Axis posts $96m loss
By Jonathan Kent
Bermuda insurer Axis Capital Holdings Ltd. last night reported a net loss of nearly $100 million, driven by permanent impairment of some investment assets and a fall in the value of an insurance contract tied to mortality rates.
The net loss broke down to 70 cents per share, compared with a net loss of $249 million, or $1.79 per share for the same period of last year.
Net realised investment losses of $253.4 million impacted the net income figure, as did a $135.7 million fall in the value of an insurance derivative contract.
Underwriting results, however, were strong with the company spending just 73.2 cents of each premium dollar on claims and expenses, helped by favourable prior-year reserve development of $122 million.
Operating income for the third quarter was $152 million, or $1 per share, compared with an operating loss of $161 million, or $1.15 per diluted common share last year, when results were impacted by claims from hurricanes Gustav and Ike.
Book value per share rose 10 percent during the July through September period to $31.58, which is also up 22 percent through the first nine months of the year.
Net income for the nine months ended September 30, 2009 was $179 million, or $1.19 per share, compared with $220 million, or $1.40 per diluted share, for the corresponding period in 2008. Gross premiums written were up seven percent on last year to $775 million.
Chief executive officer John Charman said Axis had seen strong recovery in asset valuations throughout its investment portfolio.
"Our results are particularly strong given the impact of the global economic crisis over the last two years," Mr. Charman said.
"Our results this quarter were adversely impacted by an increase in the fair value liability of our only insurance derivative contract."
CEOs including XL Capital's Mike McGavick and Ace Ltd.'s Evan Greenberg last week highlighted a trend of underpricing insurance policies in the industry.
Mr. Charman said: "At this time, the reinsurance market continues to remain the most disciplined and attractive area of the global property and casualty marketplace. In our insurance segment, we have maintained a very defensive posture overall.
"While rates improved across our insurance portfolio during the third quarter of 2009, this improvement was somewhat muted relative to the first half of this year. As we have demonstrated in the past, when necessary, we will sacrifice top-line growth to preserve underwriting profit."
Axis continued to invest in the expansion of distribution capabilities and new target markets including global accident and health, Mr. Charman said. "We expect these efforts to generate significant returns to shareholders over time," the CEO added.
