-term investments, accrued interest receivable and net
receivable (payable) for investments sold (purchased).
|
|
6 Pre-tax total return on cash and investments
excluding foreign exchange movements is a non-GAAP financial
measure as defined in SEC Regulation G. The reconciliation to
pre-tax total return on cash and investments, the most comparable
GAAP financial measure, also included foreign exchange gains
(losses) of $(10)m and $22m for the three months ended September
30, 2018 and 2017, respectively.
|
|
7 Total capital represents the sum of total shareholders'
equity, senior notes and notes payable.
|
|
|
Conference Call
We will host a conference call on Thursday, October 25, 2018 at 9:30
a.m. (Eastern) to discuss the third quarter financial results and
related matters. The teleconference can be accessed by dialing (888)
317-6003 (U.S. callers) or (412) 317-6061 (international callers)
approximately ten minutes in advance of the call and entering the
passcode 7478137. A live, listen-only webcast of the call will also be
available via the Investor Information section of our website at www.axiscapital.com.
A replay of the teleconference will be available for two weeks by
dialing (877) 344-7529 (U.S. callers) or (412) 317-0088 (international
callers) and entering the passcode 10125053. The webcast will be
archived in the Investor Information section of our website.
In addition, a financial supplement relating to our financial results
for the quarter ended September 30, 2018 is available in the Investor
Information section of the Company's website.
About AXIS Capital
AXIS Capital is a global provider of specialty lines insurance and
treaty reinsurance with shareholders' equity at September 30, 2018 of
$5.3 billion and locations in Bermuda, the United States, Europe,
Singapore, Middle East, Canada, and Latin America. Its operating
subsidiaries have been assigned a rating of "A+" ("Strong") by Standard
& Poor's and "A+" ("Superior") by A.M. Best. For more information about
AXIS Capital, visit our website at www.axiscapital.com.
Website and Social Media Disclosure
We use our website (www.axiscapital.com)
and our corporate Twitter (@AXIS_Capital) and LinkedIn (AXIS Capital)
accounts as channels of distribution of Company information. The
information we post through these channels may be deemed material.
Accordingly, investors should monitor these channels, in addition to
following our press releases, SEC filings and public conference calls
and webcasts. In addition, you may automatically receive e-mail alerts
and other information about AXIS when you enroll your e-mail address by
visiting the "E-mail Alerts" in the Investor Information section of our
website (www.axiscapital.com).
The contents of our website and social media channels are not, however,
a part of this press release.
Please be sure to follow AXIS Capital on LinkedIn.
LinkedIn: http://bit.ly/2kRYbZ5
|
|
|
AXIS CAPITAL HOLDINGS LIMITED
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2018 (UNAUDITED) AND DECEMBER 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
(in thousands)
|
|
Assets
|
|
|
|
|
|
|
|
Investments:
|
|
|
|
|
|
Fixed maturities, available for sale, at fair value
|
|
|
|
$
|
11,767,697
|
|
|
$
|
12,622,006
|
|
|
Equity securities, at fair value
|
|
|
|
433,311
|
|
|
635,511
|
|
|
Mortgage loans, held for investment, at amortized cost and fair value
|
|
|
|
333,018
|
|
|
325,062
|
|
|
Other investments, at fair value
|
|
|
|
833,563
|
|
|
1,009,373
|
|
|
Equity method investments
|
|
|
|
112,155
|
|
|
108,597
|
|
|
Short-term investments, at amortized cost and fair value
|
|
|
|
156,090
|
|
|
83,661
|
|
|
Total investments
|
|
|
|
13,635,834
|
|
|
14,784,210
|
|
|
Cash and cash equivalents
|
|
|
|
1,053,604
|
|
|
948,626
|
|
|
Restricted cash and cash equivalents
|
|
|
|
698,798
|
|
|
415,160
|
|
|
Accrued interest receivable
|
|
|
|
76,000
|
|
|
81,223
|
|
|
Insurance and reinsurance premium balances receivable
|
|
|
|
3,463,360
|
|
|
3,012,419
|
|
|
Reinsurance recoverable on unpaid and paid losses
|
|
|
|
3,439,080
|
|
|
3,338,840
|
|
|
Deferred acquisition costs
|
|
|
|
682,785
|
|
|
474,061
|
|
|
Prepaid reinsurance premiums
|
|
|
|
1,114,039
|
|
|
809,274
|
|
|
Receivable for investments sold
