AXIS Capital Reports Fourth Quarter 2018 Results
Business Wire 30-Jan-2019 4:15 PM
For the fourth quarter of 2018, the Company reports:
-
Net loss of $198 million, or $(2.37) per diluted common share and
Ex-PGAAP operating loss of $139 million, or $(1.66) per diluted common
share
-
Estimated pre-tax catastrophe and weather-related losses, net of
reinsurance and reinstatement premiums, of $269 million, or 22.5
points, compared to $133 million, or 11.2 points, in the prior year
-
Book value per diluted common share of $49.93
For the year ended 2018, the Company reports:
-
Net income of $0.4 million, and Ex-PGAAP operating income of $209
million, or $2.49 per diluted common share
-
Estimated pre-tax catastrophe and weather-related losses, net of
reinsurance and reinstatement premiums, of $430 million, or 9.0
points, compared to $835 million, or 20.4 points, in the prior year
AXIS Capital Holdings Limited ("AXIS Capital" or the "Company")
(NYSE:AXS) today reported net loss attributable to common shareholders
for the fourth quarter of 2018 of $198 million, or $(2.37) per diluted
common share, compared to net loss of $38 million, or $(0.46) per
diluted common share, for the fourth quarter of 2017. Net income
available to common shareholders for the year ended December 31, 2018
was $0.4 million, compared to net loss attributable to common
shareholders of $416 million, or $(4.94) per diluted common share, for
the same period in 2017.
Operating loss1 for the fourth quarter of 2018 was $148
million, or $(1.77) per diluted common share2, compared to
operating income of $20 million, or $0.24 per diluted common share, for
the fourth quarter of 2017. For the year ended December 31, 2018, AXIS
Capital reported operating income of $161 million, or $1.92 per diluted
common share, compared to an operating loss of $265 million, or $(3.15)
per diluted common share for the same period in 2017.
|
1 Operating 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.
|
|
2 Ex-PGAAP operating income (loss), ex-PGAAP operating
income (loss) per diluted common share and ex-PGAAP return on
average common equity ("ex-PGAAP operating ROACE") 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.
|
|
|
Commenting on the fourth quarter 2018 financial results, Albert
Benchimol, President and CEO of AXIS Capital, said:
"In 2018, we delivered improved full-year underwriting performance, both
with and without cats. Following three quarters in which we achieved
tangible progress toward delivering on our financial goals, however,
heavy attritional property and catastrophe activity led to
unsatisfactory results in the fourth quarter. Throughout the past year
we took a number of significant actions to strengthen our portfolio and,
over the past few months, we've accelerated these initiatives.
Additionally, we anticipate that recent improvements in pricing and
market discipline will also have a positive impact on the pace of our
improvements.
"2018 was a year in which we made significant progress in advancing our
strategy and in strengthening our business. We furthered our relevance
and positioning in key markets, including transitioning our London
operations to a leading position at Lloyd's with the integration of
Novae, and we scaled up a transformation program that is improving our
efficiency and our agility in a rapidly evolving market."
Fourth Quarter Highlights3
-
Gross premiums written increased by $76 million, or 7%, with an
increase of $66 million, or 8%, in the insurance segment and an
increase of $10 million, or 4%, in the reinsurance segment.
-
Net premiums written increased by 3% to $753 million.
|
KEY RATIOS
|
|
Q4 2018
|
|
Q4 2017
|
|
Change
|
|
Current accident year loss ratio excluding catastrophe and
weather-related losses
|
|
|
|
65.4
|
%
|
|
|
|
|
62.8
|
%
|
|
|
|
|
2.6
|
|
pts
|
|
Catastrophe and weather-related losses ratio
|
|
|
|
22.5
|
%
|
|
|
|
|
11.2
|
%
|
|
|
|
|
11.3
|
|
pts
|
|
Current accident year loss ratio
|
|
|
|
87.9
|
%
|
|
|
|
|
74.0
|
%
|
|
|
|
|
13.9
|
|
pts
|
|
Prior year reserve development
|
|
|
|
(3.3
|
%)
|
|
|
|
|
(4.7
|
%)
|
|
|
|
|
1.4
|
|
pts
|
|
Net loss and loss expense ratio
|
|
|
|
84.6
|
%
|
|
|
|
|
69.3
|
%
|
|
|
|
|
15.3
|
|
pts
|
|
Acquisition cost ratio
|
|
|
|
21.4
|
%
|
|
|
|
|
19.4
|
%
|
|
|
|
|
2.0
|
|
pts
|
|
General and administrative expense ratio
|
|
|
|
11.3
|
%
|
|
|
|
|
12.0
|
%
|
|
|
|
|
(0.7
|
|
pts)
|
|
Combined ratio
|
|
|
|
117.3
|
%
|
|
|
|
|
100.7
|
%
|
|
|
|
|
16.6
|
|
pts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
Net favorable prior year reserve development of $40 million (Insurance
$32 million; Reinsurance $7 million), compared to $57 million.
-
Underwriting loss included the recognition of premium attributable to
the balance sheet of Novae Group plc ("Novae") at October 2, 2017 (the
"closing date" or the "acquisition date"), without the recognition of
the associated acquisition costs, which were written off at the
closing date. The absence of $16 million and $33 million of
acquisition expenses related to premiums earned in the fourth quarter
of 2018 and 2017, respectively, benefited our acquisition cost ratio
by 1.3 points and 2.7 points, respectively.
-
Amortization of value of business acquired ("VOBA") of $23 million and
$50 million, recognized in the fourth quarter of 2018 and 2017,
respectively. This expense impacted 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 approximately
$94 million since the third quarter of 2017.
-
Adjusted for dividends, book value per diluted common share decreased
by $2.37, or 4%, compared to September 30, 2018.
|
3 All comparisons are with the same period of the prior
year, unless otherwise stated.
|
|
|
Full Year Highlights3
-
Gross premiums written increased by $1,354 million, or 24%, to $6.9
billion, with an increase of 35% in the insurance segment, primarily
attributable to the acquisition of Novae, and an increase of 14% in
the reinsurance segment.
-
Adjusting for the impact of the Novae acquisition, gross premiums
written increased by $331 million, with an increase of $60 million in
the insurance segment, and an increase of $271 million in the
reinsurance segment.
-
Net premiums written increased by 16% to $4.7 billion.
|
KEY RATIOS
|
|
2018
|
|
2017
|
|
Change
|
|
Current accident year loss ratio excluding catastrophe and
weather-related losses
|
|
|
|
61.7
|
%
|
|
|
|
|
63.7
|
%
|
|
|
|
|
(2.0
|
|
pts)
|
|
Catastrophe and weather-related losses ratio
|
|
|
|
9.0
|
%
|
|
|
|
|
20.4
|
%
|
|
|
|
|
(11.4
|
|
pts)
|
|
Current accident year loss ratio
|
|
|
|
70.7
|
%
|
|
|
|
|
84.1
|
%
|
|
|
|
|
(13.4
|
|
pts)
|
|
Prior year reserve development
|
|
|
|
(4.1
|
%)
|
|
|
|
|
(4.9
|
%)
|
|
|
|
|
0.8
|
|
pts
|
|
Net loss and loss expense ratio
|
|
|
|
66.6
|
%
|
|
|
|
|
79.2
|
%
|
|
|
|
|
(12.6
|
|
pts)
|
|
Acquisition cost ratio
|
|
|
|
20.2
|
%
|
|
|
|
|
19.9
|
%
|
|
|
|
|
0.3
|
|
pts
|
|
General and administrative expense ratio
|
|
|
|
13.1
|
%
|
|
|
|
|
14.0
|
%
|
|
|
|
|
(0.9
|
|
pts)
|
|
Combined ratio
|
|
|
|
99.9
|
%
|
|
|
|
|
113.1
|
%
|
|
|
|
|
(13.2
|
|
pts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
Net favorable prior year reserve development of $200 million
(Insurance $93 million; Reinsurance $107 million ), compared to $200
million.
