EX-2 3 q32017financialsupplement-.htm THIRD QUARTER 2017 INVESTOR FINANCIAL SUPPLEMENT Exhibit







axislogoq12017a04.jpg
 



AXIS Capital Holdings Limited








INVESTOR FINANCIAL SUPPLEMENT

THIRD QUARTER 2017




axislogoq12017a04.jpg






 
 
 
 
 
 
 
 
 
 
 
 
 
 
AXIS Capital Holdings Limited
 
 
 
 
 
92 Pitts Bay Road
 
 
 
 
 
Pembroke HM 08 Bermuda
 
 
 
 
 
 
 
 
 
 
 
Contact Information:
 
 
 
 
 
Linda Ventresca
 
 
 
 
 
Investor Relations
 
 
 
 
 
441 405 2727
 
 
 
 
 
investorrelations@axiscapital.com
 
 
 
 
 
 
 
 
 
 
 
Website Information:
 
 
 
 
 
www.axiscapital.com
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
This report is for informational purposes only. It should be read in conjunction with the documents that we file with the Securities and Exchange Commission pursuant to the Securities Act of 1933 and the Securities Exchange Act of 1934.
 
 




axislogoq12017a04.jpg

AXIS Capital Holdings Limited
FINANCIAL SUPPLEMENT TABLE OF CONTENTS
 
  
Page(s)
  
i - iii
  
II. Income Statements
  
 
  
 
  
  
  
 
  
III. Balance Sheets
  
 
  
b. Cash and Invested Assets:
  
 
  
  
  
  
  
  
  
IV. Losses Reserve Analysis
  
 
  
  
  
  
  
V. Share Analysis
  
 
  
  
  
VI. Non-GAAP Financial Measures
  
 
  
 
 


axislogoq12017a04.jpg

AXIS Capital Holdings Limited
BASIS OF PRESENTATION
DEFINITIONS AND PRESENTATION
Unless otherwise noted, all data is in thousands, except for per share amounts and ratio information.
All financial information contained herein is unaudited, except for the consolidated balance sheets at December 31, 2016 and December 31, 2015 and consolidated statements of income for the years then ended.
Amounts may not reconcile exactly due to rounding differences.
NM - Not meaningful; NA - Not applicable
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS:
Statements in this presentation that are not historical facts, including statements regarding our estimates, beliefs, expectations, intentions, strategies or projections, may be “forward-looking statements” within the meaning of the U.S. federal securities laws, including the Private Securities Litigation Reform Act of 1995. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in the United States securities laws. In some cases, these statements can be identified by the use of forward-looking words such as “may,” “should,” “could,” “anticipate,” “estimate,” “expect,” “plan,” “believe,” “predict,” “potential,” “intend” or similar expressions. Our expectations are not guarantees and are based on currently available competitive, financial and economic data along with our operating plans. Forward-looking statements contained in this presentation may include, but are not limited to, information regarding our estimates of losses related to catastrophes and other large losses, measurements of potential losses in the fair market value of our investment portfolio, our expectations regarding pricing and other market conditions, our growth prospects, and valuations of the potential impact of movements in interest rates, equity securities' prices, credit spreads and foreign currency rates.

Forward-looking statements only reflect our expectations and are not guarantees of performance. Accordingly, there are or will be important factors that could cause actual results to differ materially from those indicated in such statements. We believe that these factors include, but are not limited to, the following:

the cyclical nature of the re(insurance) business leading to periods with excess underwriting capacity and unfavorable premium rates,
the occurrence and magnitude of natural and man-made disasters,
losses from war, terrorism and political unrest or other unanticipated losses,
actual claims exceeding our loss reserves,
general economic, capital and credit market conditions,
the failure of any of the loss limitation methods we employ,
the effects of emerging claims, coverage and regulatory issues, including uncertainty related to coverage definitions, limits, terms and conditions,
our inability to purchase reinsurance or collect amounts due to us,
the breach by third parties in our program business of their obligations to us,
difficulties with technology and/or data security,
the failure of our policyholders and intermediaries to pay premiums,
the failure of our cedants to adequately evaluate risks,
inability to obtain additional capital on favorable terms, or at all,
the loss of one or more key executives,
a decline in our ratings with rating agencies,
loss of business provided to us by our major brokers and credit risk due to our reliance on brokers,
changes in accounting policies or practices,
the use of industry catastrophe models and changes to these models,
changes in governmental regulations and potential government intervention in our industry,
failure to comply with certain laws and regulations relating to sanctions and foreign corrupt practices,
increased competition,
changes in the political environment of certain countries in which we operate or underwrite business including the United Kingdom's expected withdrawal from the European Union,
fluctuations in interest rates, credit spreads, equity securities' prices and/or currency values,
the failure to successfully integrate acquired businesses or realize the expected synergies resulting from such acquisitions, and
the other factors set forth in our most recent Annual Report on Form 10-K, filed with the Securities and Exchange Commission ("SEC"), as such factors may be updated from time to time in our periodic and other filings with the SEC, which are accessible on the SEC's website at www.sec.gov.

We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

i

axislogoq12017a04.jpg

AXIS Capital Holdings Limited
BASIS OF PRESENTATION
BUSINESS DESCRIPTIONS

INSURANCE SEGMENT

Our insurance segment offers specialty insurance products to a variety of niche markets on a worldwide basis. The following are the lines of business in our insurance segment:
Property: provides physical loss or damage, business interruption and machinery breakdown coverage for virtually all types of property, including commercial buildings, residential premises, construction projects and onshore energy installations. This line of business consists of both primary and excess risks, some of which are catastrophe-exposed.
Marine: provides coverage for traditional marine classes, including offshore energy, cargo, liability, recreational marine, fine art, specie, hull and war. Offshore energy coverage includes physical damage, business interruption, operators extra expense and liability coverage for all aspects of offshore upstream energy, from exploration and construction through the operation and distribution phases.
Terrorism: provides coverage for physical damage and business interruption of an insured following an act of terrorism.
Aviation: provides hull and liability and specific war coverage primarily for passenger airlines but also for cargo operations, general aviation operations, airports, aviation authorities, security firms and product manufacturers.
Credit and Political Risk: provides credit and political risk insurance products for banks and corporations. Coverage is provided for a range of risks including sovereign default, credit default, political violence, currency inconvertibility and non-transfer, expropriation, aircraft non-repossession and contract frustration due to political events. The credit insurance coverage is primarily for lenders seeking to mitigate the risk of non-payment from their borrowers. For the credit insurance contracts, it is necessary for the buyer of the insurance (most often a bank) to hold an insured asset (most often an underlying loan) in order to claim compensation under the insurance contract.
Professional Lines: provides coverage for directors’ and officers’ liability, errors and omissions liability, employment practices liability, fiduciary liability, crime, professional indemnity, medical malpractice and other financial insurance related coverages for commercial enterprises, financial institutions and not-for-profit organizations. This business is predominantly written on a claims-made basis.
Liability: primarily targets primary and low/mid-level excess and umbrella commercial liability risks in the U.S. wholesale markets. Target industry sectors include construction, manufacturing, transportation and trucking and other services.
Accident and Health: includes accidental death, travel insurance and specialty health products for employer and affinity groups, as well as accident and health reinsurance for catastrophic or per life events on a quota share and/or excess of loss basis, with aggregate and/or per person deductibles.





ii

axislogoq12017a04.jpg

AXIS Capital Holdings Limited
BASIS OF PRESENTATION
 
BUSINESS DESCRIPTIONS (CONTINUED)

REINSURANCE SEGMENT

Our reinsurance segment provides non-life reinsurance to insurance companies on a worldwide basis. The following are the lines of business in our reinsurance segment:

Catastrophe: provides protection for most catastrophic losses that are covered in the underlying insurance policies written by our cedants. The exposure in the underlying policies is principally property exposure but also covers other exposures including workers compensation, personal accident and life. The principal perils in this portfolio are hurricane and windstorm, earthquake, flood, tornado, hail and fire. In some instances, terrorism may be a covered peril or the only peril. We underwrite catastrophe reinsurance principally on an excess of loss basis.
Property: provides coverage for property damage and related losses resulting from natural and man-made perils contained in underlying personal and commercial policies. While our predominant exposure is to property damage, other risks, including business interruption and other non-property losses, may also be covered when arising from a covered peril. While our most significant exposures typically relate to losses from windstorms, tornadoes and earthquakes, we are also exposed to other perils such as freezes, riots, floods, industrial explosions, fires, hail and a number of other loss events. We assume business on both a proportional and excess of loss basis.
Professional Lines: covers directors’ and officers’ liability, employment practices liability, medical malpractice, professional indemnity, environmental liability and miscellaneous errors and omissions insurance risks. The underlying business is predominantly written on a claims-made basis. Business is written on both a proportional and excess of loss basis.
Credit and Surety: consists of reinsurance of trade credit insurance products and includes both proportional and excess of loss structures. The underlying insurance indemnifies sellers of goods and services in the event of a payment default by the buyer of those goods and services. The Company provides credit insurance coverage to mortgage guaranty insurers and government sponsored entities. Also included in this line of business is coverage for losses arising from a broad array of surety bonds issued by insurers to satisfy regulatory demands or contract obligations in a variety of jurisdictions around the world.
Motor: provides coverage to insurers for motor liability and property damage losses arising out of any one occurrence. A loss occurrence can involve one or many claimants where the ceding insurer aggregates the claims from the occurrence. We offer traditional proportional and non-proportional reinsurance as well as structured solutions.
Liability: provides coverage to insurers of standard casualty business, excess and surplus casualty business and specialty casualty programs. The primary focus of the underlying business is general liability, although workers' compensation and auto liability are also written.
Agriculture: provides coverage for risks associated with the production of food and fiber on a global basis for primary insurance companies writing multi-peril crop insurance, crop hail, and named peril covers, as well as custom risk transfer mechanisms for agricultural dependent industries with exposures to crop yield and/or price deviations. We provide both proportional and aggregate stop loss reinsurance.
Engineering: provides coverage for all types of construction risks and risks associated with erection, testing and commissioning of machinery and plants during the construction stage. This line of business also includes coverage for losses arising from operational failures of machinery, plant and equipment and electronic equipment as well as business interruption.
Marine and Other: includes marine, aviation and personal accident reinsurance.