|
|
|
|
2,140
|
|
|
11,621
|
|
|
Goodwill
|
|
|
|
102,003
|
|
|
102,003
|
|
|
Intangible assets
|
|
|
|
247,927
|
|
|
257,987
|
|
|
Value of business acquired
|
|
|
|
58,511
|
|
|
206,838
|
|
|
Other assets
|
|
|
|
268,945
|
|
|
317,915
|
|
|
|
Total assets
|
|
|
|
|
|
$
|
24,843,026
|
|
|
$
|
24,760,177
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
Reserve for losses and loss expenses
|
|
|
|
$
|
12,025,947
|
|
|
$
|
12,997,553
|
|
|
Unearned premiums
|
|
|
|
4,242,108
|
|
|
3,641,399
|
|
|
Insurance and reinsurance balances payable
|
|
|
|
1,301,580
|
|
|
899,064
|
|
|
Senior notes and notes payable
|
|
|
|
1,377,582
|
|
|
1,376,529
|
|
|
Payable for investments purchased
|
|
|
|
220,183
|
|
|
100,589
|
|
|
Other liabilities
|
|
|
|
403,354
|
|
|
403,779
|
|
|
|
Total liabilities
|
|
|
|
|
|
19,570,754
|
|
|
19,418,913
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity
|
|
|
|
|
|
|
|
|
Preferred shares
|
|
|
|
775,000
|
|
|
775,000
|
|
|
Common shares
|
|
|
|
2,206
|
|
|
2,206
|
|
|
Additional paid-in capital
|
|
|
|
2,304,107
|
|
|
2,299,166
|
|
|
Accumulated other comprehensive income (loss)
|
|
|
|
(162,312
|
)
|
|
92,382
|
|
|
Retained earnings
|
|
|
|
6,145,482
|
|
|
5,979,666
|
|
|
Treasury shares, at cost
|
|
|
|
(3,792,211
|
)
|
|
(3,807,156
|
)
|
|
|
Total shareholders' equity
|
|
|
|
5,272,272
|
|
|
5,341,264
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders' equity
|
|
|
|
$
|
24,843,026
|
|
|
$
|
24,760,177
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AXIS CAPITAL HOLDINGS LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
Nine months ended
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands, except per share amounts)
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Net premiums earned
|
|
|
|
$
|
1,224,075
|
|
|
$
|
1,017,131
|
|
|
$
|
3,577,026
|
|
|
$
|
2,937,265
|
|
|
|
Net investment income
|
|
|
|
114,421
|
|
|
95,169
|
|
|
325,380
|
|
|
299,899
|
|
|
|
Net investment gains (losses)
|
|
|
|
(17,628
|
)
|
|
14,632
|
|
|
(77,551
|
)
|
|
(14,811
|
)
|
|
|
Other insurance related income (losses)
|
|
|
|
8,475
|
|
|
(3,197
|
)
|
|
18,811
|
|
|
(4,420
|
)
|
|
|
Bargain purchase gain
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,044
|
|
|
|
Total revenues
|
|
|
|
|
1,329,343
|
|
|
1,123,735
|
|
|
3,843,666
|
|
|
3,232,977
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Net losses and loss expenses
|
|
|
|
794,959
|
|
|
1,235,367
|
|
|
2,162,945
|
|
|
2,447,640
|
|
|
|
Acquisition costs
|
|
|
|
248,314
|
|
|
194,724
|
|
|
709,527
|
|
|
588,879
|
|
|
|
General and administrative expenses
|
|
|
|
154,894
|
|
|
124,629
|
|
|
489,944
|
|
|
433,704
|
|
|
|
Foreign exchange losses
|
|
|
|
8,305
|
|
|
32,510
|
|
|
2,066
|
|
|
90,093
|
|
|
|
Interest expense and financing costs
|
|
|
|
16,897
|
|
|
12,835
|
|
|
50,758
|
|
|
38,377
|
|
|
|
Transaction and reorganization expenses
|
|
|
|
16,300
|
|
|
5,970
|
|
|
48,125
|
|
|
5,970
|
|
|
|
Amortization of value of business acquired
|
|
|
|
39,018
|
|
|
—
|
|
|
149,535
|
|
|
—
|
|
|
|
Amortization of intangible assets
|
|
|
|
1,753
|
|
|
—
|
|
|
8,564
|
|
|
—
|
|
|
|
Total expenses
|
|
|
|
|
1,280,440
|
|
|
1,606,035
|
|
|
3,621,464
|
|
|
3,604,663
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes and interest in income (loss)
of equity method investments
|
|
|
|
48,903
|
|
|
(482,300
|
)
|
|
222,202
|
|
|
(371,686
|
)
|
|
|
Income tax benefit
|
|
|
|
3,525
|
|
|
25,877
|
|
|
3,565
|
|
|
38,547
|
|
|
|
Interest in income (loss) of equity method investments
|
|
|
|
1,667
|
|
|
(661
|
)
|
|
5,045
|
|
|
(8,402
|
)
|
|
Net income (loss)
|
|
|
|
54,095
|
|
|
(457,084
|
)
|
|
230,812
|
|
|
(341,541
|
)
|
|
|
Preferred share dividends
|
|
|
|
10,656
|
|
|
10,656
|
|
|
31,969
|
|
|
36,154
|
|
|
Net income (loss) available (attributable) to common shareholders
|
|
|
|
$
|
43,439
|
|
|
$
|
(467,740
|
)
|
|
$
|
198,843
|
|
|
$
|
(377,695
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share data
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share:
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income (loss)
|
|
|
|
$
|
0.52
|
|
|
$
|
(5.61
|
)
|
|
$
|
2.38
|
|
|
$
|
(4.47
|
)
|
|
Diluted net income (loss)
|
|
|
|
$
|
0.52
|
|
|
$
|
(5.61
|
)
|
|
$
|
