AXIS Capital Holdings Ltd. (AXS) filed Quarterly Report for the period ended 2009-09-30.
AXIS Capital Holdings Limited is a Bermuda-based global provider of specialty lines insurance and treaty reinsurance. Axis Capital Holdings Ltd. has a market cap of $4.09 billion; its shares were traded at around $28.76 with a P/E ratio of 14 and P/S ratio of 1.5. The dividend yield of Axis Capital Holdings Ltd. stocks is 2.8%. Axis Capital Holdings Ltd. had an annual average earning growth of 18.7% over the past 5 years.
Highlight of Business Operations:
ROACE was (8.2%) and 5.4% for the three and nine months ended September 30, 2009, respectively, compared to (22.5%) and 6.7% for the same periods in 2008. The return for the current quarter was impacted by net realized investment losses of $253 million and an increase in the fair value liability of an insurance derivative contract of $136 million. The results otherwise benefited from low catastrophe activity and higher net investment income relative to the prior year quarter. The return in the third quarter of 2008 was impacted by, among other things, losses incurred on Hurricanes Ike and Gustav of $386 million (net of related earned reinstatement premium) and net realized investment losses of $89 million. For further analysis, refer to the ‘Results of Operations Overview’, below.
Diluted book value per common share increased 22.5% from $25.79 at December 31, 2008 to $31.58 at September 30, 2009. The increase was primarily due to a decrease in unrealized losses on our investment portfolio of $793 million together with net income available to common shareholders in the first nine months of 2009 of $179 million. During the year we recorded other than temporary impairments (“OTTI”) charges on our investment portfolio of $331 million, which reduced net income available to common shareholders but also contributed to the above reduction in the net unrealized loss position.
Total underwriting income for the three and nine months ended September 30, 2009 was $71 million and $309 million, respectively, compared to an underwriting loss of $186 million and underwriting income of $91 million in the respective periods of 2008.
Underwriting income in our insurance segment for the three and nine months ended September 30, 2009 decreased $32 million and $92 million, respectively over the same periods of 2008. These decreases were driven by an increase in the fair value liability of an insurance derivative contract of $136 million for the quarter and $161 million for the year to date. In addition, our insurance segment was impacted by higher current accident year loss activity on its credit and political risk business this year. Underwriting results for the quarter did however benefit from a lower level of catastrophe activity relative to the prior year quarter, which included losses incurred on Hurricanes Ike and Gustav of $115 million. Our insurance segment also experienced a lower frequency and severity of property losses over the year to date.
Underwriting income in our reinsurance segment for the three and nine months ended September 30, 2009 increased $289 million and $310 million, respectively over the same periods of 2008. These increases were driven by a lower level of catastrophe losses relative to the prior year, which included losses incurred on Hurricanes Ike and Gustav of $271 million, net of related earned reinstatement premium. The increase in underwriting income for the quarter and year to date also reflects additional net favorable prior period reserve development versus the prior year periods of $32 million and $56 million, respectively. These factors were partially offset by increased loss activity on trade credit and bond reinsurance business this year.
Total net investment income and net realized investment gains/losses for the three and nine months ended September 30, 2009, decreased $80 million and $193 million, respectively, compared to the same periods in 2008. The reduction in the quarter was driven by an increase in net realized investment losses ($164 million) and lower investment income on fixed maturities and cash and cash equivalents ($20 million), partially offset by higher income from other investments ($105 million). The increase in net realized investment losses this quarter was driven by OTTI charges from medium-term notes (“MTNs”) in the fixed maturity portfolio.
AXS is in the portfolios of John Griffin of Blue Ridge Capital, Richard Snow of Snow Capital Management, L.P..
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