iii

axislogoq12017a04.jpg

AXIS Capital Holdings Limited
FINANCIAL HIGHLIGHTS
 
 
 
 
Quarter ended September 30,
 
Nine months ended September 30,
 
 
 
 
 
2017
 
2016
 
Change
 
2017
 
2016
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
HIGHLIGHTS
 
Gross premiums written
 
$
1,185,574

 
$
959,962

 
23.5
%
 
 
$
4,459,772

 
$
4,239,558

 
5.2
%
 
Gross premiums written - Insurance
 
62.8
%
 
70.4
%
 
(7.6
)
pts
 
50.1
%
 
49.8
%
 
0.3

pts
Gross premiums written - Reinsurance
 
37.2
%
 
29.6
%
 
7.6

pts
 
49.9
%
 
50.2
%
 
(0.3
)
pts
Net premiums written
 
$
832,743

 
$
595,431

 
39.9
%
 
 
$
3,297,718

 
$
3,288,587

 
0.3
%
 
Net premiums earned
 
$
1,017,131

 
$
934,415

 
8.9
%
 
 
$
2,937,265

 
$
2,783,746

 
5.5
%
 
Net premiums earned - Insurance
 
48.8
%
 
47.6
%
 
1.2

pts
 
49.3
%
 
47.5
%
 
1.8

pts
Net premiums earned - Reinsurance
 
51.2
%
 
52.4
%
 
(1.2
)
pts
 
50.7
%
 
52.5
%
 
(1.8
)
pts
Net income (loss) available to common shareholders
 
$
(467,740
)
 
$
176,644

 
nm
 
 
$
(377,695
)
 
$
334,554

 
nm
 
Non-GAAP Operating income (loss) [a]
 
(445,895
)
 
160,689

 
nm
 
 
(284,436
)
 
309,450

 
nm
 
Reserve for losses and loss expenses
 
10,787,575

 
9,874,807

 
9.2
%
 
 
10,787,575

 
9,874,807

 
9.2
%
 
Total shareholders’ equity
 
$
5,454,699

 
$
6,025,658

 
(9.5
%)
 
 
$
5,454,699

 
$
6,025,658

 
(9.5
%)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PER COMMON SHARE AND COMMON SHARE DATA
 
Basic earnings (loss) per common share
 

($5.61
)
 

$1.97

 
nm
 
 

($4.47
)
 

$3.64

 
nm
 
Diluted earnings (loss) per common share
 
(5.61
)
 
1.96

 
nm
 
 
(4.47
)
 
3.61

 
nm
 
Non-GAAP operating income (loss) per common share - diluted [b]
 

($5.35
)
 

$1.78

 
nm
 
 

($3.37
)
 

$3.34

 
nm
 
Weighted average common shares outstanding
 
83,305

 
89,621

 
(7.0
%)
 
 
84,479

 
91,852

 
(8.0
%)
 
Diluted weighted average common shares outstanding
 
83,305

 
90,351

 
(7.8
%)
 
 
84,479

 
92,579

 
(8.7
%)
 
Book value per common share 
 

$56.28

 

$61.07

 
(7.8
%)
 
 

$56.28

 

$61.07

 
(7.8
%)
 
Diluted book value per common share (treasury stock method)
 
55.33

 
59.77

 
(7.4
%)
 
 
55.33

 
59.77

 
(7.4
%)
 
Diluted tangible book value per common share (treasury stock method) [a]
 
54.30

 
58.82

 
(7.7
%)
 
 
54.30

 
58.82

 
(7.7
%)
 
Accumulated dividends declared per common share
 

$12.77

 

$11.25

 
13.5
%
 
 

$12.77

 

$11.25

 
13.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FINANCIAL RATIOS
 
ROACE [c]
 
nm
 
13.2
%
 
nm
pts
 
(10.3
%)
 
8.4
%
 
(18.7
)
pts
Non-GAAP operating ROACE [d]
 
nm
 
12.0
%
 
nm
pts
 
(7.7
%)
 
7.8
%
 
(15.5
)
pts
Net loss and loss expense ratio
 
121.5
%
 
57.0
%
 
64.5

pts
 
83.3
%
 
59.8
%
 
23.5

pts
Acquisition cost ratio
 
19.1
%
 
20.3
%
 
(1.2
)
pts
 
20.0
%
 
20.1
%
 
(0.1
)
pts
General and administrative expense ratio
 
12.3
%
 
15.3
%
 
(3.0
)
pts
 
14.8
%
 
15.8
%
 
(1.0
)
pts
Combined ratio
 
152.9
%
 
92.6
%
 
60.3

pts
 
118.1
%
 
95.7
%
 
22.4

pts
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INVESTMENT DATA
 
Total assets
 
$
21,818,150

 
$
21,222,391

 
2.8
%
 
 
$
21,818,150

 
$
21,222,391

 
2.8
%
 
Total cash and invested assets [e]
 
14,647,092

 
14,551,790

 
0.7
%
 
 
14,647,092

 
14,551,790

 
0.7
%
 
Net investment income
 
95,169

 
116,923

 
(18.6
%)
 
 
299,899

 
257,818

 
16.3
%
 
Net realized investment gains (losses)
 
$
14,632

 
$
5,205

 
181.1
%
 
 
$
(14,811
)
 
$
(40,295
)
 
(63.2
%)
 
Total return on cash and investments (inclusive of investment related foreign exchange movements) [f]
 
1.1
%
 
1.1
%
 

pts
 
3.4
%
 
3.6
%
 
(0.2
)
pts
Total return on cash and investments (exclusive of investment related foreign exchange movements) [f] [h]
 
0.9
%
 
1.1
%
 
(0.2
)
pts
 
3.0
%
 
3.9
%
 
(0.9
)
pts
Return on other investments [g]
 
2.1
%
 
4.5
%
 
(2.4
)
pts
 
7.5
%
 
3.1
%
 
4.4

pts
Book yield of fixed maturities
 
2.6
%
 
2.6
%
 

pts
 
2.6
%
 
2.6
%
 

pts
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
[a]
Non-GAAP Operating income (loss) and diluted tangible book value per common share are “non-GAAP financial measures” as defined by Regulation G. See page 28 for reconciliation of non-GAAP operating income to net income (loss) available to common shareholders and page 29 for diluted tangible book value per common share to diluted book value per common share.
[b]
Non-GAAP Operating income (loss) per common share - diluted, is calculated by dividing non-GAAP operating income (loss) for the period by diluted weighted average common shares and share equivalents.
[c]
Return on average common equity (“ROACE”) is calculated by dividing net income (loss) available to common shareholders for the period by the average common shareholders’ equity determined by using the common shareholders’ equity balances at the beginning and end of the period. Net income (loss) for the quarter-periods is annualized.
[d]
Non-GAAP Operating ROACE, also a “non-GAAP financial measure”, is calculated by dividing non-GAAP operating income (loss) for the period by the average common shareholders’ equity determined by using the common shareholders’ equity balances at the beginning and end of the period. Non-GAAP Operating income (loss) for the quarter-periods is annualized.
[e]
Total cash and invested assets represents the total cash, available for sale investments, mortgage loans, other investments, equity method investments, short-term investments, accrued interest receivable and net receivable (payable) for investments sold (purchased).
[f]
In calculating total return, we include net investment income, net realized investment gains (losses), interest in income (loss) of equity method investments and the change in unrealized gains (losses) generated by our average cash and investment balances.
[g]
Return on other investments is calculated by dividing other investment income by the average month-end other investment balances for the period.
[h]
Pre-tax total return on cash and investments excluding foreign exchange movements is a "non-GAAP financial measure" as defined in SEC Regulation G. The reconciliation to pre-tax total return on cash and investments, the most comparable GAAP financial measure, also included foreign exchange gains (losses) of $22m and $(8)m for the three months ended September 30, 2017 and 2016, respectively, and foreign exchange gains (losses) of $62m and $(39)m for the nine months ended September 30, 2017 and 2016, respectively.

1

axislogoq12017a04.jpg

AXIS Capital Holdings Limited
CONSOLIDATED STATEMENTS OF INCOME - QUARTERLY
 
Q3 2017
 
Q2 2017
 
Q1 2017
 
Q4 2016
 
Q3 2016
 
Q3 2015
UNDERWRITING REVENUES
 
 
 
 
 
 
 
 
 
 
 
Gross premiums written
$
1,185,574

 
$
1,362,327

 
$
1,911,871

 
$
730,650

 
$
959,962

 
$
936,583

Premiums ceded
(352,831
)
 
(406,310
)
 
(402,912
)
 
(266,263
)
 
(364,531
)
 
(259,366
)
Net premiums written
832,743

 
956,017

 
1,508,959

 
464,387

 
595,431

 
677,217

 
 
 
 
 
 
 
 
 
 
 
 
Gross premiums earned
1,370,035

 
1,300,648

 
1,245,669

 
1,213,623

 
1,214,826

 
1,148,356

Ceded premiums expensed
(352,904
)
 
(319,217
)
 
(306,966
)
 
(291,744
)
 
(280,411
)
 
(229,015
)
Net premiums earned
1,017,131

 
981,431

 
938,703

 
921,879

 
934,415

 
919,341

Other insurance related income (loss)
(3,197
)
 
2,560

 
(3,783
)
 
2,372

 
5,944

 
1,158

Total underwriting revenues
1,013,934

 
983,991

 
934,920

 
924,251

 
940,359

 
920,499

 
 
 
 
 
 
 
 
 
 
 
 
UNDERWRITING EXPENSES
 
 
 