2.37
|
|
|
$
|
(4.47
|
)
|
|
Weighted average number of common shares outstanding - basic
|
|
|
|
83,558
|
|
|
83,305
|
|
|
83,474
|
|
|
84,479
|
|
|
Weighted average number of common shares outstanding - diluted
|
|
|
|
84,107
|
|
|
83,305
|
|
|
83,939
|
|
|
84,479
|
|
|
Cash dividends declared per common share
|
|
|
|
$
|
0.39
|
|
|
$
|
0.38
|
|
|
$
|
1.17
|
|
|
$
|
1.14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AXIS CAPITAL HOLDINGS LIMITED
CONSOLIDATED SEGMENTAL DATA (UNAUDITED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
|
|
|
|
Insurance
|
|
Reinsurance
|
|
Total
|
|
Insurance
|
|
Reinsurance
|
|
Total
|
|
|
|
|
|
(in thousands)
|
|
Gross premiums written
|
|
|
|
$
|
969,364
|
|
|
$
|
454,343
|
|
|
$
|
1,423,707
|
|
|
$
|
651,145
|
|
|
$
|
534,429
|
|
|
$
|
1,185,574
|
|
|
Net premiums written
|
|
|
|
602,070
|
|
|
317,868
|
|
|
919,938
|
|
|
407,054
|
|
|
425,689
|
|
|
832,743
|
|
|
Net premiums earned
|
|
|
|
614,795
|
|
|
609,280
|
|
|
1,224,075
|
|
|
420,775
|
|
|
596,356
|
|
|
1,017,131
|
|
|
Other insurance related income (losses)
|
|
|
|
1,526
|
|
|
6,949
|
|
|
8,475
|
|
|
302
|
|
|
(3,499
|
)
|
|
(3,197
|
)
|
|
Net losses and loss expenses
|
|
|
|
(415,488
|
)
|
|
(379,471
|
)
|
|
(794,959
|
)
|
|
(576,688
|
)
|
|
(658,679
|
)
|
|
(1,235,367
|
)
|
|
Acquisition costs
|
|
|
|
(111,888
|
)
|
|
(136,426
|
)
|
|
(248,314
|
)
|
|
(61,541
|
)
|
|
(133,183
|
)
|
|
(194,724
|
)
|
|
Underwriting-related general and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
administrative expenses(8)
|
|
|
|
(100,656
|
)
|
|
(29,595
|
)
|
|
(130,251
|
)
|
|
(71,007
|
)
|
|
(25,689
|
)
|
|
(96,696
|
)
|
|
Underwriting income (loss) (9)
|
|
|
|
$
|
(11,711
|
)
|
|
$
|
70,737
|
|
|
59,026
|
|
|
$
|
(288,159
|
)
|
|
$
|
(224,694
|
)
|
|
(512,853
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate expenses(8)
|
|
|
|
|
|
|
|
(24,643
|
)
|
|
|
|
|
|
(27,933
|
)
|
|
Net investment income
|
|
|
|
|
|
|
|
114,421
|
|
|
|
|
|
|
95,169
|
|
|
Net investment gains (losses)
|
|
|
|
|
|
|
|
(17,628
|
)
|
|
|
|
|
|
14,632
|
|
|
Foreign exchange losses
|
|
|
|
|
|
|
|
(8,305
|
)
|
|
|
|
|
|
(32,510
|
)
|
|
Interest expense and financing costs
|
|
|
|
|
|
|
|
(16,897
|
)
|
|
|
|
|
|
(12,835
|
)
|
|
Transaction and reorganization expenses
|
|
|
|
|
|
|
|
(16,300
|
)
|
|
|
|
|
|
(5,970
|
)
|
|
Amortization of value of business acquired
|
|
|
|
|
|
|
|
(39,018
|
)
|
|
|
|
|
|
—
|
|
|
Amortization of intangible assets
|
|
|
|
|
|
|
|
(1,753
|
)
|
|
|
|
|
|
—
|
|
|
Income (loss) before income taxes and interest in income (loss)
of equity method investments
|
|
|
|
|
|
|
|
$
|
48,903
|
|
|
|
|
|
|
$
|
(482,300
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss and loss expense ratio
|
|
|
|
67.6
|
%
|
|
62.3
|
%
|
|
64.9
|
%
|
|
137.1
|
%
|
|
110.5
|
%
|
|
121.5
|
%
|
|
Acquisition cost ratio
|
|
|
|
18.2
|
%
|
|
22.4
|
%
|
|
20.3
|
%
|
|
14.6
|
%
|
|
22.3
|
%
|
|
19.1
|
%
|
|
General and administrative
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
expense ratio
|
|
|
|
16.4
|
%
|
|
4.8
|
%
|
|
12.7
|
%
|
|
16.9
|
%
|
|
4.3
|
%
|
|
12.3
|
%
|
|
Combined ratio
|
|
|
|
102.2
|
%
|
|
89.5
|
%
|
|
97.9
|
%
|
|
168.6
|
%
|
|
137.1
|
%
|
|
152.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8Underwriting-related general and administrative expenses
is a non-GAAP financial measure as defined in SEC Regulation G. The
reconciliation to total general and administrative expenses, the
most comparable GAAP financial measure, also included corporate
expenses of $25 million and $28 million for the three months ended
September 30, 2018 and 2017, respectively. Underwriting-related
general and administrative expenses and corporate expenses are
included in the general and administrative expense ratio.
|
|
9Consolidated underwriting income (loss) is a non-GAAP
financial measure as defined in SEC Regulation G. The reconciliation
to income (loss) before income taxes and interest in income (loss)
of equity method investments, the most comparable GAAP measure, is
presented above.
|
|
|
During the three months ended March 31, 2018, the Company realigned its
accident and health business by integrating this business and its
operations into the Company's insurance and reinsurance segments.