-
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 $125 million and $33 million of
acquisition expenses related to premiums earned in the years ended
December 31, 2018 and 2017, respectively benefited our acquisition
cost ratio by 2.6 and 0.7 points, respectively.
-
Amortization of VOBA of $172 million and $50 million recognized for
the year ended December 31, 2018 and 2017, respectively. This expense
impacted 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 $58 million related to the Company's
transformation initiative and the integration of Novae recognized over
the past twelve months.
-
Adjusted for dividends, book value per diluted common share decreased
by $2.38, or 4%, over the past twelve months.
Segment Highlights
Insurance Segment
|
|
|
Three Months Ended December 31,
|
|
($ in thousands)
|
|
2018
|
|
2017
|
|
Change
|
|
Gross premiums written
|
|
$
|
|
920,736
|
|
|
$
|
|
854,311
|
|
|
|
|
7.8
|
|
%
|
|
Net premiums written
|
|
|
|
576,606
|
|
|
|
|
515,826
|
|
|
|
|
11.8
|
|
%
|
|
Net premiums earned
|
|
|
|
590,479
|
|
|
|
|
586,159
|
|
|
|
|
0.7
|
|
%
|
|
Underwriting income (loss)
|
|
|
|
(36,914
|
)
|
|
|
|
37,788
|
|
|
|
|
|
|
nm
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting ratios:
|
|
|
|
|
|
|
|
|
|
|
|
Current accident year loss ratio excluding catastrophe and
weather-related losses
|
|
|
|
62.4
|
%
|
|
|
|
62.0
|
%
|
|
|
|
0.4
|
|
pts
|
|
Catastrophe and weather-related losses ratio
|
|
|
|
15.6
|
%
|
|
|
|
5.7
|
%
|
|
|
|
9.9
|
|
pts
|
|
Current accident year loss ratio
|
|
|
|
78.0
|
%
|
|
|
|
67.7
|
%
|
|
|
|
10.3
|
|
pts
|
|
Prior period reserve development
|
|
|
|
(5.4
|
%)
|
|
|
|
(4.2
|
%)
|
|
|
|
(1.2
|
|
pts)
|
|
Net loss and loss expense ratio
|
|
|
|
72.6
|
%
|
|
|
|
63.5
|
%
|
|
|
|
9.1
|
|
pts
|
|
Acquisition cost ratio
|
|
|
|
18.5
|
%
|
|
|
|
15.7
|
%
|
|
|
|
2.8
|
|
pts
|
|
Underwriting-related general and administrative expense ratio
|
|
|
|
15.2
|
%
|
|
|
|
14.7
|
%
|
|
|
|
0.5
|
|
pts
|
|
Combined ratio
|
|
|
|
106.3
|
%
|
|
|
|
93.9
|
%
|
|
|
|
12.4
|
|
pts
|
|
nm - not meaningful
|
|
|
-
Gross premiums written increased by $66 million, or 8% (8% increase on
a constant currency basis4), attributable to credit and
political risk, liability, and professional lines driven by new
business.
-
Net premiums written increased by 12% (11% on a constant currency
basis) reflecting the increase in gross premiums written in the
quarter, together with a decrease in premiums ceded in professional
lines, partially offset by an increase in premiums ceded in liability
lines.
-
The current accident year loss ratio excluding catastrophe and
weather-related losses increased in the fourth quarter compared to the
same period in 2017 primarily due to an increase in attritional loss
experience in property lines.
-
Pre-tax catastrophe and weather-related losses were $92 million
primarily attributable to Hurricane Michael and the California
Wildfires this quarter, compared to $34 million in the same period in
2017.
-
Net favorable prior year loss reserve development was $32 million this
quarter, compared to $25 million in the same period in 2017.
-
The acquisition cost ratio increased in the quarter due to changes in
business mix.
-
Underwriting loss 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 $16 million and $26 million of
acquisition costs related to premiums earned in the fourth quarter of
2018 and 2017, respectively, benefited the acquisition cost ratio by
2.7 points and 4.4 points, respectively.
|
|
|
Year Ended December 31,
|
|
($ in thousands)
|
|
2018
|
|
2017
|
|
Change
|
|
Gross premiums written
|
|
|
$
|
|
3,797,592
|
|
|
|
$
|
|
2,814,918
|
|
|
|
|
34.9
|
|
%
|
|
Net premiums written
|
|
|
|
|
2,324,747
|
|
|
|
|
|
1,775,825
|
|
|
|
|
30.9
|
|
%
|
|
Net premiums earned
|
|
|
|
|
2,362,606
|
|
|
|
|
|
1,816,438
|
|
|
|
|
30.1
|
|
%
|
|
Underwriting income (loss)
|
|
|
|
|
77,298
|
|
|
|
|
|
(241,642
|
)
|
|
|
|
|
|
nm
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current accident year loss ratio excluding catastrophe and
weather-related losses
|
|
|
|
|
58.5
|
%
|
|
|
|
|
61.3
|
%
|
|
|
|
(2.8
|
|
pts)
|
|
Catastrophe and weather-related losses ratio
|
|
|
|
|
8.7
|
%
|
|
|
|
|
22.7
|
%
|
|
|
|
(14.0
|
|
pts)
|
|
Current accident year loss ratio
|
|
|
|
|
67.2
|
%
|
|
|
|
|
84.0
|
%
|
|
|
|
(16.8
|
|
pts)
|
|
Prior period reserve development
|
|
|
|
|
(4.0
|
%)
|
|
|
|
|
(3.3
|
%)
|
|
|
|
(0.7
|
|
pts)
|
|
Net loss and loss expense ratio
|
|
|
|
|
63.2
|
%
|
|
|
|
|
80.7
|
%
|
|
|
|
(17.5
|
|
pts)
|
|
Acquisition cost ratio
|
|
|
|
|
16.9
|
%
|
|
|
|
|
14.9
|
%
|
|
|
|
2.0
|
|
pts
|
|
Underwriting-related general and administrative expense ratio
|
|
|
|
|
16.8
|
%
|
|
|
|
|
17.9
|
%
|
|
|
|
(1.1
|
|
pts)
|
|
Combined ratio
|
|
|
|
|
96.9
|
%
|
|
|
|
|
113.5
|
%
|
|
|
|
(16.6
|
|
pts)
|
|
|
-
Gross premiums written increased by $983 million, or 35%, which
included an increase of $923 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 increased by 2% (2% on a constant
currency basis) due to increases in professional lines and liability
lines driven by new business, partially offset by a decrease in
property, marine, and accident and health lines. The decreases were
attributable to property lines due to our exit from onshore energy
business in the fourth quarter of 2017, together with non-renewals in
marine, and accident and health lines.