 
 
 
 
 
 
 
 
Net losses and loss expenses
1,235,367

 
605,332

 
606,942

 
540,612

 
532,328

 
560,387

Acquisition costs
194,724

 
204,361

 
189,792

 
187,305

 
189,810

 
182,744

Underwriting-related general and administrative expenses [a]
96,696

 
117,286

 
121,801

 
130,069

 
114,223

 
121,123

Total underwriting expenses
1,526,787

 
926,979

 
918,535

 
857,986

 
836,361

 
864,254

 
 
 
 
 
 
 
 
 
 
 
 
UNDERWRITING INCOME (LOSS) [b]
(512,853
)
 
57,012

 
16,385

 
66,265

 
103,998

 
56,245

 
 
 
 
 
 
 
 
 
 
 
 
OTHER OPERATING REVENUE (EXPENSES)
 
 
 
 
 
 
 
 
 
 
 
Net investment income
95,169

 
106,063

 
98,664

 
95,517

 
116,923

 
45,685

Net realized investment gains (losses)
14,632

 
(4,392
)
 
(25,050
)
 
(20,229
)
 
5,205

 
(69,957
)
Interest expense and financing costs
(12,835
)
 
(12,751
)
 
(12,791
)
 
(12,774
)
 
(12,839
)
 
(12,918
)
Total other operating revenues (expenses)
96,966

 
88,920

 
60,823

 
62,514

 
109,289

 
(37,190
)
 
 
 
 
 
 
 
 
 
 
 
 
OTHER (EXPENSES) REVENUE
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange (losses) gains
(32,510
)
 
(36,118
)
 
(21,465
)
 
51,514

 
13,795

 
28,088

Termination fee received

 

 

 

 

 
280,000

Corporate expenses [a]
(27,933
)
 
(30,530
)
 
(39,459
)
 
(33,095
)
 
(28,683
)
 
(23,604
)
Transaction related expenses
(5,970
)
 

 

 

 

 

Reorganization and related expenses

 

 

 

 

 
(45,867
)
Bargain purchase gain

 
15,044

 

 

 

 

Total other (expenses) revenues
(66,413
)
 
(51,604
)
 
(60,924
)
 
18,419

 
(14,888
)
 
238,617

 
 
 
 
 
 
 
 
 
 
 
 
INCOME (LOSS) BEFORE INCOME TAXES AND INTEREST IN INCOME (LOSS) OF EQUITY METHOD INVESTMENTS
(482,300
)
 
94,328

 
16,284

 
147,198

 
198,399

 
257,672

 
 
 
 
 
 
 
 
 
 
 
 
Income tax (expense) benefit
25,877

 
3,333

 
9,337

 
1,373

 
(9,352
)
 
(30
)
Interest in income (loss) of equity method investments
(661
)
 
(1,975
)
 
(5,766
)
 
340

 
(2,434
)
 

 
 
 
 
 
 
 
 
 
 
 
 
NET INCOME (LOSS)
(457,084
)
 
95,686

 
19,855

 
148,911

 
186,613

 
257,642

 
 
 
 
 
 
 
 
 
 
 
 
Preferred share dividends
(10,656
)
 
(10,656
)
 
(14,841
)
 
(16,690
)
 
(9,969
)
 
(10,022
)
Loss on repurchase of preferred shares

 

 

 
(1,309
)
 

 

 
 
 
 
 
 
 
 
 
 
 
 
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS
$
(467,740
)
 
$
85,030

 
$
5,014

 
$
130,912

 
$
176,644

 
$
247,620

 
 
 
 
 
 
 
 
 
 
 
 
KEY RATIOS/PER SHARE DATA
 
 
 
 
 
 
 
 
 
 
 
Net loss and loss expense ratio
121.5
%
 
61.7
%
 
64.7
%
 
58.6
%
 
57.0
%
 
61.0
%
Acquisition cost ratio
19.1
%
 
20.8
%
 
20.2
%
 
20.3
%
 
20.3
%
 
19.9
%
General and administrative expense ratio [a]
12.3
%
 
15.1
%
 
17.2
%
 
17.8
%
 
15.3
%
 
15.7
%
Combined ratio
152.9
%
 
97.6
%
 
102.1
%
 
96.7
%
 
92.6
%
 
96.6
%
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average basic shares outstanding
83,305

 
84,141

 
86,022

 
87,552

 
89,621

 
98,226

Weighted average diluted shares outstanding
83,305

 
84,511

 
86,793

 
88,474

 
90,351

 
99,124

Basic earnings (loss) per common share

($5.61
)
 

$1.01

 

$0.06

 

$1.50

 

$1.97

 

$2.52

Diluted earnings (loss) per common share

($5.61
)
 

$1.01

 

$0.06

 

$1.48

 

$1.96

 

$2.50

ROACE (annualized)
nm

 
6.7
%
 
0.4
%
 
9.9
%
 
13.2
%
 
18.8
%
Non-GAAP operating ROACE (annualized)
nm

 
8.6
%
 
4.0
%
 
7.6
%
 
12.0
%
 
3.9
%
 
[a]
Underwriting-related general and administrative expenses is a "non-GAAP financial measure" as defined in SEC Regulation G. Our total general and administrative expenses also include corporate expenses. Both underwriting-related general and administrative expenses and corporate expenses are included in the general and administrative expense ratio.
[b]
Group (or consolidated) underwriting income is also a "non-GAAP financial measure". Reconciliations of consolidated underwriting income to the nearest GAAP financial measure (income (loss) before income taxes and interest in income (loss) of equity method investments) are presented above and on the following page.

2

axislogoq12017a04.jpg

AXIS Capital Holdings Limited
CONSOLIDATED STATEMENTS OF INCOME - YEAR TO DATE
 
Nine months ended September 30,
 
Year ended December 31,
 
2017
 
2016
 
2015
 
2016
 
2015
UNDERWRITING REVENUES
 
 
 
 
 
 
 
 
 
Gross premiums written
$
4,459,772

 
$
4,239,558

 
$
3,803,928

 
$
4,970,208

 
$
4,603,730

Premiums ceded
(1,162,054
)
 
(950,971
)
 
(724,621
)
 
(1,217,234
)
 
(929,064
)
Net premiums written
3,297,718

 
3,288,587

 
3,079,307

 
3,752,974

 
3,674,666

 
 
 
 
 
 
 
 
 
 
Gross premiums earned
3,916,352

 
3,548,771

 
3,421,422

 
4,762,394

 
4,567,953

Ceded premiums expensed
(979,087
)
 
(765,025
)
 
(656,817
)
 
(1,056,769
)
 
(881,536
)
Net premiums earned
2,937,265

 
2,783,746

 
2,764,605

 
3,705,625

 
3,686,417

Other insurance related income (loss)
(4,420
)
 
4,850

 
12,319

 
7,222

 
(2,953
)
Total underwriting revenues
2,932,845

 
2,788,596

 
2,776,924

 
3,712,847

 
3,683,464

 
 
 
 
 
 
 
 
 
 
UNDERWRITING EXPENSES
 
 
 
 
 
 
 
 
 
Net losses and loss expenses
2,447,640

 
1,663,584

 
1,652,868

 
2,204,197

 
2,176,199

Acquisition costs
588,879

 
559,570

 
537,549

 
746,876

 
718,112

Underwriting-related general and administrative expenses [a]
335,782

 
352,632

 
372,625

 
482,701

 
486,911

Total underwriting expenses
3,372,301

 
2,575,786

 
2,563,042

 
3,433,774

 
3,381,222

 
 
 
 
 
 
 
 
 
 
UNDERWRITING INCOME (LOSS)
(439,456
)
 
212,810

 
213,882

 
279,073

 
302,242

 
 
 
 
 
 
 
 
 
 
OTHER OPERATING REVENUE (EXPENSES)
 
 
 
 
 
 
 
 
 
Net investment income
299,899

 
257,818

 
226,336

 
353,335

 
305,336

Net realized investment losses
(14,811
)
 
(40,295
)
 
(123,618
)
 
(60,525
)
 
(138,491
)
Interest expense and financing costs
(38,377
)
 
(38,586
)
 
(38,114
)
 
(51,360
)
 
(50,963
)
Total other operating revenues
246,711

 
178,937

 
64,604

 
241,450

 
115,882

 
 
 
 
 
 
 
 
 
 
OTHER (EXPENSES) REVENUE
 
 
 
 
 
 
 
 
 
Foreign exchange (losses) gains
(90,093
)
 
69,781

 
69,200

 
121,295

 
102,312

Termination fee received

 

 
280,000

 

 
280,000

Corporate expenses [a]
(97,922
)
 
(86,922
)
 
(83,826
)
 
(120,016
)
 
(109,910
)
Transaction related expenses

(5,970
)
 

 

 

 

Reorganization and related expenses

 

 
(45,867
)
 

 
(45,867
)
Bargain purchase gain
15,044

 

 

 

 

Total other (expenses) revenue
(178,941
)
 
(17,141
)
 
219,507

 
1,279

 
226,535

 
 
 
 
 
 
 
 
 
 
INCOME (LOSS) BEFORE INCOME TAXES AND INTEREST IN INCOME (LOSS) OF EQUITY METHOD INVESTMENTS
(371,686
)
 
374,606

 
497,993

 
521,802

 
644,659

 
 
 
 
 
 
 
 
 
 
Income tax (expense) benefit
38,547

 
(7,712
)
 
(1,155
)
 
(6,340
)
 
(3,028
)
Interest in loss of equity method investments
(8,402
)
 
(2,434
)
 

 
(2,094
)
 

 
 
 
 
 
 
 
 
 
 
NET INCOME (LOSS)
(341,541
)
 
364,460

 
496,838

 
513,368

 
641,631

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred share dividends
(36,154
)
 
(29,906
)
 
(30,066
)
 
(46,597
)
 
(40,069
)
Loss on repurchase of preferred shares

 