Financial results relating to this business were previously included in
the results of the insurance segment. As a result of the realignment,
accident and health results are included in the results of both the
insurance and reinsurance segments, with effect from January 1, 2018.
The results are inclusive of underwriting-related general and
administrative expenses attributable to accident and health business. In
addition, to facilitate comparison of information across periods,
certain reclassifications have been made to prior year amounts to
conform to the current year's presentation. These reclassifications did
not impact results of operations, financial condition or liquidity.
|
|
|
AXIS CAPITAL HOLDINGS LIMITED
CONSOLIDATED SEGMENTAL DATA (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
|
|
|
|
Insurance
|
|
Reinsurance
|
|
Total
|
|
Insurance
|
|
Reinsurance
|
|
Total
|
|
|
|
|
|
(in thousands)
|
|
Gross premiums written
|
|
|
|
$
|
2,876,856
|
|
|
$
|
2,860,471
|
|
|
$
|
5,737,327
|
|
|
$
|
1,960,608
|
|
|
$
|
2,499,164
|
|
|
$
|
4,459,772
|
|
|
Net premiums written
|
|
|
|
1,748,142
|
|
|
2,158,122
|
|
|
3,906,264
|
|
|
1,259,999
|
|
|
2,037,719
|
|
|
3,297,718
|
|
|
Net premiums earned
|
|
|
|
1,772,126
|
|
|
1,804,900
|
|
|
3,577,026
|
|
|
1,230,279
|
|
|
1,706,986
|
|
|
2,937,265
|
|
|
Other insurance related income (losses)
|
|
|
|
3,359
|
|
|
15,452
|
|
|
18,811
|
|
|
853
|
|
|
(5,273
|
)
|
|
(4,420
|
)
|
|
Net losses and loss expenses
|
|
|
|
(1,065,799
|
)
|
|
(1,097,146
|
)
|
|
(2,162,945
|
)
|
|
(1,093,237
|
)
|
|
(1,354,403
|
)
|
|
(2,447,640
|
)
|
|
Acquisition costs
|
|
|
|
(290,082
|
)
|
|
(419,445
|
)
|
|
(709,527
|
)
|
|
(177,937
|
)
|
|
(410,942
|
)
|
|
(588,879
|
)
|
|
Underwriting-related general and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
administrative expenses(10)
|
|
|
|
(305,394
|
)
|
|
(99,481
|
)
|
|
(404,875
|
)
|
|
(239,389
|
)
|
|
(96,393
|
)
|
|
(335,782
|
)
|
|
Underwriting income (loss)(11)
|
|
|
|
$
|
114,210
|
|
|
$
|
204,280
|
|
|
318,490
|
|
|
$
|
(279,431
|
)
|
|
$
|
(160,025
|
)
|
|
(439,456
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate expenses(10)
|
|
|
|
|
|
|
|
(85,069
|
)
|
|
|
|
|
|
(97,922
|
)
|
|
Net investment income
|
|
|
|
|
|
|
|
325,380
|
|
|
|
|
|
|
299,899
|
|
|
Net investment losses
|
|
|
|
|
|
|
|
(77,551
|
)
|
|
|
|
|
|
(14,811
|
)
|
|
Foreign exchange losses
|
|
|
|
|
|
|
|
(2,066
|
)
|
|
|
|
|
|
(90,093
|
)
|
|
Interest expense and financing costs
|
|
|
|
|
|
|
|
(50,758
|
)
|
|
|
|
|
|
(38,377
|
)
|
|
Bargain purchase gain
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
15,044
|
|
|
Transaction and reorganization expenses
|
|
|
|
|
|
|
|
(48,125
|
)
|
|
|
|
|
|
(5,970
|
)
|
|
Amortization of value of business acquired
|
|
|
|
|
|
|
|
(149,535
|
)
|
|
|
|
|
|
—
|
|
|
Amortization of intangible assets
|
|
|
|
|
|
|
|
(8,564
|
)
|
|
|
|
|
|
—
|
|
|
Income (loss) before income taxes and interest in income (loss)
of equity method investments
|
|
|
|
|
|
|
|
$
|
222,202
|
|
|
|
|
|
|
$
|
(371,686
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss and loss expense ratio
|
|
|
|
60.1
|
%
|
|
60.8
|
%
|
|
60.5
|
%
|
|
88.9
|
%
|
|
79.3
|
%
|
|
83.3
|
%
|
|
Acquisition cost ratio
|
|
|
|
16.4
|
%
|
|
23.2
|
%
|
|
19.8
|
%
|
|
14.4
|
%
|
|
24.2
|
%
|
|
20.0
|
%
|
|
General and administrative
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
expense ratio
|
|
|
|
17.2
|
%
|
|
5.5
|
%
|
|
13.7
|
%
|
|
19.5
|
%
|
|
5.6
|
%
|
|
14.8
|
%
|
|
Combined ratio
|
|
|
|
93.7
|
%
|
|
89.5
|
%
|
|
94.0
|
%
|
|
122.8
|
%
|
|
109.1
|
%
|
|
118.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10Underwriting-related general and administrative
expenses is a non-GAAP financial measure as defined in SEC
Regulation G. The reconciliation to total general and administrative
expenses, the most comparable GAAP financial measure, also included
corporate expenses of $85 million and $98 million for the nine
months ended September 30, 2018 and 2017, respectively.