-
Net premiums written increased by $549 million or 31%. Excluding the
impact of the acquisition of Novae, net premiums written decreased by
4% (5% on a constant currency basis) due to an increase in premiums
ceded in property, liability, and professional lines, partially offset
by the increase in gross premiums written in the year.
-
Underwriting income increased in the twelve months ended December 31,
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, an increase in net favorable prior year
development and a decrease in the general and administrative expense
ratio, partially offset by an increase 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 $121 million and $26 million of
acquisition costs related to premiums earned in the years ended
December 31, 2018 and 2017, respectively, benefited the acquisition
cost ratio by 5.1 and 1.4 points, respectively.
|
4 Amounts presented on a constant currency basis are
non-GAAP financial measures as defined in SEC Regulation G. The
constant currency basis is calculated by applying the average
foreign exchange rate from the current year to prior year amounts.
The reconciliations to the most comparable GAAP financial measures
are provided in this release, as is a discussion of the rationale
for the presentation of these items.
|
|
|
Reinsurance Segment
|
|
Three Months Ended December 31,
|
|
($ in thousands)
|
|
2018
|
|
2017
|
|
Change
|
|
Gross premiums written
|
|
|
$
|
|
252,002
|
|
|
|
$
|
|
242,190
|
|
|
|
|
4.1
|
|
%
|
|
Net premiums written
|
|
|
|
|
176,092
|
|
|
|
|
|
213,598
|
|
|
|
|
(17.6
|
|
)%
|
|
Net premiums earned
|
|
|
|
|
623,990
|
|
|
|
|
|
625,336
|
|
|
|
|
(0.2
|
|
)%
|
|
Underwriting income (loss)
|
|
|
|
|
(157,750
|
)
|
|
|
|
|
(11,658
|
)
|
|
|
|
|
|
nm
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current accident year loss ratio excluding catastrophe and
weather-related losses
|
|
|
|
|
68.3
|
%
|
|
|
|
|
63.6
|
%
|
|
|
|
4.7
|
|
pts
|
|
Catastrophe and weather-related losses ratio
|
|
|
|
|
28.8
|
%
|
|
|
|
|
16.3
|
%
|
|
|
|
12.5
|
|
pts
|
|
Current accident year loss ratio
|
|
|
|
|
97.1
|
%
|
|
|
|
|
79.9
|
%
|
|
|
|
17.2
|
|
pts
|
|
Prior period reserve development
|
|
|
|
|
(1.1
|
%)
|
|
|
|
|
(5.1
|
%)
|
|
|
|
4.0
|
|
pts
|
|
Net loss and loss expense ratio
|
|
|
|
|
96.0
|
%
|
|
|
|
|
74.8
|
%
|
|
|
|
21.2
|
|
pts
|
|
Acquisition cost ratio
|
|
|
|
|
24.1
|
%
|
|
|
|
|
22.8
|
%
|
|
|
|
1.3
|
|
pts
|
|
Underwriting-related general and administrative expense ratio
|
|
|
|
|
3.9
|
%
|
|
|
|
|
4.4
|
%
|
|
|
|
(0.5
|
|
pts)
|
|
Combined ratio
|
|
|
|
|
124.0
|
%
|
|
|
|
|
102.0
|
%
|
|
|
|
22.0
|
|
pts
|
|
|
-
Gross premiums written increased by $10 million, or 4% (5% on a
constant currency basis) attributable to catastrophe, and accident and
health lines, partially offset by decreases in professional lines and
property lines. The increase in catastrophe lines was largely due to
reinstatements premiums and the increase in accident and health lines
was due to new business, partially offset by a timing difference. The
decrease in property lines was driven by premium adjustments and the
decrease in professional lines was driven by the restructuring of a
significant treaty.
-
Net premiums written decreased by $38 million, or 18% (16% on a
constant currency basis) due to an increase in premiums ceded in
catastrophe, accident and health, credit and surety, and liability
lines, partially offset by the increase in gross premiums written in
the quarter.
-
The current accident year loss ratio excluding catastrophe and
weather-related losses increased in the fourth quarter compared to the
same period in 2017, primarily due to an increase in mid-size and
attritional loss experience in property lines, partially offset by
favorable impact of rate increases in U.K. non- proportional motor
business.
-
Pre-tax catastrophe and weather-related losses were $177 million
primarily attributable to Hurricane Michael and the California
Wildfires this quarter, compared to $99 million reported during the
same period in 2017.
-
Net favorable prior year reserve development was $7 million this
quarter compared to $32 million in the fourth quarter of 2017.
-
The acquisition cost ratio increased due the impact of retrocessional
contracts, partially offset by favorable changes in business mix.
-
The general administrative expense ratio decreased in the quarter,
largely attributable to benefits related to arrangements with
strategic capital partners, partially offset by an increase in the
allocation of corporate expenses.
-
Underwriting loss 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 $7 million of acquisition costs related
to premiums earned in the fourth quarter of 2017 benefited the
acquisition cost ratio by 1.1 points.
|
|
|
Year Ended December 31,
|
|
($ in thousands)
|
|
2018
|
|
2017
|
|
Change
|
|
Gross premiums written
|
|
|
$
|
|
3,112,473
|
|
|
|
$
|
|
2,741,355
|
|
|
|
|
13.5
|
|
%
|
|
Net premiums written
|
|
|
|
|
2,334,215
|
|
|
|
|
|
2,251,318
|
|
|
|
|
3.7
|
|
%
|
|
Net premiums earned
|
|
|
|
|
2,428,889
|
|
|
|
|
|
2,332,322
|
|
|
|
|
4.1
|
|
%
|
|
Underwriting income (loss)
|
|
|
|
|
46,529
|
|
|
|
|
|
(171,684
|
)
|
|
|
|
|
|
nm
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current accident year loss ratio excluding catastrophe and
weather-related losses
|
|
|
|
|
64.8
|
%
|
|
|
|
|
65.6
|
%
|
|
|
|
(0.8
|
|
pts)
|
|
Catastrophe and weather-related losses ratio
|
|
|
|
|
9.4
|
%
|
|
|
|
|
18.5
|
%
|
|
|
|
(9.1
|
|
pts)
|
|
Current accident year loss ratio
|
|
|
|
|
74.2
|
%
|
|
|
|
|
84.1
|
%
|
|
|
|
(9.9
|
|
pts)
|
|
Prior period reserve development
|
|
|
|
|
(4.4
|
%)
|
|
|
|
|
(6.0
|
%)
|
|
|
|
1.6
|
|
pts
|
|
Net loss and loss expense ratio
|
|
|
|
|
69.8
|
%
|
|
|
|
|
78.1
|
%
|
|
|
|
(8.3
|
|
pts)
|
|
Acquisition cost ratio
|
|
|
|
|
23.5
|
%
|
|
|
|
|
23.7
|
%
|
|
|
|
(0.2
|
|
pts)
|
|
Underwriting-related general and administrative expense ratio
|
|
|
|
|
5.1
|
%
|
|
|
|
|
5.3
|
%
|
|
|
|
(0.2
|
|
pts)
|
|
Combined ratio
|
|
|
|
|
98.4
|
%
|
|
|
|
|
107.1
|
%
|
|
|
|
(8.7
|
|
pts)
|
|
|
-
Gross premiums written increased by $371 million, or 14%, which
included an increase of $100 million attributable to catastrophe, and
marine and aviation lines associated with the acquisition of Novae.
