Bermuda insurer Axis Capital last night announced a record year-end profit of more than $1 billion in only its sixth year of operation.

Axis chief executive officer John Charman hailed the results as "a magnificent achievement" and put it down to the high quality of his personnel.

"For us to have taken six years from a standing start to make $1 billion in net income is a magnificent achievement and it's a great testament to our team, everybody from the top to bottom of the company," Mr. Charman told The Royal Gazette.

Axis' net income for the fourth quarter of 2007 was $306 million, a quarterly record for the company, compared to $281 million in 2006. Net income for the year was $1.05 billion, compared to $926 million a year earlier.

Operating income and investment income both rose, while combined ratio (anything lower than 100 percent indicates profitable underwriting) improved 2.9 ratio points to 70.8 percent.

"If you look at our seven senior underwriters, from Michael Butt downwards, you see seven people with more than 200 years of combined experience in the industry," Mr. Charman said.

"We are a young company, but we have tremendous experience in our team.

"If there is a distinguishing factor about Axis, it's the expertise and quality of our senior underwriting team. That quality has been proven through industry cycle after industry cycle."

Axis, which writes specialty lines insurance and treaty insurance, achieved its improved results, despite a softening of insurance rates across virtually all lines.

"You can't differentiate between companies, when there are no losses," Mr. Charman said. "It's very difficult for analysts or reporters to differentiate between good companies and not so good when everybody's making profits. But when the market is soft, that's when quality shows."

Mr. Charman added that robust price monitoring systems were in place to carefully evaluate every piece of new business written by Axis and that senior management always strived to keep in touch with "the reality of what's going on in the marketplace".

"We are the only company in the industry in which senior management is so embedded in daily underwriting activity," the CEO said.

Despite the turmoil on the world markets, Axis' net investment income rose 19 percent for the year to $483 million. In its earnings statement, the company said it had $76 million in its investment portfolio in direct exposure to sub-prime mortgages, representing less than one percent of the company's total cash and investments.

Mr. Charman said: "Our investment committee has been very concerned about market conditions over the year and they have used a very defensive strategy. We've been fortunate not to have been tainted by the sub-prime crisis."

Axis had increased its diluted book value per share by 23 percent during 2007, Mr. Charman added, and had returned more than $400 million to shareholders through dividends and share repurchases.

Gross insurance premiums written were eight percent lower for the quarter at $509 million, which Axis said "reflected strong underwriting discipline".

The reinsurance segment reported a 61 percent fall in gross premiums written to $64 million, compared to $163.3 million in the fourth quarter of 2006. The fall was due primarily to cedants retaining more risk. For the year, gross reinsurance premiums written totalled $1.55 billion, in line with 2006.

Total capitalisation at December 31, 2007, was $5.7 billion, compared to $4.9 billion a year earlier.