Underwriting-related general and administrative expenses and
corporate expenses are included in the general and administrative
expense ratio.
|
|
11Consolidated underwriting income (loss) is a non-GAAP
financial measure as defined in SEC Regulation G. The reconciliation
to income (loss) before income taxes and interest in income (loss)
of equity method investments, the most comparable GAAP measure, is
presented above.
|
|
|
|
|
|
AXIS CAPITAL HOLDINGS LIMITED
NON-GAAP FINANCIAL MEASURES RECONCILIATION (UNAUDITED)
OPERATING INCOME AND OPERATING RETURN ON AVERAGE COMMON EQUITY
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
Nine months ended
|
|
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
(in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) available (attributable) to common shareholders
|
|
|
|
$
|
43,439
|
|
|
$
|
(467,740
|
)
|
|
$
|
198,843
|
|
|
$
|
(377,695
|
)
|
|
Net investment losses (gains), net of tax(12)
|
|
|
|
17,005
|
|
|
(11,975
|
)
|
|
73,540
|
|
|
16,703
|
|
|
Foreign exchange losses (gains), net of tax(13)
|
|
|
|
6,435
|
|
|
28,071
|
|
|
(3,358
|
)
|
|
85,851
|
|
|
Transaction and reorganization expenses, net of tax(14)
|
|
|
|
13,911
|
|
|
5,749
|
|
|
40,709
|
|
|
5,749
|
|
|
Bargain purchase gain(15)
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15,044
|
)
|
|
Operating income (loss)
|
|
|
|
$
|
80,790
|
|
|
$
|
(445,895
|
)
|
|
$
|
309,734
|
|
|
$
|
(284,436
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per diluted common share
|
|
|
|
$
|
0.52
|
|
|
$
|
(5.61
|
)
|
|
$
|
2.37
|
|
|
$
|
(4.47
|
)
|
|
Net investment losses (gains), net of tax
|
|
|
|
0.21
|
|
|
$
|
(0.15
|
)
|
|
0.89
|
|
|
0.20
|
|
|
Foreign exchange losses (gains), net of tax
|
|
|
|
0.08
|
|
|
0.34
|
|
|
(0.04
|
)
|
|
1.01
|
|
|
Transaction and reorganization expenses, net of tax
|
|
|
|
0.17
|
|
|
0.07
|
|
|
0.49
|
|
|
0.07
|
|
|
Bargain purchase gain
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.18
|
)
|
|
Operating income (loss) per diluted common share
|
|
|
|
$
|
0.96
|
|
|
$
|
(5.35
|
)
|
|
$
|
3.69
|
|
|
$
|
(3.37
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding - diluted
|
|
|
|
84,107
|
|
|
83,305
|
|
|
83,939
|
|
|
84,479
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average common shareholders' equity
|
|
|
|
4,487,639
|
|
|
4,898,698
|
|
|
4,531,768
|
|
|
4,912,998
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized return on average common equity
|
|
|
|
3.9
|
%
|
|
nm
|
|
5.9
|
%
|
|
(10.3
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized operating return on average common equity(16)
|
|
|
|
7.2
|
%
|
|
nm
|
|
9.1
|
%
|
|
(7.7
|
)%
|
nm - not meaningful
|
12Tax cost (benefit) of ($623) and $2,657 for the three
months ended September 30, 2018 and 2017, respectively, and $(4,011)
and $1,892 for the nine months ended September 30, 2018 and 2017,
respectively. Tax impact is estimated by applying the statutory
rates of applicable jurisdictions, after consideration of other
relevant factors including the ability to utilize capital losses.
|
|
13Tax cost (benefit) of ($1,870) and ($4,439) for the
three months ended September 30, 2018 and 2017, respectively, and
$(5,424) and $(4,242) for the nine months ended September 30, 2018
and 2017, respectively. Tax impact is estimated by applying the
statutory rates of applicable jurisdictions, after consideration of
other relevant factors including the tax status of specific foreign
exchange transactions.
|
|
14Tax cost (benefit) of $(2,389) and $(221) for the three
months ended September 30, 2018 and 2017, respectively, and $(7,416)
and $(221) for the nine months ended September 30, 2018 and 2017,
respectively. Tax impact is estimated by applying the statutory
rates of applicable jurisdictions.
|
|
15Tax impact is nil.
|
|
16Annualized operating return on average common equity is
a non-GAAP financial measure as defined in SEC Regulation G. The
reconciliation to the most comparable GAAP financial measure
annualized return on average common equity is provided in the table
above, and a discussion of the rationale for the presentation of
these items is included later in this release.