Excluding the impact of the acquisition of Novae, gross premiums
written increased by $271 million, or 10% (7% on a constant currency
basis), attributable to credit and surety, motor, accident and health,
and catastrophe 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 largely due to new
business and timing differences, together with the favorable impact of
rate increases in U.K. non-proportional motor business following the
reduction in the Ogden Rate during the first quarter of 2017. The
increase in accident and health was largely due to new business,
partially offset by premium adjustments. The increase in catastrophe
lines was largely due to new business, increased line sizes on a
number of treaties, and favorable rate increases, partially offset by
a lower level of premiums written on a multi-year basis.
-
Net premiums written increased by $83 million, or 4%. Excluding the
impact of the acquisition of Novae, net premiums written increased by
$11 million or 1% (decreased by 3% on a constant currency basis)
reflecting the increase in gross premiums written in the year,
partially offset by an increase in premiums ceded in accident and
health, catastrophe, credit and surety, and liability lines.
-
Underwriting income increased in the year ended December 31, 2018,
principally associated with an increase in net premiums earned, a
decrease in catastrophe and weather-related losses, and a decrease in
the current accident year loss ratio excluding catastrophe and
weather-related losses, partially offset by a decrease in net
favorable prior year development.
-
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 and $7 million of acquisition
costs related to premiums earned in the years ended December 31, 2018
and 2017, respectively, benefited the acquisition cost ratio by 0.1
and 0.3 points, respectively.
Investments
Net investment income of $113 million for the quarter represents an
increase of $12 million from the fourth quarter of 2017, and a decrease
of $1 million from the third quarter of 2018 due to changes in fair
values of our alternative investments ("Other investments"). Net
realized and unrealized investment losses recognized in net income for
the quarter were $73 million, compared to $43 million of net realized
investment gains in the fourth quarter of 2017 and $18 million of net
realized and unrealized investment losses in the third quarter of 2018.
Pre-tax total return on cash and investments5 was 0.2%
including foreign exchange movements (0.3% excluding foreign exchange
movements6), as net investment income generated in the
quarter was offset by net realized investments losses arising from the
sale of fixed maturity securities and the decrease in the fair value of
equity securities. The prior year period pre-tax total return was 0.6%
including foreign exchange movements (0.5% excluding foreign exchange
movements). Our fixed income portfolio book yield at December 31, 2018
was 3.1%, while the market yield was 3.6%.
Capitalization / Shareholders' Equity
Total capital7 at December 31, 2018 was $6.4 billion,
including $1.3 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
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.
Book value per diluted common share, calculated on a treasury stock
basis, declined by $2.77 in the current quarter, and by $3.95 over the
past twelve months, to $49.93. The decrease in the quarter was primarily
driven by the net loss generated in the quarter and common share
dividends declared. The decrease over the past twelve months was driven
by unrealized investment losses reported in other comprehensive income,
and common share dividends declared.
During the fourth quarter of 2018, the Company declared dividends of
$0.40 per common share, with total dividends declared of $1.57 per
common share over the past twelve months. Adjusted for dividends
declared, the book value per diluted common share decreased by $2.37, or
4%, for the quarter and decreased by $2.38, or 4%, 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 $(20)m and
$18m for the three months ended December 31, 2018 and 2017,
respectively.
|
|
7 Total capital represents the sum of total shareholders'
equity and our senior notes payable and debt.
|
|
|
Conference Call
We will host a conference call on Thursday, January 31, 2019 at 9:30 AM
(EST) to discuss the fourth quarter and year-end 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 1263927. 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 10127972. 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 December 31, 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 December 31, 2018 of
$5.0 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 Capital 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
|
|
DECEMBER 31, 2018 (UNAUDITED) AND DECEMBER 31, 2017
|
|
|
|
|
|
2018
|
|
2017
|
|
|
|
(in thousands)
|
|
Assets
|
|
|
|
|
|
Investments:
|
|
|
|
|
|
Fixed maturities, available for sale, at fair value
|
|
$
|
|
11,435,347
|
|
|
$
|
|
12,622,006
|
|
|
Equity securities, at fair value
|
|
|
|
381,633
|
|
|
|
|
635,511
|
|
|
Mortgage loans, held for investment, at amortized cost and fair value
|
|
|
|
298,650
|
|
|
|
|
325,062
|
|
|
Other investments, at fair value
|
|
|
|
787,787
|
|
|
|
|
1,009,373
|
|
|
Equity method investments
|
|
|
|
108,103
|
|
|
|
|
108,597
|
|
|
Short-term investments, at amortized cost and fair value
|
|
|
|
144,040
|
|
|
|
|
83,661
|
|
|
Total investments
|
|
|
|
13,155,560
|
|
|
|
|
14,784,210
|
|
|
Cash and cash equivalents
|
|
|
|
1,232,814
|
|
|
|
|
948,626
|
|
|
Restricted cash and cash equivalents
|
|
|
|
597,206
|
|
|
|
|
415,160
|
|
|
Accrued interest receivable
|
|
|
|
80,335
|
|
|
|
|
81,223
|
|
|
Insurance and reinsurance premium balances receivable
|
|
|
|
3,007,296
|
|
|
|
|
3,012,419
|
|
|