 

 
(1,309
)
 

 
 
 
 
 
 
 
 
 
 
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS
$
(377,695
)
 
$
334,554

 
$
466,772

 
$
465,462

 
$
601,562

 
 
 
 
 
 
 
 
 
 
KEY RATIOS/PER SHARE DATA
 
 
 
 
 
 
 
 
 
Net loss and loss expense ratio
83.3
%
 
59.8
%
 
59.8
%
 
59.5
%
 
59.0
%
Acquisition cost ratio
20.0
%
 
20.1
%
 
19.4
%
 
20.2
%
 
19.5
%
General and administrative expense ratio [a]
14.8
%
 
15.8
%
 
16.5
%
 
16.2
%
 
16.2
%
Combined ratio
118.1
%
 
95.7
%
 
95.7
%
 
95.9
%
 
94.7
%
 
 
 
 
 
 
 
 
 
 
Weighted average basic shares outstanding
84,479

 
91,852

 
99,464

 
90,772

 
98,609

Weighted average diluted shares outstanding
84,479

 
92,579

 
100,468

 
91,547

 
99,629

Basic earnings per common share

($4.47
)
 

$3.64

 

$4.69

 

$5.13

 

$6.10

Diluted earnings per common share

($4.47
)
 

$3.61

 

$4.65

 

$5.08

 

$6.04

ROACE [b]
(10.3
%)
 
8.4
%
 
12.0
%
 
9.0
%
 
11.5
%
Operating ROACE [b]
(7.7
%)
 
7.8
%
 
7.2
%
 
7.9
%
 
7.7
%
[a]
Both underwriting-related general and administrative expenses and corporate expenses are included in the general and administrative expense ratio.
[b]
Annualized for the nine-month periods.

3

axislogoq12017a04.jpg

AXIS Capital Holdings Limited
CONSOLIDATED SEGMENT DATA
 
 
Quarter ended September 30, 2017
 
Nine months ended September 30, 2017
 
 
Insurance
 
Reinsurance
 
Total
 
Insurance
 
Reinsurance
 
Total
UNDERWRITING REVENUES
 
 
 
 
 
 
 
 
 
 
 
 
Gross premiums written
 
$
744,366

 
$
441,208

 
$
1,185,574

 
$
2,234,395

 
$
2,225,377

 
$
4,459,772

Net premiums written
 
500,022

 
332,721

 
832,743

 
1,533,029

 
1,764,689

 
3,297,718

 
 
 
 
 
 
 
 
 
 
 
 
 
Gross premiums earned
 
723,648

 
646,387

 
1,370,035

 
2,118,929

 
1,797,423

 
3,916,352

Ceded premiums expensed
 
(227,644
)
 
(125,260
)
 
(352,904
)
 
(670,659
)
 
(308,428
)
 
(979,087
)
Net premiums earned
 
496,004

 
521,127

 
1,017,131

 
1,448,270

 
1,488,995

 
2,937,265

Other insurance related income (loss)
 
526

 
(3,723
)
 
(3,197
)
 
1,077

 
(5,497
)
 
(4,420
)
Total underwriting revenues
 
496,530

 
517,404

 
1,013,934

 
1,449,347

 
1,483,498

 
2,932,845

 
 
 
 
 
 
 
 
 
 
 
 
 
UNDERWRITING EXPENSES
 
 
 
 
 
 
 
 
 
 
 
 
Net losses and loss expenses
 
628,865

 
606,502

 
1,235,367

 
1,241,495

 
1,206,145

 
2,447,640

Acquisition costs
 
74,231

 
120,493

 
194,724

 
223,665

 
365,214

 
588,879

Underwriting-related general and administrative expenses
 
75,038

 
21,658

 
96,696

 
253,308

 
82,474

 
335,782

Total underwriting expenses
 
778,134

 
748,653

 
1,526,787

 
1,718,468

 
1,653,833

 
3,372,301

 
 
 
 
 
 
 
 
 
 
 
 
 
UNDERWRITING INCOME (LOSS)
 
$
(281,604
)
 
$
(231,249
)
 
$
(512,853
)
 
$
(269,121
)
 
$
(170,335
)
 
$
(439,456
)
 
 
 
 
 
 
 
 
 
 
 
 
 
KEY RATIOS
 
 
 
 
 
 
 
 
 
 
 
 
Current accident year loss ratio
 
127.3
%
 
125.0
%
 
126.2
%
 
87.8
%
 
88.6
%
 
88.2
%
Prior period reserve development
 
(0.5
%)
 
(8.6
%)
 
(4.7
%)
 
(2.1
%)
 
(7.6
%)
 
(4.9
%)
Net loss and loss expense ratio
 
126.8
%
 
116.4
%
 
121.5
%
 
85.7
%
 
81.0
%
 
83.3
%
Acquisition cost ratio
 
15.0
%
 
23.1
%
 
19.1
%
 
15.4
%
 
24.5
%
 
20.0
%
Underwriting-related general and administrative expense ratio
 
15.1
%
 
4.2
%
 
9.6
%
 
17.6
%
 
5.6
%
 
11.5
%
Corporate expense ratio
 
 
 
 
 
2.7
%
 
 
 
 
 
3.3
%
Combined ratio
 
156.9
%
 
143.7
%
 
152.9
%
 
118.7
%
 
111.1
%
 
118.1
%

4

axislogoq12017a04.jpg

AXIS Capital Holdings Limited
GROSS PREMIUMS WRITTEN BY SEGMENT BY LINE OF BUSINESS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine months ended September 30,
 
 
Q3 2017
 
Q2 2017
 
Q1 2017
 
Q4 2016
 
Q3 2016
 
Q3 2015
 
2017
 
2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INSURANCE SEGMENT
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property
 
$
154,882

 
$
198,681

 
$
144,564

 
$
150,511

 
$
164,605

 
$
139,488

 
$
498,127

 
$
522,380

Marine
 
42,483

 
73,921

 
65,601

 
34,311

 
33,677

 
38,817

 
182,005

 
191,298

Terrorism
 
12,147

 
10,509

 
11,814

 
10,056

 
9,394

 
11,192

 
34,470

 
28,090

Aviation
 
23,814

 
21,037

 
14,583

 
16,062

 
9,684

 
10,222

 
59,434

 
37,111

Credit and Political Risk
 
19,793

 
15,139

 
16,172

 
15,631

 
5,423

 
8,542

 
51,105

 
34,299

Professional Lines
 
213,009

 
244,119

 
155,469

 
254,942

 
204,926

 
196,218

 
612,597

 
590,417

Liability
 
131,975

 
136,725

 
90,603

 
94,233

 
108,447

 
104,666

 
359,304

 
310,797

Accident and Health
 
146,263

 
95,892

 
195,200

 
31,700

 
139,274

 
97,559

 
437,353

 
398,404

TOTAL INSURANCE SEGMENT
 
744,366

 
796,023

 
694,006

 
607,446

 
675,430

 
606,704

 
2,234,395

 
2,112,796

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
REINSURANCE SEGMENT
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Catastrophe
 
89,510

 
135,560

 
185,935

 
8,193

 
46,338

 
56,693

 
411,004

 
316,692

Property
 
90,001

 
56,723

 
194,541

 
(1,020
)
 
61,957

 
67,539

 
341,265

 
283,555

Professional Lines
 
20,175

 
120,584

 
77,012

 
33,309

 
19,479

 
45,509

 
217,772

 
235,094

Credit and Surety
 
38,216

 
25,143

 
119,925

 
3,975

 
36,174

 
23,390

 
183,284

 
315,102

Motor
 
40,385

 
42,093

 
291,423

 
7,683

 
13,344

 
21,359

 
373,901

 
338,403

Liability
 
139,083

 
118,095

 
111,821

 
57,109

 
91,387

 
111,361

 
368,999

 
365,380

Agriculture
 
11,152

 
58,094

 
149,191

 
6,963

 
1,286

 
(3,303
)
 
218,437

 
151,315

Engineering
 
10,120

 
7,347

 
40,533

 
12,173

 
13,588

 
4,397

 
58,000

 
56,719

Marine and Other
 
2,566

 
2,665

 
47,484

 
(5,181
)
 
979

 
2,934

 
52,715

 
64,502

TOTAL REINSURANCE SEGMENT
 
441,208

 
566,304

 
1,217,865

 
123,204

 
284,532

 
329,879

 
2,225,377

 
2,126,762

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CONSOLIDATED TOTAL
 
$
1,185,574

 
$
1,362,327

 
$
1,911,871

 
$
730,650

 
$
959,962

 
$
936,583

 
$
4,459,772

 
$
4,239,558


5

axislogoq12017a04.jpg

AXIS Capital Holdings Limited
INSURANCE SEGMENT DATA - QUARTERLY
 
 
Q3 2017
 
Q2 2017
 
Q1 2017
 
Q4 2016
 
Q3 2016
 
Q3 2015
UNDERWRITING REVENUES
 
 
 
 
 
 
 
 
 
 
 
 
Gross premiums written
 
$
744,366

 
$
796,023

 
$
694,006

 
$
607,446

 
$
675,430

 
$
606,704

Net premiums written
 
500,022

 
527,678

 
505,329

 
374,068

 
433,131

 
381,118

 
 
 
 
 
 
 
 
 
 
 
 
 
Gross premiums earned
 
723,648

 
716,176

 
679,105

 
680,000

 
668,820

 
647,024

Ceded premiums expensed
 
(227,644
)
 
(222,340
)
 
(220,675
)
 
(225,328
)
 
(224,129
)
 
(202,474
)
Net premiums earned
 
496,004

 
493,836

 
458,430

 
454,672

 
444,691

 
444,550

Other insurance related income
 
526

 
508

 
42

 
146

 
39

 
542

Total underwriting revenues
 
496,530

 
494,344

 
458,472

 
454,818

 
444,730

 
445,092

 
 
 
 
 
 