|
|
|
|
|
|
AXIS CAPITAL HOLDINGS LIMITED
NON-GAAP FINANCIAL MEASURES RECONCILIATION (UNAUDITED)
EX-PGAAP OPERATING INCOME AND EX-PGAAP OPERATING RETURN ON
AVERAGE COMMON EQUITY
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
Nine months ended
|
|
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
(in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) available (attributable) to common shareholders
|
|
|
|
$
|
43,439
|
|
|
$
|
(467,740
|
)
|
|
$
|
198,843
|
|
|
$
|
(377,695
|
)
|
|
Net investment losses (gains), net of tax(12)
|
|
|
|
17,005
|
|
|
(11,975
|
)
|
|
73,540
|
|
|
16,703
|
|
|
Foreign exchange losses (gains), net of tax(13)
|
|
|
|
6,435
|
|
|
28,071
|
|
|
(3,358
|
)
|
|
85,851
|
|
|
Transaction and reorganization expenses, net of tax(14)
|
|
|
|
13,911
|
|
|
5,749
|
|
|
40,709
|
|
|
5,749
|
|
|
Bargain purchase gain(15)
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15,044
|
)
|
|
Operating income (loss)
|
|
|
|
$
|
80,790
|
|
|
$
|
(445,895
|
)
|
|
$
|
309,734
|
|
|
$
|
(284,436
|
)
|
|
Amortization of VOBA and intangible assets, net of tax(17)
|
|
|
|
32,938
|
|
|
—
|
|
|
127,075
|
|
|
—
|
|
|
Amortization of acquisition costs, net of tax(18)
|
|
|
|
(23,769
|
)
|
|
—
|
|
|
(88,642
|
)
|
|
—
|
|
|
Ex-PGAAP operating income (loss) (2)
|
|
|
|
$
|
89,959
|
|
|
$
|
(445,895
|
)
|
|
$
|
348,167
|
|
|
$
|
(284,436
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per diluted common share
|
|
|
|
$
|
0.52
|
|
|
$
|
(5.61
|
)
|
|
$
|
2.37
|
|
|
$
|
(4.47
|
)
|
|
Net investment losses (gains), net of tax
|
|
|
|
0.21
|
|
|
(0.15
|
)
|
|
0.89
|
|
|
0.20
|
|
|
Foreign exchange losses (gains), net of tax
|
|
|
|
0.08
|
|
|
0.34
|
|
|
(0.04
|
)
|
|
1.01
|
|
|
Transaction and reorganization expenses, net of tax
|
|
|
|
0.17
|
|
|
0.07
|
|
|
0.49
|
|
|
0.07
|
|
|
Bargain purchase gain
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.18
|
)
|
|
Operating income (loss) per diluted common share
|
|
|
|
$
|
0.96
|
|
|
$
|
(5.35
|
)
|
|
$
|
3.69
|
|
|
$
|
(3.37
|
)
|
|
Amortization of VOBA and intangible assets, net of tax(17)
|
|
|
|
0.39
|
|
|
—
|
|
|
1.52
|
|
|
—
|
|
|
Amortization of acquisition cost, net of tax(18)
|
|
|
|
(0.28
|
)
|
|
—
|
|
|
(1.06
|
)
|
|
—
|
|
|
Ex-PGAAP operating income (loss) per diluted common share(2)
|
|
|
|
$
|
1.07
|
|
|
$
|
(5.35
|
)
|
|
$
|
4.15
|
|
|
$
|
(3.37
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average diluted common shares outstanding
|
|
|
|
84,107
|
|
|
83,305
|
|
|
83,939
|
|
|
84,479
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average common shareholders' equity
|
|
|
|
4,487,639
|
|
|
4,898,698
|
|
|
4,531,768
|
|
|
4,912,998
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized return on average common equity
|
|
|
|
3.9
|
%
|
|
nm
|
|
5.9
|
%
|
|
(10.3
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized operating return on average common equity(16)
|
|
|
|
7.2
|
%
|
|
nm
|
|
9.1
|
%
|
|
(7.7
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized ex-PGAAP operating return on average common equity(2)
|
|
|
|
8.0
|
%
|
|
nm
|
|
10.2
|
%
|
|
nm
|
nm - not meaningful
|
17Tax cost (benefit) of $(7,726) and $(29,808) for the
three and nine months ended September 30, 2018, respectively. Tax
impact is estimated by applying the statutory rates of applicable
jurisdictions.
|
|
18Tax cost (benefit) of $5,575 and $20,793 for the three
and nine months ended September 30, 2018, respectively. Tax impact
is estimated by applying the statutory rates of applicable
jurisdictions.
|
|
|
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within the
meaning of the U.S. federal securities laws. Forward-looking statements
contained in this release include our expectations regarding market
conditions and information regarding our estimates of losses related to
natural disasters on our results of operations. These statements involve
risks, uncertainties and assumptions. Actual events or results may
differ materially from our expectations. Important factors that could
cause actual events or results to be materially different from our
expectations include (1) the cyclical nature of the re(insurance)
business leading to periods with excess underwriting capacity and
unfavorable premium rates, (2) the occurrence and magnitude of natural
and man-made disasters, (3) losses from war, terrorism and political
unrest or other unanticipated losses, (4) actual claims exceeding our
loss reserves, (5) general economic, capital and credit market
conditions, (6) the failure of any of the loss limitation methods we
employ, (7) the effects of emerging claims, coverage and regulatory
issues, including uncertainty related to coverage definitions, limits,
terms and conditions, (8) our inability to purchase reinsurance or
collect amounts due to us, (9) the breach by third parties in our
program business of their obligations to us, (10) difficulties with
technology and/or data security, (11) the failure of our policyholders
and intermediaries to pay premiums, (12) the failure of our cedants to
adequately evaluate risks, (13) inability to obtain additional capital
on favorable terms, or at all, (14) the loss of one or more key
executives, (15) a decline in our ratings with rating agencies, (16) the
loss of business provided to us by our major brokers and credit risk due
to our reliance on brokers, (17) changes in accounting policies or
practices, (18) the use of industry catastrophe models and changes to
these models, (19) changes in governmental regulations and potential
government intervention in our industry, (20) failure to comply with
certain laws and regulations relating to sanctions and foreign corrupt
practices, (21) increased competition, (22) changes in the political
environment of certain countries in which we operate or underwrite
business including the United Kingdom's expected withdrawal from the
European Union, (23) fluctuations in interest rates, credit spreads,
equity prices and/or currency values, (24) the failure to successfully
integrate acquired businesses or realize the expected synergies
resulting from such acquisitions, (25) the failure to realize the
expected benefits or synergies relating to the Company's transformation
program (26) changes in tax laws, and (27) the other factors set forth
in our most recent Annual Report on Form 10-K filed with the Securities
and Exchange Commission ("SEC"), as such factors may be updated from
time to time in our periodic and other filings with the SEC, which are
accessible on the SEC's website at www.sec.gov.