Reinsurance recoverable on unpaid losses
|
|
|
|
3,501,669
|
|
|
|
|
3,159,514
|
|
|
Reinsurance recoverable on paid losses
|
|
|
|
280,233
|
|
|
|
|
179,326
|
|
|
Deferred acquisition costs
|
|
|
|
566,622
|
|
|
|
|
474,061
|
|
|
Prepaid reinsurance premiums
|
|
|
|
1,013,573
|
|
|
|
|
809,274
|
|
|
Receivable for investments sold
|
|
|
|
32,627
|
|
|
|
|
11,621
|
|
|
Goodwill
|
|
|
|
102,003
|
|
|
|
|
102,003
|
|
|
Intangible assets
|
|
|
|
241,568
|
|
|
|
|
257,987
|
|
|
Value of business acquired
|
|
|
|
35,714
|
|
|
|
|
206,838
|
|
|
Other assets
|
|
|
|
285,346
|
|
|
|
|
317,915
|
|
|
Total assets
|
|
$
|
|
24,132,566
|
|
|
$
|
|
24,760,177
|
|
|
Liabilities
|
|
|
|
|
|
Reserve for losses and loss expenses
|
|
$
|
|
12,280,769
|
|
|
$
|
|
12,997,553
|
|
|
Unearned premiums
|
|
|
|
3,635,758
|
|
|
|
|
3,641,399
|
|
|
Insurance and reinsurance balances payable
|
|
|
|
1,338,991
|
|
|
|
|
899,064
|
|
|
Senior notes and notes payable
|
|
|
|
1,341,961
|
|
|
|
|
1,376,529
|
|
|
Payable for investments purchased
|
|
|
|
111,838
|
|
|
|
|
100,589
|
|
|
Other liabilities
|
|
|
|
393,178
|
|
|
|
|
403,779
|
|
|
Total liabilities
|
|
|
|
19,102,495
|
|
|
|
|
19,418,913
|
|
|
Shareholders' equity
|
|
|
|
|
|
Preferred shares
|
|
|
|
775,000
|
|
|
|
|
775,000
|
|
|
Common shares
|
|
|
|
2,206
|
|
|
|
|
2,206
|
|
|
Additional paid-in capital
|
|
|
|
2,308,583
|
|
|
|
|
2,299,166
|
|
|
Accumulated other comprehensive income (loss)
|
|
|
|
(177,110
|
)
|
|
|
|
92,382
|
|
|
Retained earnings
|
|
|
|
5,912,812
|
|
|
|
|
5,979,666
|
|
|
Treasury shares, at cost
|
|
|
|
(3,791,420
|
)
|
|
|
|
(3,807,156
|
)
|
|
Total shareholders' equity
|
|
|
|
5,030,071
|
|
|
|
|
5,341,264
|
|
|
Total liabilities and shareholders' equity
|
|
$
|
|
24,132,566
|
|
|
$
|
|
24,760,177
|
|
|
|
|
AXIS CAPITAL HOLDINGS LIMITED
|
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
FOR THE QUARTERS AND YEARS ENDED DECEMBER 31, 2018 AND 2017
|
|
|
|
|
|
Quarters ended
|
|
Years ended
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|
|
|
(in thousands, except per share amounts)
|
|
Revenues
|
|
|
|
Net premiums earned
|
|
$
|
1,214,469
|
|
|
$
|
1,211,495
|
|
|
$
|
4,791,495
|
|
|
$
|
4,148,760
|
|
|
Net investment income
|
|
|
113,128
|
|
|
|
100,908
|
|
|
|
438,507
|
|
|
|
400,805
|
|
|
Net investment gains (losses)
|
|
|
(72,667
|
)
|
|
|
43,038
|
|
|
|
(150,218
|
)
|
|
|
28,226
|
|
|
Other insurance related income (losses)
|
|
|
(8,189
|
)
|
|
|
3,180
|
|
|
|
10,622
|
|
|
|
(1,240
|
)
|
|
Bargain purchase gain
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
15,044
|
|
|
Total revenues
|
|
|
1,246,741
|
|
|
|
1,358,621
|
|
|
|
5,090,406
|
|
|
|
4,591,595
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
Net losses and loss expenses
|
|
|
1,027,343
|
|
|
|
840,132
|
|
|
|
3,190,287
|
|
|
|
3,287,772
|
|
|
Acquisition costs
|
|
|
259,308
|
|
|
|
234,713
|
|
|
|
968,835
|
|
|
|
823,591
|
|
|
General and administrative expenses
|
|
|
137,445
|
|
|
|
145,723
|
|
|
|
627,389
|
|
|
|
579,428
|
|
|
Foreign exchange losses (gains)
|
|
|
(31,232
|
)
|
|
|
44,644
|
|
|
|
(29,165
|
)
|
|
|
134,737
|
|
|
Interest expense and financing costs
|
|
|
16,675
|
|
|
|
16,434
|
|
|
|
67,432
|
|
|
|
54,811
|
|
|
Transaction and reorganization expenses
|
|
|
18,815
|
|
|
|
20,748
|
|
|
|
66,940
|
|
|
|
26,718
|
|
|
Amortization of value of business acquired
|
|
|
22,797
|
|
|
|
50,104
|
|
|
|
172,332
|
|
|
|
50,104
|
|
|
Amortization of intangible assets
|
|
|
5,251
|
|
|
|
2,543
|
|
|
|
13,814
|
|
|
|
2,543
|
|
|
Total expenses
|
|
|
1,456,402
|
|
|
|
1,355,041
|
|
|
|
5,077,864
|
|
|
|
4,959,704
|
|
|
Income (loss) before income taxes and interest in income (loss)
of equity method investments
|
|
|
(209,661
|
)
|
|
|
3,580
|
|
|
|
12,542
|
|
|
|
(368,109
|
)
|
|
Income tax (expense) benefit
|
|
|
25,921
|
|
|
|
(31,005
|
)
|
|
|
29,486
|
|
|
|
7,542
|
|
|
Interest in income (loss) of equity method investments
|
|
|
(4,052
|
)
|
|
|
—
|
|
|
|
993
|
|
|
|
(8,402
|
)
|
|
Net income (loss)
|
|
|
(187,792
|
)
|
|
|
(27,425
|
)
|
|
|
43,021
|
|
|
|
(368,969
|
)
|
|
Preferred share dividends
|
|
|
10,656
|
|
|
|
10,656
|
|
|
|
42,625
|
|
|
|
46,810
|
|
|
Net income (loss) available (attributable) to common shareholders
|
|
$
|
(198,448
|
)
|
|
$
|
(38,081
|
)
|
|
$
|
396
|
|
|
$
|
(415,779
|
)
|
|
Per share data
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per common share:
|
|
|
|
|
|
|
|
|
|
Earnings (loss) common share
|
|
$
|
(2.37
|
)
|
|
$
|
(0.46
|
)
|
|
$
|
—
|
|
|
$
|
(4.94
|
)
|
|
Earnings (loss) per diluted common share
|
|
$
|
(2.37
|
)
|
|
$
|
(0.46
|
)
|
|
$
|
—
|
|
|
$
|
(4.94
|
)
|
|
Weighted average common shares outstanding
|
|
|
83,582
|
|
|
|
83,160
|
|
|
|
83,501
|
|
|
|
84,108
|
|
|
Weighted average diluted common shares outstanding
|
|
|
83,582
|
|
|
|
83,160
|
|
|
|
84,007
|
|
|
|
84,108
|
|
|
Cash dividends declared per common share
|
|
$
|
0.40
|
|
|
$
|
0.39
|
|
|
$
|
1.57
|
|
|
$
|
1.53
|
|
|
|
|
AXIS CAPITAL HOLDINGS LIMITED
|
|
CONSOLIDATED SEGMENTAL DATA (UNAUDITED)
|
|
FOR THE QUARTERS ENDED DECEMBER 31, 2018 AND 2017
|
|
|
|
|
|
2018
|
|
2017
|
|
|
|
Insurance
|
|
Reinsurance
|
|
Total
|
|
Insurance
|
|
Reinsurance
|
|
Total
|
|
|
|
(in thousands)
|
|
Gross premiums written
|
|
$
|
920,736
|
|
|
$
|
252,002
|
|
|
$
|
1,172,738
|
|
|
$
|
854,311
|
|
|
$
|
242,190
|
|
|
$
|
1,096,501
|
|
|
Net premiums written
|
|
|
576,606
|
|
|
|
176,092
|
|
|
|
752,698
|
|
|
|
515,826
|
|
|
|
213,598
|
|
|
|
729,424
|
|
|
Net premiums earned
|
|
|
590,479
|
|
|
|
623,990
|
|
|
|
1,214,469
|
|
|
|
586,159
|
|
|
|
625,336
|
|
|
|
1,211,495
|
|
|
Other insurance related income (losses)
|
|
|
101
|
|
|
|
(8,290
|
)
|
|
|
(8,189
|
)
|
|
|
2,091
|
|
|
|
1,089
|
|
|
|
3,180
|
|
|
Net losses and loss expenses
|
|
|
(428,525
|
)
|
|
|
(598,818
|
)
|
|
|
(1,027,343
|