 
 
 
 
 
 
 
UNDERWRITING EXPENSES
 
 
 
 
 
 
 
 
 
 
 
 
Net losses and loss expenses
 
628,865

 
325,728

 
286,903

 
288,161

 
273,226

 
283,272

Acquisition costs
 
74,231

 
81,276

 
68,157

 
66,138

 
61,755

 
69,118

General and administrative expenses
 
75,038

 
87,822

 
90,448

 
94,205

 
84,588

 
85,814

Total underwriting expenses
 
778,134

 
494,826

 
445,508

 
448,504

 
419,569

 
438,204

 
 
 
 
 
 
 
 
 
 
 
 
 
UNDERWRITING INCOME (LOSS)
 
$
(281,604
)
 
$
(482
)
 
$
12,964

 
$
6,314

 
$
25,161

 
$
6,888

 
 
 
 
 
 
 
 
 
 
 
 
 
KEY RATIOS
 
 
 
 
 
 
 
 
 
 
 
 
Current accident year loss ratio
 
127.3
%
 
69.9
%
 
64.5
%
 
66.2
%
 
66.1
%
 
64.3
%
Prior period reserve development
 
(0.5
%)
 
(3.9
%)
 
(1.9
%)
 
(2.8
%)
 
(4.7
%)
 
(0.6
%)
Net loss and loss expense ratio
 
126.8
%
 
66.0
%
 
62.6
%
 
63.4
%
 
61.4
%
 
63.7
%
Acquisition cost ratio
 
15.0
%
 
16.5
%
 
14.9
%
 
14.5
%
 
13.9
%
 
15.5
%
General and administrative expense ratio
 
15.1
%
 
17.7
%
 
19.7
%
 
20.7
%
 
19.1
%
 
19.4
%
Combined ratio
 
156.9
%
 
100.2
%
 
97.2
%
 
98.6
%
 
94.4
%
 
98.6
%

6

axislogoq12017a04.jpg

AXIS Capital Holdings Limited
REINSURANCE SEGMENT DATA - QUARTERLY
 
 
Q3 2017
 
Q2 2017
 
Q1 2017
 
Q4 2016
 
Q3 2016
 
Q3 2015
UNDERWRITING REVENUES
 
 
 
 
 
 
 
 
 
 
 
 
Gross premiums written
 
$
441,208

 
$
566,304

 
$
1,217,865

 
$
123,204

 
$
284,532

 
$
329,879

Net premiums written
 
332,721

 
428,339

 
1,003,630

 
90,319

 
162,300

 
296,099

 
 


 
 
 
 
 
 
 
 
 
 
Gross premiums earned
 
646,387

 
584,472

 
566,564

 
533,623

 
546,006

 
501,332

Ceded premiums expensed
 
(125,260
)
 
(96,877
)
 
(86,291
)
 
(66,416
)
 
(56,282
)
 
(26,541
)
Net premiums earned
 
521,127

 
487,595

 
480,273

 
467,207

 
489,724

 
474,791

Other insurance related (loss) income
 
(3,723
)
 
2,052

 
(3,825
)
 
2,226

 
5,905

 
616

Total underwriting revenues
 
517,404

 
489,647

 
476,448

 
469,433

 
495,629

 
475,407

 
 


 
 
 
 
 
 
 
 
 
 
UNDERWRITING EXPENSES
 


 
 
 
 
 
 
 
 
 
 
Net losses and loss expenses
 
606,502

 
279,604

 
320,039

 
252,451

 
259,102

 
277,115

Acquisition costs
 
120,493

 
123,085

 
121,635

 
121,167

 
128,055

 
113,626

General and administrative expenses
 
21,658

 
29,464

 
31,353

 
35,864

 
29,635

 
35,309

Total underwriting expenses
 
748,653

 
432,153

 
473,027

 
409,482

 
416,792

 
426,050

 
 


 
 
 
 
 
 
 
 
 
 
UNDERWRITING INCOME (LOSS)
 
$
(231,249
)
 
$
57,494

 
$
3,421

 
$
59,951

 
$
78,837

 
$
49,357

 
 


 
 
 
 
 
 
 
 
 
 
KEY RATIOS
 


 
 
 
 
 
 
 
 
 
 
Current accident year loss ratio
 
125.0
%
 
67.9
%
 
70.0
%
 
65.9
%
 
64.2
%
 
67.4
%
Prior period reserve development
 
(8.6
%)
 
(10.6
%)
 
(3.4
%)
 
(11.9
%)
 
(11.3
%)
 
(9.0
%)
Net loss and loss expense ratio
 
116.4
%
 
57.3
%
 
66.6
%
 
54.0
%
 
52.9
%
 
58.4
%
Acquisition cost ratio
 
23.1
%
 
25.2
%
 
25.3
%
 
25.9
%
 
26.1
%
 
23.9
%
General and administrative expense ratio
 
4.2
%
 
6.1
%
 
6.6
%
 
7.7
%
 
6.1
%
 
7.4
%
Combined ratio
 
143.7
%
 
88.6
%
 
98.5
%
 
87.6
%
 
85.1
%
 
89.7
%

7

axislogoq12017a04.jpg

AXIS Capital Holdings Limited
REINSURANCE SEGMENT - STRATEGIC CAPITAL PARTNERS
 
 
 
 
 
 
 
 
 
 
 
Quarter ended September 30,
 
Nine months ended September 30,
TOTAL MANAGED PREMIUMS [a]
 
2017
 
2016
 
2017
 
2016
Total Managed Premiums
 
$
441,208

 
$
284,532

 
$
2,225,377

 
$
2,126,762

Premiums ceded to Harrington Re
 
55,900

 
101,689

 
178,574

 
101,689

Premiums ceded to Other Strategic Capital Partners
 
52,587

 
20,543

 
282,114

 
169,544

Net premiums written
 
$
332,721

 
$
162,300

 
$
1,764,689

 
$
1,855,529

 
 
 
 
 
 
 
 
 
FEE INCOME FROM STRATEGIC CAPITAL PARTNERS [b]
 
 
 
 
 
 
 
 
Fee income
 
$
5,516

 
$
8,072

 
$
28,261

 
$
15,007

 
 
 
 
 
 
 
 
 
[a]
Total managed premiums represented gross premiums written by the AXIS Reinsurance segment of $441,208 and $284,532 for the three months ended September 30, 2017 and 2016, respectively, and $2,225,377 and $2,126,762 for the nine months ended September 30, 2017 and 2016, respectively, including premiums written on behalf of our strategic capital partners.
[b]
Fee income (loss) from strategic capital partners represents service fees and reimbursement of expenses due to the AXIS Reinsurance segment from its strategic capital partners. Fee income (loss) from strategic capital partners included $(4,301) and $4,924 included in other insurance related income (expense) for the three and nine months ended September 30, 2017, respectively, and $3,399 for the three and nine months ended September 30, 2016. It also included $9,816 and $23,337 as an offset to general and administrative expenses for the three and nine months ended September 30, 2017, respectively, and $4,673 for the three and nine months ended September 30, 2016 . Fee income from strategic capital partners for periods prior to June 30, 2016 were included in acquisition costs.

8

axislogoq12017a04.jpg

AXIS Capital Holdings Limited
NET INVESTMENT INCOME
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine months ended September 30,
 
 
Q3 2017
 
Q2 2017
 
Q1 2017
 
Q4 2016
 
Q3 2016
 
Q3 2015
 
2017
 
2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities
 
$
74,978

 
$
78,218

 
$
77,407

 
$
76,036

 
$
75,827

 
$
75,980

 
$
230,603

 
$
229,423

Other investments
 
17,373

 
23,639

 
18,962

 
16,744

 
38,248

 
(27,421
)
 
59,973

 
25,770

Equity securities
 
3,223

 
4,347

 
3,478

 
3,462

 
4,633

 
3,445

 
11,048

 
12,843

Mortgage loans
 
2,895

 
2,597

 
2,477

 
2,313

 
2,191

 
482

 
7,970

 
5,683

Cash and cash equivalents
 
3,111

 
3,433

 
3,095

 
2,138

 
3,768

 
993

 
9,640

 
7,071

Short-term investments
 
698

 
660

 
438

 
1,353

 
337

 
83

 
1,797

 
708

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross investment income
 
102,278

 
112,894

 
105,857

 
102,046

 
125,004

 
53,562

 
321,031

 
281,498

Investment expenses
 
(7,109
)
 
(6,831
)
 
(7,193
)
 
(6,529
)
 
(8,081
)
 
(7,877
)
 
(21,132
)
 
(23,680
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income
 
$
95,169

 
$
106,063

 
$
98,664

 
$
95,517

 
$
116,923

 
$
45,685

 
$
299,899

 
$
257,818




9

axislogoq12017a04.jpg

AXIS Capital Holdings Limited
CONSOLIDATED BALANCE SHEETS
 
 
September 30,
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
September 30,
 
 
2017
 
2017
 
2017
 
2016
 
2016
 
2015
ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
Investments:
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities, available for sale, at fair value
 
