Bermuda’s AXIS Capital Holdings Limited reported a net loss for the third quarter of 2008 of $249 million, or $1.79 per diluted common share, compared with net income of $270 million, or $1.65 per diluted common share, for the third quarter of 2007.
The Company’s net income for the nine months ended September 30, 2008 was $220 million, or $1.40 per diluted share, compared with $749 million, or $4.53 per diluted share, for the corresponding period in 2007.
Axis noted that the results for the period were “impacted by Hurricanes Ike and Gustav and investment losses resulting from the unprecedented financial market volatility and disruption to the financial system.”
Operating losses for the third quarter were $161 million, or $1.15 per diluted share, compared with operating income of $271 million, or $1.66 per diluted common share, for the third quarter of 2007. Operating losses excluding foreign exchange gains, net of tax, for the third quarter of 2008 were $171 million, or $1.22 per diluted common share, compared with income of $264 million, or $1.62 per diluted common share, for the third quarter of 2007.
Operating income for the first nine months of 2008 was $273 million, or $1.74 per diluted share, compared with $754 million, or $4.55 per diluted common share, for the first nine months of 2007. This same item excluding foreign exchange gains, net of tax, for the first nine months of 2008 was $251 million, or $1.59 per diluted common share, compared with $739 million, or $4.46 per diluted common share, for the first nine months of 2007.
Axis listed the following operating highlights
— Net premiums earned of $690 million were stable;
— Net loss per diluted share of $1.79. We recorded after-tax net losses on Hurricanes Ike and Gustav of $2.66 per diluted share;
— A combined ratio of 128.0 percent, including net favorable reserve development of 11.0 ratio points. Excluding net losses from Hurricanes Ike and Gustav, our combined ratio was 69.0 percent;
— Net investment income of $51 million, a decrease of 57 percent. This reduction was primarily due to unrealized mark-to-market losses on our credit and hedge funds resulting from the significant disruption to the financial system;
— Strong operating cash flows of $489 million for the quarter and $1.2 billion for the year to date;
— Capital management initiatives during the quarter included $58 million of share repurchases. Our common dividend of $0.185 per share represents an increase of 12 percent over the prior year quarter;
— Shareholders’ equity of $4.6 billion, a decrease of $0.7 billion, or 13 percent, in the quarter. This reduction primarily reflects the after-tax impact of net losses from Hurricanes Gustav and Ike in the quarter of $371 million, net of related earned premium, and the combined after-tax impact of realized and unrealized losses from our investment portfolio of $434 million;
— Diluted book value per common share1 of $26.25, a decrease of 3 percent from September 30, 2007, and 9 percent from December 31, 2007. Excluding the impact of share repurchase activity, our diluted book value per common share was essentially flat over the twelve months ended September 30, 2008; and
— With respect to our liquidity position, liquid markets are available for the vast majority of our $10.6 billion investment portfolio, which includes $4.8 billion of investments in cash and cash equivalents and U.S. government and agency backed securities and our $1.5 billion credit facility, which provides for borrowing of up to $500 million, and does not expire until August 2010.
CEO and President John Charman commented: “During this quarter, the world’s financial system, our industry and we at AXIS have experienced an unprecedented confluence of events, including significant hurricane activity as well as extraordinary volatility and illiquidity in the financial markets.
“Our diluted book value per share has ended the last twelve months down less than 3 percent; however, excluding the impact of share repurchases over that period, it is essentially flat. Our capital resources and liquidity position remain very strong and we are amply prepared to maximize shareholder value throughout this important next cycle with our global and diversified platforms in both the insurance and reinsurance markets. We believe a cycle turn to the positive is now nearly upon us, but the timing and magnitude of the onset will vary by segment of the market.”
The complete report and details on accessing to yesterday’s earnings conference call may be obtained on the Company’s web site at: http://www.axiscapital.com.
Source: Axis Capital
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