)
|
|
|
(372,191
|
)
|
|
|
(467,941
|
)
|
|
|
(840,132
|
)
|
|
Acquisition costs
|
|
|
(109,111
|
)
|
|
|
(150,197
|
)
|
|
|
(259,308
|
)
|
|
|
(92,293
|
)
|
|
|
(142,420
|
)
|
|
|
(234,713
|
)
|
|
Underwriting-related general and administrative expenses(8)
|
|
|
(89,858
|
)
|
|
|
(24,435
|
)
|
|
|
(114,293
|
)
|
|
|
(85,978
|
)
|
|
|
(27,722
|
)
|
|
|
(113,700
|
)
|
|
Underwriting income (loss)(9)
|
|
$
|
(36,914
|
)
|
|
$
|
(157,750
|
)
|
|
|
(194,664
|
)
|
|
$
|
37,788
|
|
|
$
|
(11,658
|
)
|
|
|
26,130
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate expenses(8)
|
|
|
|
|
|
|
(23,152
|
)
|
|
|
|
|
|
|
(32,023
|
)
|
|
Net investment income
|
|
|
|
|
|
|
113,128
|
|
|
|
|
|
|
|
100,908
|
|
|
Net investment gains (losses)
|
|
|
|
|
|
|
(72,667
|
)
|
|
|
|
|
|
|
43,038
|
|
|
Foreign exchange (losses) gains
|
|
|
|
|
|
|
31,232
|
|
|
|
|
|
|
|
(44,644
|
)
|
|
Interest expense and financing costs
|
|
|
|
|
|
|
(16,675
|
)
|
|
|
|
|
|
|
(16,434
|
)
|
|
Transaction and reorganization expenses
|
|
|
|
|
|
|
(18,815
|
)
|
|
|
|
|
|
|
(20,748
|
)
|
|
Amortization of value of business acquired
|
|
|
|
|
|
|
(22,797
|
)
|
|
|
|
|
|
|
(50,104
|
)
|
|
Amortization of intangible assets
|
|
|
|
|
|
|
(5,251
|
)
|
|
|
|
|
|
|
(2,543
|
)
|
|
Income (loss) before income taxes and interest in income (loss)
of equity method investments
|
|
|
|
|
|
$
|
(209,661
|
)
|
|
|
|
|
|
$
|
3,580
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss and loss expense ratio
|
|
|
72.6
|
%
|
|
|
96.0
|
%
|
|
|
84.6
|
%
|
|
|
63.5
|
%
|
|
|
74.8
|
%
|
|
|
69.3
|
%
|
|
Acquisition cost ratio
|
|
|
18.5
|
%
|
|
|
24.1
|
%
|
|
|
21.4
|
%
|
|
|
15.7
|
%
|
|
|
22.8
|
%
|
|
|
19.4
|
%
|
|
General and administrative expense ratio
|
|
|
15.2
|
%
|
|
|
3.9
|
%
|
|
|
11.3
|
%
|
|
|
14.7
|
%
|
|
|
4.4
|
%
|
|
|
12.0
|
%
|
|
Combined ratio
|
|
|
106.3
|
%
|
|
|
124.0
|
%
|
|
|
117.3
|
%
|
|
|
93.9
|
%
|
|
|
102.0
|
%
|
|
|
100.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8 Underwriting-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 $23 million and $32 million for the three
months ended December 31, 2018 and 2017, respectively.
Underwriting-related general and administrative expenses and
corporate expenses are included in the general and administrative
expense ratio.
|
|
9 Consolidated 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 operations.
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 of the Company, with effect from
January 1, 2018. The results are inclusive of underwriting-related
general and administrative expenses attributable to the Company's
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
|
|
FOR THE YEARS ENDED DECEMBER 31, 2018 (UNAUDITED) AND 2017
|
|
|
|
|
|
2018
|
|
2017
|
|
|
|
Insurance
|
|
Reinsurance
|
|
Total
|
|
Insurance
|
|
Reinsurance
|
|
Total
|
|
|
|
(in thousands)
|
|
Gross premiums written
|
|
$
|
3,797,592
|
|
|
$
|
3,112,473
|
|
|
$
|
6,910,065
|
|
|
$
|
2,814,918
|
|
|
$
|
2,741,355
|
|
|
$
|
5,556,273
|
|
|
Net premiums written
|
|
|
2,324,747
|
|
|
|
2,334,215
|
|
|
|
4,658,962
|
|
|
|
1,775,825
|
|
|
|
2,251,318
|
|
|
|
4,027,143
|
|
|
Net premiums earned
|
|
|
2,362,606
|
|
|
|
2,428,889
|
|
|
|
4,791,495
|
|
|
|
1,816,438
|
|
|
|
2,332,322
|
|
|
|
4,148,760
|
|
|
Other insurance related income (losses)
|
|
|
3,460
|
|
|
|
7,162
|
|
|
|
10,622
|
|
|
|
2,944
|
|
|
|
(4,184
|
)
|
|
|
(1,240
|
)
|
|
Net losses and loss expenses
|
|
|
(1,494,323
|
)
|
|
|
(1,695,964
|
)
|
|
|
(3,190,287
|
)
|
|
|
(1,465,427
|
)
|
|
|
(1,822,345
|
)
|
|
|
(3,287,772
|
)
|
|
Acquisition costs
|
|
|
(399,193
|
)
|
|
|
(569,642
|
)
|
|
|
(968,835
|
)
|
|
|
(270,229
|
)
|
|
|
(553,362
|
)
|
|
|
(823,591
|
)
|
|
Underwriting-related general and administrative expenses(10)
|
|
|
(395,252
|
)
|
|
|
(123,916
|
)
|
|
|
(519,168
|
)
|
|
|
(325,368
|
)
|
|
|
(124,115
|
)
|
|
|
(449,483
|
)
|
|
Underwriting income (loss)(11)
|
|
$
|
77,298
|
|
|
$
|
46,529
|
|
|
|
123,827
|
|
|
$
|
(241,642
|
)
|
|
$
|
(171,684
|
)
|
|
|
(413,326
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate expenses(10)
|
|
|
|
|
|
|
(108,221
|
)
|
|
|
|
|
|
|
(129,945
|
)
|
|
Net investment income
|
|
|
|
|
|
|
438,507
|
|
|
|
|
|
|
|
400,805
|
|
|
Net investment gains (losses)
|
|
|
|
|
|
|
(150,218
|
)
|
|
|
|
|
|
|
28,226
|
|
|
Bargain purchase gain
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
15,044
|
|
|
Foreign exchange (losses) gains
|
|
|
|
|
|
|
29,165
|
|
|
|
|
|
|
|
(134,737
|
)
|
|
Interest expense and financing costs
|
|
|
|
|
|
|
(67,432
|
)
|
|
|
|
|
|
|
(54,811
|
)
|
|
Transaction and reorganization expenses
|
|
|
|
|
|
|
(66,940
|
)
|
|
|
|
|
|
|
(26,718
|
)
|
|
Amortization of value of business acquired
|
|
|
|
|
|
|
(172,332
|
)
|
|
|
|
|
|
|
(50,104
|
)
|
|
Amortization of intangible assets
|
|
|
|
|
|
|
(13,814
|
)
|
|
|
|
|
|
|
(2,543
|
)
|
|
Income (loss) before income taxes and interest in income (loss)
of equity method investments
|
|
|
|
|
|
$
|
12,542
|
|
|
|
|
|
|
$
|
(368,109
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss and loss expense ratio
|
|
|
63.2
|
%
|
|
|
69.8
|
%
|
|
|
66.6
|
%
|
|
|
80.7
|
%
|
|
|
78.1
|
%
|
|
|
79.2
|
%
|
|
Acquisition cost ratio
|
|
|
16.9
|
%
|
|
|
23.5
|
%
|
|
|
20.2
|
%
|
|
|
14.9
|
%
|
|
|
23.7
|
%
|
|
|
19.9
|
%
|
|
General and administrative expense ratio
|
|
|
16.8
|
%
|
|
|
5.1
|
%
|
|
|
13.1
|
%
|
|
|
17.9
|
%
|
|
|
5.3
|
%
|
|
|
14.0
|
%
|
|
Combined ratio
|
|
|
96.9
|
%
|
|
|
98.4
|
%
|
|
|
99.9
|
%
|
|
|
113.5
|
%
|
|
|
107.1
|
%
|
|
|
113.1
|
%
|
|
|
|
10 Underwriting-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 $108 million and $130 million for the years
ended December 31, 2018 and 2017, respectively. Underwriting-related
general and administrative expenses and corporate expenses are
included in the general and administrative expense ratio.