We undertake no obligation to update or revise publicly any
forward-looking statements, whether as a result of new information,
future events or otherwise.
Non-GAAP Financial Measures
We present our results of operations in a way we believe will be most
meaningful and useful to investors, analysts, rating agencies and others
who use our financial information to evaluate our performance. Some of
the measurements we use are considered non-GAAP financial measures under
SEC rules and regulations. In this press release, we present
underwriting-related general and administrative expenses, consolidated
underwriting income (loss), operating income (loss) (in total and on
a per share basis), annualized operating return on average common
equity ("operating ROACE"), amounts presented on a constant currency
basis, ex-PGAAP operating income (loss) (in total and on a per share
basis) and ex-PGAAP operating ROACE which are non-GAAP financial
measures as defined in SEC Regulation G. We believe that these non-GAAP
financial measures, which may be defined and calculated differently by
other companies, better explain and enhance the understanding of our
results of operations. However, these measures should not be viewed as a
substitute for those determined in accordance with accounting principles
generally accepted in the United States of America ("U.S. GAAP").
Underwriting-Related General and Administrative
Expenses
Underwriting-related general and administrative expenses include those
general and administrative expenses that are incremental and/or directly
attributable to our individual underwriting operations. While this
measure is presented in the Segment Information note to our Consolidated
Financial Statements, it is considered a non-GAAP financial measure when
presented elsewhere on a consolidated basis.
Corporate expenses include holding company costs necessary to support
our worldwide insurance and reinsurance operations and costs associated
with operating as a publicly-traded company. As these expenses are not
incremental and/or directly attributable to our individual underwriting
operations, these expenses are excluded from underwriting-related
general and administrative expenses and, therefore, consolidated
underwriting income (loss). General and administrative expenses, the
most comparable GAAP financial measure to underwriting-related general
and administrative expenses, also includes corporate expenses.
The reconciliation of underwriting-related general and administrative
expenses to general and administrative expenses, the most comparable
GAAP financial measure, is presented in the Consolidated Segmental
Data section of this press release.
Consolidated Underwriting Income (Loss)
Consolidated underwriting income (loss) is a pre-tax measure of
underwriting profitability that takes into account net premiums earned
and other insurance related income (losses) as revenues and net losses
and loss expenses, acquisition costs and underwriting-related general
and administrative costs as expenses. While this measure is presented in
the Segment Information note to our Consolidated Financial Statements,
it is considered a non-GAAP financial measure when presented elsewhere
on a consolidated basis.
We evaluate our underwriting results separately from the performance of
our investment portfolio. As a result, we believe it is appropriate to
exclude net investment income and net investment gains (losses) from our
underwriting profitability measure.
Foreign exchange losses (gains) in our Consolidated Statement of
Operations primarily relate to the impact of foreign exchange rate
movements on our net insurance-related liabilities. However, we manage
our investment portfolio in such a way that unrealized and realized
foreign exchange losses (gains) on our investment portfolio generally
offset a large portion of the foreign exchange losses (gains) arising
from our underwriting portfolio. As a result, we believe that foreign
exchange losses (gains) are not a meaningful contributor to our
underwriting performance, therefore, foreign exchange losses (gains) are
excluded from consolidated underwriting income (loss).
Interest expense and financing costs primarily relate to interest
payable on our senior notes and notes payable. As these expenses are not
incremental and/or directly attributable to our individual underwriting
operations, these expenses are excluded from underwriting-related
general and administrative expenses, and, therefore, consolidated
underwriting income (loss).
Bargain purchase gain, recognized upon the acquisition of Aviabel,
reflects the excess of the fair value of the net identifiable assets
acquired over the fair value of consideration transferred and is not
indicative of future revenues of the company, therefore, this revenue is
excluded from consolidated underwriting income (loss).
Transaction and reorganization expenses are primarily driven by business
decisions, the nature and timing of which are not related to the
underwriting process, therefore, these expenses are excluded from
consolidated underwriting income (loss).
Amortization of intangible assets including VOBA arose from business
decisions, the nature and timing of which are not related to the
underwriting process, therefore, these expenses are excluded from
consolidated underwriting income (loss).
We believe that the presentation of underwriting-related general and
administrative expenses and consolidated underwriting income (loss)
provides investors with an enhanced understanding of our results of
operations, by highlighting the underlying pre-tax profitability of our
underwriting activities. The reconciliation of consolidated underwriting
income (loss) to income (loss) before income taxes and interest in
income (loss) of equity method investments, the most comparable GAAP
financial measure, is presented in the Consolidated Segmental Data
section of this press release.
Operating Income (Loss)
Operating income (loss) represents after-tax operational results
exclusive of after-tax net investment gains (losses), foreign exchange
losses (gains), transaction and reorganization expenses and bargain
purchase gain.