$
11,086,386

 
$
11,424,295

 
$
11,191,529

 
$
11,397,114

 
$
11,566,860

 
$
12,139,595

Equity securities, available for sale, at fair value
 
659,751

 
738,489

 
653,419

 
638,744

 
644,344

 
689,157

Mortgage loans, held for investment, at amortized cost and fair value
 
360,381

 
349,916

 
339,855

 
349,969

 
332,753

 
129,431

Other investments, at fair value
 
830,253

 
813,617

 
780,395

 
830,219

 
847,262

 
800,319

Equity method investments
 
108,597

 
109,258

 
111,233

 
116,000

 
111,295

 
10,805

Short-term investments, at amortized cost and fair value
 
15,282

 
10,146

 
13,338

 
127,461

 
39,877

 
7,152

Total investments
 
13,060,650

 
13,445,721

 
13,089,769

 
13,459,507

 
13,542,391

 
13,776,459

Cash and cash equivalents
 
1,631,127

 
1,015,270

 
1,451,570

 
1,241,507

 
1,077,263

 
1,180,473

Accrued interest receivable
 
68,023

 
72,626

 
69,649

 
74,971

 
71,096

 
75,375

Insurance and reinsurance premium balances receivable
 
2,968,096

 
3,050,222

 
2,891,811

 
2,313,512

 
2,694,976

 
2,169,581

Reinsurance recoverable on paid and unpaid losses
 
2,360,821

 
2,184,934

 
2,070,341

 
2,334,922

 
2,336,741

 
2,036,099

Deferred acquisition costs
 
562,774

 
591,397

 
609,773

 
438,636

 
545,618

 
544,178

Prepaid reinsurance premiums
 
734,129

 
733,836

 
645,663

 
556,344

 
582,551

 
416,451

Receivable for investments sold
 
9,357

 
18,754

 
40,448

 
14,123

 
2,285

 
7,220

Goodwill and intangible assets
 
87,206

 
86,220

 
84,613

 
85,049

 
85,501

 
87,329

Other assets
 
335,967

 
300,658

 
293,330

 
295,120

 
283,969

 
264,176

TOTAL ASSETS
 
$
21,818,150

 
$
21,499,638

 
$
21,246,967

 
$
20,813,691

 
$
21,222,391

 
$
20,557,341

 
 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES
 
 
 
 
 
 
 
 
 
 
 
 
Reserve for losses and loss expenses
 
$
10,787,575

 
$
9,878,662

 
$
9,541,963

 
$
9,697,827

 
$
9,874,807

 
$
9,703,583

Unearned premiums
 
3,521,063

 
3,704,003

 
3,629,354

 
2,969,498

 
3,453,655

 
3,107,348

Insurance and reinsurance balances payable
 
670,292

 
677,204

 
514,356

 
493,183

 
461,519

 
301,830

Senior notes
 
993,797

 
993,511

 
993,229

 
992,950

 
992,633

 
991,562

Payable for investments purchased
 
122,065

 
95,865

 
83,783

 
62,550

 
141,245

 
303,916

Other liabilities
 
268,659

 
257,698

 
253,917

 
325,313

 
272,874

 
322,736

TOTAL LIABILITIES
 
16,363,451

 
15,606,943

 
15,016,602

 
14,541,321

 
15,196,733

 
14,730,975

 
 
 
 
 
 
 
 
 
 
 
 
 
SHAREHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
 
 
 
Preferred shares
 
775,000

 
775,000

 
1,126,074

 
1,126,074

 
625,000

 
627,843

Common shares
 
2,206

 
2,206

 
2,206

 
2,206

 
2,206

 
2,202

Additional paid-in capital
 
2,291,516

 
2,283,523

 
2,276,671

 
2,299,857

 
2,307,866

 
2,230,278

Accumulated other comprehensive income (loss)
 
141,613

 
84,306

 
699

 
(121,841
)
 
98,505

 
(117,593
)
Retained earnings
 
6,051,659

 
6,551,801

 
6,499,262

 
6,527,627

 
6,430,573

 
6,093,897

Treasury shares, at cost
 
(3,807,295
)
 
(3,804,141
)
 
(3,674,547
)
 
(3,561,553
)
 
(3,438,492
)
 
(3,010,261
)
TOTAL SHAREHOLDERS' EQUITY
 
5,454,699

 
5,892,695

 
6,230,365

 
6,272,370

 
6,025,658

 
5,826,366

 
 
 
 
 
 
 
 
 
 
 
 
 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
 
$
21,818,150

 
$
21,499,638

 
$
21,246,967

 
$
20,813,691

 
$
21,222,391

 
$
20,557,341

 
 
 
 
 
 
 
 
 
 
 
 
 
Basic common shares outstanding
 
83,157

 
83,203

 
85,170

 
86,441

 
88,439

 
96,049

Diluted common shares outstanding
 
84,575

 
84,655

 
86,670

 
88,317

 
90,363

 
98,213

Book value per common share
 

$56.28

 

$61.51

 

$59.93

 

$59.54

 

$61.07

 

$54.91

Diluted book value per common share
 
55.33

 
60.45

 
58.89

 
58.27

 
59.77

 
53.68

Diluted tangible book value per common share
 

$54.30

 

$59.44

 

$57.92

 

$57.31

 

$58.82

 

$52.78

Debt to total capital [a]
 
15.4
%
 
14.4
%
 
13.7
%
 
13.7
%
 
14.1
%
 
14.5
%
Debt and preferred equity to total capital
 
27.4
%
 
25.7
%
 
29.3
%
 
29.2
%
 
23.0
%
 
23.8
%
[a]
The debt to total capital ratio is calculated by dividing our senior notes by total capital. Total capital represents the sum of total shareholders’ equity and our senior notes.

10

axislogoq12017a04.jpg

AXIS Capital Holdings Limited
CASH AND INVESTED ASSETS PORTFOLIO
At September 30, 2017
 
 
Cost or
Amortized Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair Value
 
Percentage
Fixed Maturities, available for sale
 
 
 
 
 
 
 
 
 
 
U.S. government and agency
 
$
1,556,963

 
$
2,729

 
$
(12,374
)
 
$
1,547,318

 
10.7
%
Non-U.S. government
 
568,223

 
13,961

 
(8,544
)
 
573,640

 
3.9
%
Corporate debt
 
4,460,337

 
65,230

 
(21,600
)
 
4,503,967

 
30.7
%
Agency RMBS
 
2,313,096

 
12,218

 
(18,492
)
 
2,306,822

 
15.7
%
CMBS
 
665,520

 
5,954

 
(1,738
)
 
669,736

 
4.6
%
Non-Agency RMBS
 
42,653

 
1,968

 
(804
)
 
43,817

 
0.3
%
ABS
 
1,285,080

 
4,572

 
(782
)
 
1,288,870

 
8.8
%
Municipals
 
151,522

 
1,379

 
(685
)
 
152,216

 
1.0
%
Total fixed maturities
 
11,043,394

 
108,011

 
(65,019
)
 
11,086,386

 
75.7
%
 
 
 
 
 
 
 
 
 
 
 
Equity securities, available for sale
 
 
 
 
 
 
 
 
 
 
Common stocks
 
13,980

 
1,415

 
(569
)
 
14,826

 
0.1
%
Exchange traded funds
 
365,412

 
88,782

 

 
454,194

 
3.1
%
Bond mutual funds
 
183,718

 
8,686

 
(1,673
)
 
190,731

 
1.3
%
Total equity securities
 
563,110

 
98,883

 
(2,242
)
 
659,751

 
4.5
%
 
 
 
 
 
 
 
 
 
 
 
Total available for sale investments
 
$
11,606,504

 
$
206,894

 
$
(67,261
)
 
11,746,137

 
80.2
%
 
 
 
 
 
 
 
 
 
 
 
Mortgage loans, held for investment
 
 
 
 
 
 
 
360,381

 
2.5
%
 
 
 
 
 
 
 
 
 
 
 
Other investments (see below)
 
 
 
 
 
 
 
830,253

 
5.7
%
 
 
 
 
 
 
 
 
 
 
 
Equity method investments
 
 
 
 
 
 
 
108,597

 
0.7
 %
 
 
 
 
 
 
 
 
 
 
 
Short-term investments
 
 
 
 
 
 
 
15,282

 
0.1
%
 
 
 
 
 
 
 
 
 
 
 
Total investments
 
 
 
 
 
 
 
13,060,650

 
89.2
%
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents [a]
 
 
 
 
 
 
 
1,631,127

 
11.1
%
 
 
 
 
 
 
 
 
 
 
 
Accrued interest receivable
 
 
 
 
 
 
 
68,023

 
0.5
%
 
 
 
 
 
 
 
 
 
 
 
Net receivable/(payable) for investments sold (purchased)
 
 
 
 
 
 
 
(112,708
)
 
(0.8
%)
 
 
 
 
 
 
 
 
 
 
 
Total cash and invested assets
 
 
 
 
 
 
 
$
14,647,092

 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair Value
 
Percentage
Other Investments:
 
 
 
 
 
 
 
 
 
 
Long/short equity funds
 
 
 
 
 
 
 
$
64,067

 
7.7
%
Multi-strategy funds
 
 
 
 
 
 
 
286,452

 
34.5
%
Event-driven funds
 
 
 
 
 
 
 
48,578

 
5.9
%
Direct lending funds
 
 
 
 
 
 
 
232,389

 
28.0
%
Real estate funds
 
 
 
 
 
 
 
46,691

 
5.6
%
Private equity funds
 
 
 
 
 
 
 
71,896

 
8.7
%
Other privately held investments
 
 
 
 
 
 
 
43,398

 
5.2
%
Collateralized loan obligations - equity tranches
 
 
 
 
 
 
 
36,782

 
4.4
%
Total
 
 
 
 
 
 
 
$
830,253

 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
[a]
Includes $281 million of restricted cash and cash equivalents.