|
|
11 Consolidated 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 QUARTERS AND YEARS ENDED DECEMBER 31, 2018 AND 2017
|
|
|
|
|
|
Quarters ended
|
|
Years ended
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
(in thousands, except per share amounts)
|
|
Net income (loss) available (attributable) to common shareholders
|
|
$
|
(198,448
|
)
|
|
$
|
(38,081
|
)
|
|
$
|
396
|
|
|
$
|
(415,779
|
)
|
|
Net investment (gains) losses, net of tax(12)
|
|
|
65,036
|
|
|
|
(42,908
|
)
|
|
|
138,576
|
|
|
|
(26,204
|
)
|
|
Foreign exchange losses (gains), net of tax(13)
|
|
|
(30,138
|
)
|
|
|
41,109
|
|
|
|
(33,496
|
)
|
|
|
126,960
|
|
|
Transaction and reorganization expenses, net of tax(14)
|
|
|
15,195
|
|
|
|
18,130
|
|
|
|
55,904
|
|
|
|
23,879
|
|
|
Revaluation of net deferred tax asset(15)
|
|
|
—
|
|
|
|
41,629
|
|
|
|
—
|
|
|
|
41,629
|
|
|
Bargain purchase gain(15)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(15,044
|
)
|
|
Operating income (loss)
|
|
$
|
(148,355
|
)
|
|
$
|
19,879
|
|
|
$
|
161,380
|
|
|
$
|
(264,559
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per diluted common share
|
|
$
|
(2.37
|
)
|
|
$
|
(0.46
|
)
|
|
$
|
—
|
|
|
$
|
(4.94
|
)
|
|
Net investment (gains) losses, net of tax
|
|
|
0.78
|
|
|
|
(0.52
|
)
|
|
|
1.65
|
|
|
|
(0.31
|
)
|
|
Foreign exchange losses (gains), net of tax
|
|
|
(0.36
|
)
|
|
|
0.50
|
|
|
|
(0.40
|
)
|
|
|
1.51
|
|
|
Transaction and reorganization expenses, net of tax
|
|
|
0.18
|
|
|
|
0.22
|
|
|
|
0.67
|
|
|
|
0.28
|
|
|
Revaluation of net deferred tax asset
|
|
|
—
|
|
|
|
0.50
|
|
|
|
—
|
|
|
|
0.49
|
|
|
Bargain purchase gain
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.18
|
)
|
|
Operating income (loss) per diluted common share
|
|
$
|
(1.77
|
)
|
|
$
|
0.24
|
|
|
$
|
1.92
|
|
|
$
|
(3.15
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average diluted common shares outstanding
|
|
|
83,582
|
|
|
|
83,160
|
|
|
|
84,007
|
|
|
|
84,108
|
|
|
Average common shareholders' equity
|
|
$
|
4,376,172
|
|
|
$
|
4,622,982
|
|
|
$
|
4,410,668
|
|
|
$
|
4,856,280
|
|
|
Annualized return on average common equity
|
|
|
(18.1
|
%)
|
|
|
(3.3
|
)%
|
|
|
—
|
%
|
|
|
(8.6
|
%)
|
|
Annualized operating return on average common equity(16)
|
|
|
(13.6
|
%)
|
|
|
1.7
|
%
|
|
|
3.7
|
%
|
|
|
(5.4
|
%)
|
|
|
|
12 Tax cost (benefit) of $(8) million and $nil for the
three months ended December 31, 2018 and 2017, respectively, and
$(12) million and $2 million for the years ended 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.
|
|
13 Tax cost (benefit) of $1 million and $(4) million for
the three months ended December 31, 2018 and 2017, respectively, and
$(4) million and $(8) million for the years ended 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.
|
|
14 Tax cost (benefit) of $(4) million and $(3) million
for the three months ended December 31, 2018 and 2017, respectively,
and $(11) million and $(3) million for the years ended 2018 and
2017. Tax impact is estimated by applying the statutory rates of
applicable jurisdictions.
