Axis Capital Holdings Ltd last night announced that second-quarter profits more than halved on estimated catastrophe losses of some $126 million.But the Bermuda Class of 2001 re/insurer’s operating earnings per share of 65 cents far exceeded the expectations of 47 cents of analysts surveyed by Bloomberg.Axis posted net income of $101 million, or 79 cents per diluted common share, compared with $205 million, or $1.51 per share, for the second quarter of 2010.Sales rose and book value increased three percent, as Axis chief executive officer John Charman hailed a “solid quarter” for the company in spite of the natural disasters.Of the catastrophe losses, $75 million related to severe US weather events, including a series of tornadoes that struck the US in April and May. The June aftershock in New Zealand, which added to the damage caused by previous earthquakes in the Christchurch area, accounted for a further $31 million, while there was a $20 million increase in loss estimates for first-quarter catastrophes.“The year thus far, which we estimate has cost the industry over $70 billion in insured catastrophe losses, is breaking records in terms of global catastrophe activity,” said Axis chief executive officer John Charman.“These losses, combined with recently introduced material changes to catastrophe models have propelled the industry into a transitional phase, forcing it to take a new view of every aspect of catastrophe risk. Since January 1, Axis has been repositioning its portfolio to benefit from these positive opportunities following this transition as we enter 2012.“Despite the impact of catastrophes on underwriting profit, Axis had a solid second quarter. Operating income was $83 million and diluted book value per share grew three percent in the quarter.“Our gross premiums written in the quarter increased 11 percent reflecting meaningful contributions from our new accident and health initiative and our renewable energy insurance team in London as well as continued, steady progress with our P&C operations in Canada and Australia.“Our reserves continued to develop favourably and we have continued to prudently diversify our investment portfolio away from risk associated with rising interest rates. Finally, our posture remains circumspect with respect to casualty insurance markets that have yet to experience some very necessary improvement.”The company’s combined ratio the proportion of premium dollars spent on claims and expenses rose to 98.9 percent, compared to 86.2 percent last year. Net favourable prior-year reserve development of $52 million benefited the ratio by 6.1 points.Net investment income was $100 million, a rise of 21 percent on the second-quarter of 2010. Axis made a return on cash and investments of 1.5 percent, compared to 0.9 percent last year.Shareholders’ equity at June 30 was $5.3 billion and book value per share was $36.78, down from $39.37 at December 31, 2010.