AXIS Posts $468.1 Million Q3 Net Loss

Bermuda-based AXIS Capital Holdings Limited reported a net loss for the quarter ended September 30, 2005 of $468.1 million, or $3.32 per diluted common share, compared with net income of $6.3 million, or 4 cents per diluted common share, for the quarter ended September 30, 2004.

AXIS also suffered a net loss for the nine months ended September 30, 2005 of $143.4 million, or $1.01 per diluted common share, compared with net income of $313.9 million, or $1.89 per diluted common share, for the nine months ended September 30, 2004.

The company’s announcement noted: “Net losses from Hurricanes Katrina and Rita were $804.5 million for the quarter ended September 30, 2005 compared to net losses from Hurricanes Charley, Frances, Ivan and Jeanne of $227.4 million for the quarter ended September 30, 2004. Our net loss for Hurricane Katrina was $723.6 million. Our initial range of net loss estimates was determined immediately following the event and our updated estimate reflects our analysis of the latest loss information. Our estimated net losses for Hurricane Katrina assume an industry loss of $60 billion.”

AXIS net operating loss (which excludes capital gains and losses) for the third quarter was slightly less at $462.2 million, or $3.27 per diluted common share. For the first nine months of 2005, AXIS reported a net operating loss of $138.5 million, or 98 cents per diluted common share.

Other operating highlights cited in the announcement included:
— Gross premiums written increased by 15.5 percent to $794.6 million primarily due to an increase in premiums written by our reinsurance segment;
— Net premiums earned increased by 18.2 percent to $616.8 million primarily due to net premiums earned by our reinsurance segment;
— Total pre-tax investment income, including net realized gains and losses, increased by 38.5 percent to $60.6 million primarily due to a combination of higher investment balances and higher investment yields; and
— Total shareholders’ equity was $2.9 billion and total capitalization was $3.4 billion at September 30, 2005, including $250 million of newly issued preferred equity.

Commenting on the third quarter 2005 results, John Charman, the company’s President and CEO, stated: “It has been an extraordinarily eventful quarter not only for AXIS, but also for the industry as a whole. This last quarter continued to demonstrate the increased frequency of major Atlantic hurricanes, much like last year’s hurricane season. Uniquely, it was marked by the unprecedented profile and magnitude of the Katrina loss. The unprecedented losses of this year could well exceed an ultimate figure of $80 billion for the industry. My stated management goal has always been, at a minimum, preservation of capital and I believe that we have achieved this. Our capital position is strong and I expect every one of AXIS’s major businesses will benefit strongly from the dramatic, positive changes underway in the marketplace.”

Charman also noted: “Our initial communication following Katrina was that we estimated this net loss to AXIS to be within our expectations of operating income for the year. Since that time, the industry has incurred the additional strain from Rita and Wilma that could together exceed $20 billion in industry losses. Following these events, we believe that we may ultimately have a nominal net operating loss for the 2005 calendar year, assuming no other large losses during the remainder of the year.”

The full earning statement may be obtained on the company’s Website at: http://www.axiscapital.com.