Axis Capital Holdings Ltd. yesterday posted a net loss of $249 million for the third quarter, after taking huge hits from hurricanes Gustav and Ike.

The insurer and reinsurer said the two storms would cost it around $371 million — the largest sum declared by any Bermuda company so far.

Meanwhile the company also suffered $434 million of realised and unrealised losses on its investments.

Axis chief executive officer John Charman described the third quarter's combination of unfavourable underwriting and investment conditions as "an unprecedented confluence of events".

The net loss broke down to $1.79 per share, compared to a net income of $270 million, or $1.65 per share in the same period in 2007.

Shareholders' equity of $4.6 billion declined $0.7 billion, or 13 percent during the quarter, mostly due to the storm losses, Axis said.

Book value slipped three percent during the first nine months of the year to $26.25.

Combined ratio — the percentage of premium dollars paid out on claims and expenses — was 128 percent.

"During this quarter, the world's financial system, our industry and we at Axis have experienced an unprecedented confluence of events, including significant hurricane activity as well as extraordinary volatility and illiquidity in the financial markets," Mr. Charman said.

"Our diluted book value per share has ended the last 12 months down less than three percent; however, excluding the impact of share repurchases over that period, it is essentially flat.

"Our capital resources and liquidity position remain very strong and we are amply prepared to maximise shareholder value throughout this important next cycle with our global and diversified platforms in both the insurance and reinsurance markets. We believe a cycle turn to the positive is now nearly upon us, but the timing and magnitude of the onset will vary by segment of the market."

Net investment income was $51 million — down 57 percent on the prior year. The decrease was driven by a $68 million fall in income from Axis' alternative investments, most of which was due to unrealised losses on its credit and hedge funds.

The company said liquid markets were available for the vast majority of its $10.6 billion investment portfolio, which includes $4.8 billion of investments in cash and cash equivalents and US government and agency-backed securities. Axis added it has a $1.5 billion credit facility, which provides for borrowing of up to $500 million, and does not expire until August 2010.