11

axislogoq12017a04.jpg

AXIS Capital Holdings Limited
CASH AND INVESTED ASSETS COMPOSITION - QUARTERLY
 
 
Q3 2017
 
Q2 2017
 
Q1 2017
 
Q4 2016
 
Q3 2016
 
Q3 2015
 
 
Fair Value %
 
Fair Value %
 
Fair Value %
 
Fair Value %
 
Fair Value %
 
Fair Value %
CASH AND INVESTED ASSETS PORTFOLIO
 
 
 
 
 
 
 
 
 
 
 
 
Fixed Maturities:
 
 
 
 
 
 
 
 
 
 
 
 
U.S. government and agency
 
10.7
%
 
11.3
%
 
11.5
%
 
11.4
%
 
10.8
%
 
12.7
%
Non-U.S. government
 
3.9
%
 
3.7
%
 
3.8
%
 
3.8
%
 
4.0
%
 
5.2
%
Corporate debt
 
30.7
%
 
32.8
%
 
30.5
%
 
31.2
%
 
31.4
%
 
30.4
%
MBS:
 
 
 
 
 
 
 
 
 
 
 
 
Agency RMBS
 
15.7
%
 
15.9
%
 
15.6
%
 
16.7
%
 
17.3
%
 
15.0
%
CMBS
 
4.6
%
 
4.5
%
 
4.7
%
 
4.5
%
 
6.1
%
 
7.3
%
Non-agency RMBS
 
0.3
%
 
0.3
%
 
0.4
%
 
0.4
%
 
0.5
%
 
0.7
%
ABS
 
8.8
%
 
9.5
%
 
9.4
%
 
8.3
%
 
8.5
%
 
9.8
%
Municipals
 
1.0
%
 
1.0
%
 
0.9
%
 
1.1
%
 
0.9
%
 
1.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Fixed Maturities
 
75.7
%
 
79.0
%
 
76.8
%
 
77.4
%
 
79.5
%
 
82.3
%
Equity securities
 
4.5
%
 
5.1
%
 
4.5
%
 
4.3
%
 
4.4
%
 
4.7
%
Mortgage loans
 
2.5
%
 
2.4
%
 
2.3
%
 
2.4
%
 
2.3
%
 
0.9
%
Other investments
 
5.7
%
 
5.6
%
 
5.4
%
 
5.6
%
 
5.8
%
 
5.4
%
Equity method investments
 
0.7
%
 
0.8
%
 
0.8
%
 
0.8
%
 
0.8
%
 
0.1
%
Short-term investments
 
0.1
%
 
0.1
%
 
0.1
%
 
0.9
%
 
0.3
%
 
0.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Investments
 
89.2
%
 
93.0
%
 
89.9
%
 
91.4
%
 
93.1
%
 
93.5
%
Cash and cash equivalents
 
11.1
%
 
7.0
%
 
10.0
%
 
8.4
%
 
7.4
%
 
8.0
%
Accrued interest receivable
 
0.5
%
 
0.5
%
 
0.5
%
 
0.5
%
 
0.5
%
 
0.5
%
Net receivable/(payable) for investments sold or purchased
 
(0.8
%)
 
(0.5
%)
 
(0.4
%)
 
(0.3
%)
 
(1.0
%)
 
(2.0
%)
Total Cash and Invested Assets
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
CREDIT QUALITY OF FIXED MATURITIES
 
Fair Value %
 
Fair Value %
 
Fair Value %
 
Fair Value %
 
Fair Value %
 
Fair Value %
U.S. government and agency
 
14.0
%
 
14.3
%
 
15.2
%
 
14.5
%
 
13.5
%
 
15.4
%
AAA
 
39.5
%
 
38.1
%
 
37.8
%
 
36.5
%
 
37.7
%
 
35.0
%
AA
 
7.9
%
 
8.1
%
 
8.7
%
 
9.9
%
 
10.1
%
 
10.9
%
A
 
15.0
%
 
15.8
%
 
14.7
%
 
15.3
%
 
15.3
%
 
18.7
%
BBB
 
14.5
%
 
14.7
%
 
14.1
%
 
13.7
%
 
13.9
%
 
11.6
%
Below BBB
 
9.1
%
 
9.0
%
 
9.5
%
 
10.1
%
 
9.5
%
 
8.4
%
Total
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
MATURITY PROFILE OF FIXED MATURITIES
 
Fair Value %
 
Fair Value %
 
Fair Value %
 
Fair Value %
 
Fair Value %
 
Fair Value %
Within one year
 
3.9
%
 
3.5
%
 
2.9
%
 
2.7
%
 
3.0
%
 
3.5
%
From one to five years
 
34.7
%
 
36.2
%
 
35.8
%
 
33.8
%
 
32.9
%
 
36.5
%
From five to ten years
 
20.5
%
 
20.0
%
 
19.7
%
 
22.0
%
 
20.2
%
 
17.7
%
Above ten years
 
2.0
%
 
2.0
%
 
2.6
%
 
2.8
%
 
3.1
%
 
2.5
%
Asset-backed and mortgage-backed securities
 
38.9
%
 
38.3
%
 
39.0
%
 
38.7
%
 
40.8
%
 
39.8
%
Total
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
CASH AND INVESTED ASSETS PORTFOLIO CHARACTERISTICS
 
 
 
 
 
 
 
 
 
 
 
 
Book yield of fixed maturities
 
2.6
%
 
2.6
%
 
2.7
%
 
2.6
%
 
2.6
%
 
2.5
%
Yield to maturity of fixed maturities
 
2.6
%
 
2.6
%
 
2.7
%
 
2.8
%
 
2.3
%
 
2.5
%
Average duration of fixed maturities (inclusive of duration hedges)
 
3.2 yrs

 
3.1 yrs

 
3.3 yrs

 
3.5 yrs

 
3.2 yrs

 
3.1 yrs

Average credit quality
 
AA-

 
AA-

 
AA-

 
AA-

 
AA-

 
AA-

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


12

axislogoq12017a04.jpg

AXIS Capital Holdings Limited
GEOGRAPHIC DISTRIBUTION OF FIXED MATURITIES AND EQUITIES
At September 30, 2017
 
 
 
Corporate Debt
 
 
 
 
 
 
 
 
 
 
 
 
 
Governments
and Agencies
 
Financials
 
Non-Financials
 
Government
Guaranteed
 
Total
 
Agency
RMBS
 
Non-Agency RMBS/CMBS
 
ABS
 
Total Fixed Maturities
 
Equities
 
Total Fixed Maturities and Equities
Composition by country
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Eurozone countries:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Netherlands
$
21,001

  
$
14,951

 
$
76,402

 
$

 
$
91,353

 
$

 
$

 
$

 
$
112,354

 
$
1,423

  
$
113,777

Germany
45,633

  
6,130

 
19,837

 

 
25,967

 

 

 

 
71,600

 
1,577

  
73,177

Belgium
31,748

  
427

 
20,115

 

 
20,542

 

 

 

 
52,290

 
531

  
52,821

France

  
10,162

 
31,556

 

 
41,718

 

 

 

 
41,718

 
4,409

  
46,127

Luxembourg

  

 
45,518

 

 
45,518

 

 

 

 
45,518

 

  
45,518

Ireland

  
22,139

 
11,724

 

 
33,863

 

 

 
4,241

 
38,104

 
81

  
38,185

Italy
7,241

  
406

 
6,914

 

 
7,320

 

 

 

 
14,561

 
810

  
15,371

Spain
2,885

  
7,320

 
4,300

 

 
11,620

 

 

 

 
14,505

 
436

  
14,941

Supranational [a]
9,661

  

 

 

 

 

 

 

 
9,661

 

  
9,661

Austria

  
791

 
1,221

 

 
2,012

 

 

 

 
2,012

 
261

  
2,273

Portugal

 

 
949

 

 
949

 

 

 

 
949

 

 
949

Finland

 

 
693

 

 
693

 

 

 

 
693

 
227

 
920

Other [b]

  

 

 

 

 

 

 

 

 
88,617

  
88,617

Total eurozone
118,169

  
62,326

 
219,229

 

 
281,555

 

 

 
4,241

 
403,965

 
98,372

  
502,337

Other concentrations:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
United Kingdom
184,220

  
50,872

 
119,005

 
20,755

 
190,632

 

 
12,621

 

 
387,473

 
11,918

  
399,391

Canada
91,259

  
122,380

 
96,385

 
77,884

 
296,649

 

 

 
6,814

 
394,722

 

  
394,722

Japan

 
93,025

 
2,999

 
5,914

 
101,938

 

 

 
7,351

 
109,289

 
22,665

 
131,954

Australia

  
62,674

 
12,074

 

 
74,748

 

 

 

 
74,748

 

  
74,748

Mexico
36,997

 

 
1,475

 

 
1,475

 

 

 

 
38,472

 

  
38,472

Other
142,995

  
18,127

 
68,737

 
16,665

 
103,529

 

 

 

 
246,524

 
27,792

[c]
274,316

Total other concentrations
455,471

  
347,078

 
300,675

 
121,218

 
768,971

 

 
12,621

 
14,165

 
1,251,228

 
62,375

  
1,313,603

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Non-U.S. concentrations
573,640

  
409,404

 
519,904

 
121,218

 
1,050,526

 

 
12,621

 
18,406

 
1,655,193

 
160,747

  
1,815,940

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
United States
1,495,423

[d]
1,372,278

 
2,080,359

 
804

 
3,453,441

 
2,306,822

 
700,932

 
1,270,464

 
9,227,082

 
499,004

[e]
9,726,086

United States agencies
51,895

  

 

 

 

 

 

 

 
51,895

 

  
51,895

United States local governments
152,216

  

 

 

 

 

 

 

 
152,216

 

  
152,216

Total U.S. concentrations
1,699,534

  
1,372,278

 
2,080,359

 
804

 
3,453,441

 
2,306,822

 
700,932

 
1,270,464

 
9,431,193

 
499,004

  
9,930,197

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Totals
$
2,273,174

  
$
1,781,682

 
$
2,600,263

 
$
122,022

 
$
4,503,967

 
$
2,306,822

 
$
713,553

 
$
1,288,870

 
$
11,086,386

 
$
659,751

  
$
11,746,137

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
[a]
Represents holdings of the European Investment Bank.
[b]
Represents holdings in exchange-traded funds ("ETFs"). The primary countries of risk for these underlying securities are countries within the eurozone.
[c]
Represents exchange-traded funds ("ETFs") designed to track indexes with primary underlying exposures to countries other than the United States and those within the eurozone.
[d]
Represents United States Treasuries.
[e]
Represents ETFs designed to track the S&P 500 and a U.S. bond mutual fund.

