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Axis beats analysts’ forecast

Bermuda-based re/insurer Axis Capital Holdings Ltd surpassed Wall Street's expectations in posting second-quarter net income of $191 million.

Profit broke down to $1.79 per share, compared with $72 million, or 62 cents per share in the second quarter last year.

Operating income totalled $173 million, or $1.63 per share, well ahead of the $1.20 per share consensus forecast of analysts tracked by Yahoo Finance. Annualised operating return was 13.1 percent.

Axis wrote more business, recording gross premiums written of $1.2 billion, up one percent. A nine percent increase in reinsurance premiums was offset by a three percent dip in insurance segment premiums.

The combined ratio of 90.8 percent — representing the proportion of premium dollars spent on claims and expenses — improved from 101.7 percent in the corresponding period last year.

Axis estimated natural catastrophe and weather-related pre-tax net losses of $36 million, primarily related to US weather events, compared to $140 million (net of reinstatement premiums) incurred during the second quarter of 2013.

Net favourable prior year reserve development of $85 million benefited the combined ratio by 8.5 points.

Axis spent $139 million buying back its own shares during the April through June period. At June 30, diluted book value share was $49.69, a five percent increase during the quarter and a 16 percent increase over the last 12 months.

Albert Benchimol, President and CEO of AXIS Capital, said: “Underlying these results is the continued rebalancing of our portfolio toward lower volatility and non-correlating lines creating greater efficiency of capital overall.

“During this year, we have already repurchased seven million shares, representing six percent of our opening equity, for $318 million, in addition to distributing $59 million in dividends to shareholders.

“Despite more challenging market conditions, I am highly confident in the power of our market presence and our delivery of service and technical know-how. We remain well positioned to access and win high quality business in all key markets.

“These attributes, combined with gains we expect to reap heading into 2015 from our various initiatives, independent of the property and casualty pricing cycle, will support our achievement of superior results with less volatility.”

Alternative investments generated $32 million during the quarter, boosting total investment income up to $115 million.

Total capital at June 30 was $7.4 billion, including $1.5 billion of senior notes and $0.6 billion of preferred equity, compared to $6.8 billion at the end of 2013.

Axis added: “The increase was primarily attributable to the issuance, during the first quarter of 2014, of $500 million of senior unsecured notes. Net proceeds from this senior note offering are expected to be used towards the repayment of $500 million of Axis Capital's 5.75 percent senior unsecured notes that mature on December 1, 2014.”

Axis CEO Albert Benchimol

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Published July 30, 2014 at 9:00 am (Updated July 29, 2014 at 9:45 pm)

Axis beats analysts’ forecast

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