|
|
15 Tax impact is nil.
|
|
16 Annualized 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 QUARTERS AND YEARS ENDED DECEMBER 31, 2018 AND 2017
|
|
|
|
|
|
Quarters ended
|
|
Years ended
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
(in thousands, except per share amounts)
|
|
Net loss attributable to common shareholders
|
|
$
|
(198,448
|
)
|
|
$
|
(38,081
|
)
|
|
$
|
396
|
|
|
$
|
(415,779
|
)
|
|
Net investment (gains) losses, net of tax(12)
|
|
|
65,036
|
|
|
|
(42,908
|
)
|
|
|
138,576
|
|
|
|
(26,204
|
)
|
|
Foreign exchange losses (gains), net of tax(13)
|
|
|
(30,138
|
)
|
|
|
41,109
|
|
|
|
(33,496
|
)
|
|
|
126,960
|
|
|
Transaction and reorganization expenses, net of tax(14)
|
|
|
15,195
|
|
|
|
18,130
|
|
|
|
55,904
|
|
|
|
23,879
|
|
|
Revaluation of net deferred tax asset(15)
|
|
|
—
|
|
|
|
41,629
|
|
|
|
—
|
|
|
|
41,629
|
|
|
Bargain purchase gain(15)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(15,044
|
)
|
|
Operating income (loss)
|
|
$
|
(148,355
|
)
|
|
$
|
19,879
|
|
|
$
|
161,380
|
|
|
$
|
(264,559
|
)
|
|
Amortization of VOBA and intangible assets, net of tax(17)
|
|
|
22,395
|
|
|
|
42,644
|
|
|
|
149,470
|
|
|
|
42,644
|
|
|
Amortization of acquisition costs, net of tax(18)
|
|
|
(12,986
|
)
|
|
|
(26,443
|
)
|
|
|
(101,628
|
)
|
|
|
(26,443
|
)
|
|
Ex-PGAAP operating income (loss) (2)
|
|
$
|
(138,946
|
)
|
|
$
|
36,080
|
|
|
$
|
209,222
|
|
|
$
|
(248,358
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Loss per diluted common share
|
|
$
|
(2.37
|
)
|
|
$
|
(0.46
|
)
|
|
$
|
—
|
|
|
$
|
(4.94
|
)
|
|
Net investment (gains) losses, net of tax
|
|
|
0.78
|
|
|
|
(0.52
|
)
|
|
|
1.65
|
|
|
|
(0.31
|
)
|
|
Foreign exchange losses (gains), net of tax
|
|
|
(0.36
|
)
|
|
|
0.50
|
|
|
|
(0.40
|
)
|
|
|
1.51
|
|
|
Transaction and reorganization expenses, net of tax
|
|
|
0.18
|
|
|
|
0.22
|
|
|
|
0.67
|
|
|
|
0.28
|
|
|
Revaluation of net deferred tax asset
|
|
|
—
|
|
|
|
0.50
|
|
|
|
—
|
|
|
|
0.49
|
|
|
Bargain purchase gain
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.18
|
)
|
|
Operating income (loss) per diluted common share
|
|
$
|
(1.77
|
)
|
|
$
|
0.24
|
|
|
$
|
1.92
|
|
|
$
|
(3.15
|
)
|
|
Amortization of VOBA and intangible assets, net of tax(17)
|
|
|
0.27
|
|
|
|
0.51
|
|
|
|
1.78
|
|
|
|
0.51
|
|
|
Amortization of acquisition cost, net of tax(18)
|
|
|
(0.16
|
)
|
|
|
(0.32
|
)
|
|
|
(1.21
|
)
|
|
|
(0.31
|
)
|
|
Ex-PGAAP operating income (loss) per diluted common share(2)
|
|
$
|
(1.66
|
)
|
|
$
|
0.43
|
|
|
$
|
2.49
|
|
|
$
|
(2.95
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average diluted common shares outstanding
|
|
|
83,582
|
|
|
|
83,160
|
|
|
|
84,007
|
|
|
|
84,108
|
|
|
Average common shareholders' equity
|
|
|
4,376,172
|
|
|
|
4,622,982
|
|
|
|
4,410,668
|
|
|
|
4,856,280
|
|
|
Annualized return on average common equity
|
|
|
(18.1
|
)%
|
|
|
(3.3
|
)%
|
|
|
—
|
%
|
|
|
(8.6
|
)%
|
|
Annualized operating return on average common equity(16)
|
|
|
(13.6
|
)%
|
|
|
1.7
|
%
|
|
|
3.7
|
%
|
|
|
(5.4
|
)%
|
|
Annualized ex-PGAAP operating return on average common equity(2)
|
|
|
(12.7
|
)%
|
|
|
3.1
|
%
|
|
|
4.7
|
%
|
|
|
(5.1
|
)%
|
|
|
|
17 Tax cost (benefit) of $(5) million and $(10) million
for the three months ended December 31, 2018, and 2017, respectively
and $(35) million and $(10) million for the years ended December 31,
2018, and 2017, respectively. Tax impact is estimated by applying
the statutory rates of applicable jurisdictions.
|
|
18 Tax cost (benefit) of $3 million and $6 million for
the three months ended December 31, 2018, and 2017, respectively and
$24 million and $6 million for the years ended December 31, 2018,
and 2017, 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 securities' 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 including but not limited to those 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 the 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, pre-tax total return on cash and investments excluding foreign
exchange movements, ex-PGAAP operating income (loss) (in total and on
a per share basis) and annualized 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 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 expenses 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 such, 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 Compagnie
Belge d'Assurances Aviation NV/SA ("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).
The revaluation of net deferred tax asset ("DTA") resulted in a tax
expense recognized in the fourth quarter of 2017 related to the
revaluation of our net DTA, following the reduction in the U.S.
corporate income tax rate from 35% to 21% enacted as part of the Tax
Cuts and Jobs Act of 2017 ("U.S. Tax Reform"). The nature and timing of
the tax expense associated with the U.S. Tax Reform is not related to
the underwriting process, therefore, this expense is excluded from
consolidated underwriting income (loss).
We believe that 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, revaluation of
net deferred tax asset 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).
The revaluation of net deferred tax asset ("DTA") resulted in a tax
expense recognized in the fourth quarter of 2017 related to the
revaluation of our net DTA, following the reduction in the U.S.
corporate income tax rate from 35% to 21% enacted as part of the Tax
Cuts and Jobs Act of 2017 ("U.S. Tax Reform"). The nature and timing of
the tax expense associated with the U.S. Tax Reform is not related to
the underwriting process therefore, this expense is excluded it 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 excluding
after-tax net investment gains (losses), foreign exchange losses
(gains), transaction and reorganization expenses, revaluation of net
deferred tax asset 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, revaluation of net deferred tax asset 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
annualized operating ROACE, which are derived from the operating income
(loss) measure and are reconciled to the most comparable GAAP financial
measures, earnings per diluted 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.
Pre-Tax Total Return on Cash and Investments
excluding Foreign Exchange Movement
Pre-tax total return on cash and investments excluding foreign exchange
movements measures net investment income (loss), net investments gains
(losses), interest in income (loss) of equity method investments, and
change in unrealized investment gains (losses) generated by average cash
and investment balances. The reconciliation of pre-tax total return on
cash and investments excluding foreign exchange movements to pre-tax
total return on cash and investments, the most comparable GAAP financial
measure is presented in the Investments section in this release.
We believe this presentation enables investors and other users of our
financial information to analyze the performance of our investments.
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 associated with Novae's
balance sheet at October 2, 2017 (the "closing date" or "acquisition
date"). We present ex-PGAAP operating income (loss) per diluted common
share and annualized ex-PGAAP operating ROACE, 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 also presented in the Non-GAAP Financial
Measures Reconciliation of this press release.
The reconciliation of ex-PGAAP operating income (loss) per diluted
common share and annualized ex-PGAAP operating ROACE to the most
comparable GAAP financial measures, earnings per diluted common share
and annualized ROACE, respectively, are also presented in the Non-GAAP
Financial Measures Reconciliation of this press release.
We believe the presentation of ex-PGAAP operating income (loss),
ex-PGAAP operating income (loss) per diluted common share and annualized
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 months and year ended December 31, 2018 included the recognition
of premium attributable to Novae's balance sheet at the acquisition date
without the recognition of the associated acquisition costs.
View source version on businesswire.com: https://www.businesswire.com/news/home/20190130005695/en/
