Axis Capital Holdings Ltd. yesterday became the latest insurer to boost its dividend and announce a share repurchase programme.

Axis said it had increased its quarterly dividend 20 percent to 15 cents per shares and approved the additional repurchase of $150 million of common shares.

Axis recently completed a $350 million share repurchase from two of its founding shareholders, including insurance broker Marsh, which exhausted the share repurchase plan authorised by the board of directors in December, 2004.

Axis is the latest Bermuda insurer to announce a ?capital management plan? and to have seen original investors cash in.

Earlier this month, Montpelier Re and Aspen both said original investors were cashing in their investments.

Aspen said it would be offering $150 million of shares being sold by its original investors. In addition to the sale of shares by its original investors, Montpelier announced a special dividend of $390 million to shareholders.

Companies buy back shares and increase dividends for a number of reasons, not the least of which is to make the companies? shares more attractive to investors by reducing the supply of shares and increasing the dividend yield.

In the case of insurance companies, which require a certain level of capital to support their underwriting, it also makes sense to reduce capital if premium rates are declining, thus reducing the need for heavy capital investment.

The alternative is to write more premium at lower rates, thus reducing the company?s profitability and the return on investment to shareholders. At the same time, lower premiums can be undervalued, making it harder for the insurer to later pay claims.

In certain cases, insurers will retain capital with the aim of buying out competitors or expanding into new insurance lines. However, many of the class of 2001 Bermuda insurers seem to be opting to reduce capital instead. Axis? dividend will be payable on April 14, 2005, to the shareholders of record at the close of business on March 31, 2005.