AXIS Reports Record $166.8 Million Q1 Net

Bermuda-based AXIS Capital Holdings Limited reported a 56 percent increase in net income for the quarter ended March 31, 2004 to $166.8 million, or $1.00 per diluted share, from $107.1 million, or $0.75 per diluted share, for the quarter ended March 31, 2003.

The bulletin cited “increased underwriting profits and investment income” as the chief factors in producing the good results. It also noted that the company’s annualized return on shareholders’ equity was 22.9 percent for the quarter ended March 31, 2004 compared to 21.2 percent for the quarter ended March 31, 2003.

John Charman, President and CEO, commented: “This first quarter of 2004 saw all four of our underwriting segments fully operational for the first time. Our diversified, global AXIS franchise was able to participate strongly in the important renewal season and all segments reported substantial growth ranging from 23 percent to 170 percent.” He noted the company’s “geographic and product diversified group of specialty businesses, trading daily as a highly efficient and focused, integrated underwriting machine,” indicating that this business model was largely responsible for producing the 22.9 percent ROE.

“Our diversity of operations, our strong balance sheet, our highly skilled and well regarded underwriting professionals continue to attract quality business and drive long-term real value for our shareholders,” Charman continued.

The report also gave the following figures: “Gross premiums written for the quarter ended March 31, 2004 were $1,044.1 million compared to $608.6 million for the quarter ended March 31, 2003, an increase of 72 percent. Of these premiums written: $300.4 million were derived from global insurance compared to $243.6 million in the corresponding quarter of 2003, an increase of 23 percent; $429.1 million from global reinsurance compared to $211.5 million in the corresponding quarter of 2003, an increase of 103 percent; $148.3 million from U.S. insurance compared to $91.9 million in the corresponding quarter of 2003, an increase of 61 percent; and $166.3 million from U.S. reinsurance compared to $61.6 million the corresponding quarter of 2003, an increase of 170 percent. The increase in our global reinsurance gross premiums written was largely driven by our strategic expansion into continental Europe. The increase in our U.S. insurance and reinsurance gross premiums written was largely driven by greater market penetration and our ability to participate fully in the first quarter’s important renewal season.

“For the quarter ended March 31, 2004 compared to the quarter ended March 31, 2003, ceded premiums increased to $144.9 million from $68.4 million and our net premiums written rose to $899.2 million from $540.1 million. Net premiums earned increased to $471.2 million from $302.4 million. The increase reflects the increase in our gross premiums written over the last twelve months.”

Axis “generated a combined ratio of 72.5 percent, a loss ratio of 51.5 percent and an expense ratio of 21.0 percent “in the first quarter of 2004, “compared to 73.1 percent, 48.4 percent and 24.7 percent, respectively, for the quarter ended March 31, 2003. In both of these quarters, there was limited catastrophic loss activity. In addition, our loss ratios benefited by 10.3 percentage points and 3.4 percentage points, respectively, as a result of favorable prior period loss reserve development. Our expense ratio continues to improve as our earned premium base increases.”

Shareholders’ equity increased to $3.0 billion at March 31, 2004. Diluted book value per share at March 31, 2004 was $18.54, compared to $17.48 at December 31, 2003. Diluted book value per share is a non-GAAP financial measure. A reconciliation of this measure to book value per share is presented at the end of this release.

AXIS Capital will host a conference call on Tuesday, May 4, 2004 at 8:30 AM (Eastern) to discuss the first quarter financial results and related matters. This presentation will be available through an audio webcast accessible through the Investor Information section of the Company’s website at www.axiscapital.com.