30 July 2014News

Lower volatility lines behind strong Q2 results for AXIS

AXIS Capital produced a healthy set of results in its Q2 report, driven by the company’s greater efficiency of overall capital due to the continued rebalancing of its portfolio.

The firm reported net income available to common shareholders for the second quarter of 2014 of $191 million, compared with $72 million for the second quarter of 2013. Net income available to common shareholders for the six months ended June 30th, 2014, was $328 million, compared with $375 million for the corresponding period of 2013.

The company’s operating income also greatly improved in the second quarter of 2014, sitting at $173 million, compared with $50 million for the prior year quarter. For the six months ended June 30th, 2014, AXIS Capital reported operating income of $310 million, compared with $278 million, for the first six months of 2013.

Q2 Highlights

AXIS saw gross premiums written increase 1 percent to $1.2 billion, with growth of 9 percent in its reinsurance segment partially offset by a decrease in written premiums of 3 percent in its insurance business.

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

Operating income for the quarter was $173 million, representing an annualized operating return on average common equity of 13.1 percent, compared to $50 million and 3.9 percent in Q2 2013.

Finally, the company’s combined ratio for the quarter was 90.8 percent, compared to 101.7 percent in the prior year quarter.

Commenting on the results, Albert Benchimol, president and CEO of AXIS Capital, says: "AXIS reported strong results for the second quarter, with operating income of $1.63 per diluted share, annualized operating ROE of 13.1 percent and diluted book value per share of $49.69 at the end of the quarter. Adjusted for dividends, diluted book value grew 6 percent during the quarter and 19 percent over last year. 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 7 million shares, representing 6 percent of our opening equity, for $318 million, in addition to distributing $59 million in dividends to shareholders.”

Benchimol continues: “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.”