Although the investment of premiums to generate income and investment
gains (losses) is an integral part of our operations, the determination
to realize investment gains (losses) is independent of the underwriting
process and is heavily influenced by the availability of market
opportunities. Furthermore, many users believe that the timing of the
realization of investment gains (losses) is somewhat opportunistic for
many companies.
Foreign exchange losses (gains) in our Consolidated Statements of
Operations primarily relate to the impact of foreign exchange rate
movements on net insurance-related liabilities. However, this movement
is only one element of the overall impact of foreign exchange rate
fluctuations on our financial position. In addition, we recognize
unrealized foreign exchange losses (gains) on our available-for-sale
investments in other comprehensive income (loss) and foreign exchange
losses (gains) realized upon the sale of these investments in net
investment gains (losses). These unrealized and realized foreign
exchange losses (gains) generally offset a large portion of the foreign
exchange losses (gains) reported separately in net income (loss)
available (attributable) to common shareholders, thereby minimizing the
impact of foreign exchange rate movements on total shareholders' equity.
As a result, the foreign exchange losses (gains) in our Consolidated
Statement of Operations in isolation are not a fair representation of
the performance of our business.
Transaction and reorganization expenses are primarily driven by business
decisions, the nature and timing of which are not related to the
underwriting process, therefore, these expenses are excluded from
operating income (loss).
Bargain purchase gain, recognized upon the acquisition of Aviabel,
reflects the excess of the fair value of the net identifiable assets
acquired over the fair value of consideration transferred and is not
indicative of future revenues of the company, therefore, this revenue is
excluded from operating income (loss).
Certain users of our financial statements evaluate performance exclusive
of after-tax net investment gains (losses), foreign exchange losses
(gains), transaction and reorganization expenses and bargain purchase
gain to understand the profitability of recurring sources of income.
We believe that showing net income (loss) available (attributable) to
common shareholders exclusive of after-tax net investment gains
(losses), foreign exchange losses (gains), transaction and
reorganization expenses and bargain purchase gain reflects the
underlying fundamentals of our business. In addition, we believe that
this presentation enables investors and other users of our financial
information to analyze performance in a manner similar to how our
management analyzes the underlying business performance. We also believe
this measure follows industry practice and, therefore, facilitates
comparison of our performance with our peer group. We believe that
equity analysts and certain rating agencies that follow us, and the
insurance industry as a whole, generally exclude these items from their
analyses for the same reasons. The reconciliation of operating income
(loss) to net income (loss) available (attributable) to common
shareholders, the most comparable GAAP financial measure, is presented
in the Non-GAAP Financial Measures Reconciliation section of this
press release.
We also present operating income (loss) per diluted common share and
operating ROACE, which are derived from the operating income (loss)
measure and are reconciled to the most comparable GAAP financial
measures, diluted earnings per common share and annualized return on
average common equity ("ROACE"), respectively, in the Non-GAAP
Financial Measures Reconciliation of this press release.
Constant Currency Basis
We present gross premiums written and net premiums written on a constant
currency basis in this press release. The amounts presented on a
constant currency basis are calculated by applying the average foreign
exchange rate from the current year to the prior year amounts. We
believe this presentation enables investors and other users of our
financial information to analyze growth in gross premiums written and
net premiums written on a constant basis. The reconciliation to gross
premiums written and net premiums written on a GAAP basis is presented
in the Insurance Segment and Reinsurance Segment sections of this
press release.
Ex-PGAAP Operating Income (Loss)
Ex-PGAAP operating income (loss) represents operating income (loss)
exclusive of amortization of VOBA and intangible assets, net of tax and
amortization of acquisition costs, net of tax both associated with
Novae's balance sheet at October 2, 2017 (the "closing date" or the
"acquisition date"). We also present ex-PGAAP operating income per
diluted common share and annualized ex- PGAAP operating ROACE in this
press release, which are derived from the ex-PGAAP operating
income (loss) measure. The reconciliation of ex-PGAAP operating income
(loss) to net income (loss) available (attributable) to common
shareholders, the most comparable GAAP financial measure, is provided in
the Non-GAAP Financial Measures Reconciliation section in this
release.
The reconciliation of ex-PGAAP operating income per diluted common share
and ex-PGAAP operating ROACE to the most comparable GAAP financial
measures, diluted earnings per common share and annualized ROACE,
respectively, are also provided in the Non-GAAP Financial Measures
Reconciliation section of this press release.
We believe the presentation of ex-PGAAP operating income (loss),
ex-PGAAP operating income (loss) per diluted common share and ex-PGAAP
operating ROACE enables investors and other users of our financial
information to better analyze the performance of our business.
Acquisition of Novae
On October 2, 2017, AXIS Capital acquired Novae. The Company identified
VOBA which represents the present value of the expected underwriting
profit within policies that were in-force at the closing date of the
transaction. In addition, the allocation of the acquisition price to the
assets acquired and liabilities assumed of Novae based on estimated fair
values at the acquisition date, resulted in the write-off of the
deferred acquisition cost asset on Novae's balance sheet at the
acquisition date as the value of policies in-force on that date are
considered within VOBA. Consequently, underwriting income (loss) in the
three and nine months ended September 30, 2018 included the recognition
of premium attributable to Novae's balance sheet at the acquisition date
without the recognition of the associated acquisition costs.
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