13

axislogoq12017a04.jpg

AXIS Capital Holdings Limited
CORPORATE DEBT COMPOSITION
At September 30, 2017
 
 
Fair Value
 
% of Total
Corporate Debt
 
% of Total
Cash and
Invested Assets
Composition by sector - Investment grade
 
 
 
 
 
 
Financial institutions:
 
 
 
 
 
 
U.S. banking
 
$
970,474

 
21.5
%
 
6.6
%
Foreign banking [a]
 
325,341

 
7.2
%
 
2.2
%
Corporate/commercial finance
 
211,157

 
4.7
%
 
1.4
%
Insurance
 
117,361

 
2.6
%
 
0.8
%
Investment brokerage
 
11,779

 
0.3
%
 
0.1
%
Total financial institutions
 
1,636,112

 
36.3
%
 
11.1
%
Consumer non-cyclicals
 
516,251

 
11.5
%
 
3.5
%
Consumer cyclical
 
320,126

 
7.1
%
 
2.2
%
Communications
 
245,361

 
5.4
%
 
1.7
%
Technology
 
210,374

 
4.7
%
 
1.4
%
Energy
 
197,815

 
4.4
%
 
1.4
%
Non-U.S. government guaranteed [b]
 
121,218

 
2.7
%
 
0.8
%
Transportation
 
97,053

 
2.2
%
 
0.7
%
Industrials
 
89,186

 
2.0
%
 
0.6
%
Utilities
 
88,775

 
2.0
%
 
0.6
%
Total investment grade
 
3,522,271

 
78.3
%
 
24.0
%
 
 
 
 
 
 
 
Total non-investment grade
 
981,696

 
21.7
%
 
6.7
%
 
 
 
 
 
 
 
Total corporate debt
 
$
4,503,967

 
100.0
%
 
30.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
[a]
Located in Canada, Japan, Australia, United Kingdom, Switzerland, Norway, Denmark, Chile, Germany, France, Netherlands and Spain.
[b]
No corporate debt guaranteed by a eurozone country.

14

axislogoq12017a04.jpg

AXIS Capital Holdings Limited
INVESTMENT PORTFOLIO
TEN LARGEST CORPORATE DEBT HOLDINGS
At September 30, 2017  
 
 
Amortized
Cost
 
Net Unrealized
Gain (Loss)
 
Fair Value
 
% of Total
Fixed  Maturities
ISSUER [a]
 
 
 
 
 
 
 
 
MORGAN STANLEY
 
$
131,740

 
$
812

 
$
132,552

 
1.2
%
GOLDMAN SACHS GROUP
 
122,539

 
727

 
123,266

 
1.1
%
JP MORGAN CHASE & CO
 
118,202

 
749

 
118,951

 
1.1
%
WELLS FARGO & COMPANY
 
112,131

 
761

 
112,892

 
1.0
%
BANK OF AMERICA CORP
 
82,147

 
963

 
83,110

 
0.7
%
FORD MOTOR COMPANY
 
60,628

 
(313
)
 
60,315

 
0.5
%
AMERICAN EXPRESS COMPANY
 
52,639

 
300

 
52,939

 
0.5
%
VERIZON COMMUNICATIONS INC
 
53,006

 
(114
)
 
52,892

 
0.5
%
AT&T INC
 
49,267

 
545

 
49,812

 
0.4
%
GENERAL MOTORS COMPANY
 
46,934

 
903

 
47,837

 
0.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
[a]
The holdings represent direct investments in fixed maturities of the parent issuer and its major subsidiaries. These investments exclude asset and mortgage backed securities that were issued, sponsored or serviced by the parent.

15

axislogoq12017a04.jpg

AXIS Capital Holdings Limited
MORTGAGE-BACKED AND ASSET-BACKED SECURITIES COMPOSITION
At September 30, 2017
 
 
Agencies
 
AAA
 
AA
 
A
 
BBB
 
Non-Investment
Grade
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential MBS
 
$
2,306,822

 
$
18,073

 
$
457

 
$
1,995

 
$
6,939

 
$
16,353

 
$
2,350,639

Commercial MBS
 
130,401

 
441,160

 
65,968

 
24,091

 
8,116

 

 
669,736

ABS
 

 
1,091,864

 
138,219

 
36,309

 
16,029

 
6,449

 
1,288,870

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total mortgage-backed and asset-backed securities
 
$
2,437,223

 
$
1,551,097

 
$
204,644

 
$
62,395

 
$
31,084

 
$
22,802

 
$
4,309,245

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Percentage of total
 
56.6
%
 
36.0
%
 
4.7
%
 
1.4
%
 
0.7
%
 
0.6
%
 
100.0
%

16

axislogoq12017a04.jpg

AXIS Capital Holdings Limited
REINSURANCE RECOVERABLE ANALYSIS
 
 
Q3 2017
 
Q2 2017
 
Q1 2017
 
Q4 2016
 
Q3 2016
 
Q3 2015
Reinsurance recoverable on paid losses and loss expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Insurance
 
$
38,654

 
$
59,391

 
$
26,009

 
$
40,413

 
$
32,853

 
$
28,812

Reinsurance
 
24,145

 
14,674

 
15,301

 
18,400

 
27,096

 

Total
 
$
62,799

 
$
74,065

 
$
41,310

 
$
58,813

 
$
59,949

 
$
28,812

 
 
 
 
 
 
 
 
 
 
 
 
 
Reinsurance recoverable on unpaid losses and loss expenses: OSLR
 
 
 
 
 
 
 
 
 
 
 
 
Insurance
 
$
587,061

 
$
563,510

 
$
576,914

 
$
723,265

 
$
712,987

 
$
660,861

Reinsurance
 
99,302

 
45,525

 
39,069

 
36,326

 
31,789

 
8,039

Total
 
$
686,363

 
$
609,035

 
$
615,983

 
$
759,591

 
$
744,776

 
$
668,900

 
 
 
 
 
 
 
 
 
 
 
 
 
Reinsurance recoverable on unpaid losses and loss expenses: IBNR
 
 
 
 
 
 
 
 
 
 
 
 
Insurance
 
$
1,406,026

 
$
1,406,141

 
$
1,366,078

 
$
1,489,953

 
$
1,523,537

 
$
1,323,350

Reinsurance
 
221,872

 
113,483

 
67,121

 
46,955

 
28,700

 
32,457

Total
 
$
1,627,898

 
$
1,519,624

 
$
1,433,199

 
$
1,536,908

 
$
1,552,237

 
$
1,355,807

 
 
 
 
 
 
 
 
 
 
 
 
 
Provision against reinsurance recoverables:
 
 
 
 
 
 
 
 
 
 
 
 
Insurance
 
$
(15,973
)
 
$
(17,629
)
 
$
(20,017
)
 
$
(19,889
)
 
$
(20,087
)
 
$
(17,420
)
Reinsurance
 
(266
)
 
(161
)
 
(134
)
 
(501
)
 
(134
)
 

Total
 
$
(16,239
)
 
$
(17,790
)
 
$
(20,151
)
 
$
(20,390
)
 
$
(20,221
)
 
$
(17,420
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Net reinsurance recoverables:
 
 
 
 
 
 
 
 
 
 
 
 
Insurance
 
$
2,015,768

 
$
2,011,413

 
$
1,948,984

 
$
2,233,742

 
$
2,249,290

 
$
1,995,603

Reinsurance
 
345,053

 
173,521

 
121,357

 
101,180

 
87,451

 
40,496

Total
 
$
2,360,821

 
$
2,184,934

 
$
2,070,341

 
$
2,334,922

 
$
2,336,741

 
$
2,036,099


17

axislogoq12017a04.jpg

AXIS Capital Holdings Limited
REINSURANCE RECOVERABLE ANALYSIS
At September 30, 2017
Categories
 
Gross
Recoverable
 
Collateral
 
Gross
Recoverable
Net of
Collateral
 
% of  Total
Gross
Recoverable
Net  of
Collateral
 
% of  Total
Shareholders’
Equity
 
Provision
Against
Reinsurance
Recoverable
 
Provision
Against  Reinsurance
Recoverable as %
of Gross Recoverable
 
Net
Recoverable
Top 10 reinsurers based on gross recoverables
 
$
1,442,169

 
$
(142,870
)
 
$
1,299,299

 
62.8%
 
23.8%
 
$
(9,195
)
 
0.6%
 
$
1,432,974

Other reinsurers balances > $20 million
 
609,352

 
(91,510
)
 
517,842

 
25.0%
 
9.5%
 
(4,489
)
 
0.7%
 
604,863

Other reinsurers balances < $20 million
 
325,539

 
(73,143
)
 
252,396

 
12.2%
 
4.6%
 
(2,555
)
 
0.8%
 
322,984

Total
 
$
2,377,060

 
$
(307,523
)
 
$
2,069,537

 
100.0%
 
37.9%
 
$
(16,239
)
 
0.7%
 
$
2,360,821

At September 30, 2017, 91.7% (December 31, 2016: 96.7%) of our gross recoverables were collectible from reinsurers rated the equivalent of A- or better by internationally recognized rating agencies.

 
Top 10 Reinsurers (net of collateral)
 
% of  Total
Gross
Recoverable
Net  of
Collateral
 
% of  Total
Shareholders’
Equity
Swiss Reinsurance America Corporation
 
17.1%
 
6.5%
Transatlantic Reinsurance Company
 
9.4%
 
3.6%
Partner Reinsurance Co of US
 
9.0%
 
3.4%
Lloyds of London
 
7.8%
 
3.0%
Hannover Ruck SE
 
4.2%
 
1.6%
Berkley Insurance Company
 
4.2%
 
1.6%
Harrington Re Ltd.
 
3.8%
 
1.4%
Everest Reinsurance Company
 
3.7%
 
1.4%
Munich Reinsurance America, Inc
 
3.6%
 
1.3%
Liberty Mutual Insurance Company
 
3.4%
 
1.2%
 
 
66.2%
 
25.0%

18

axislogoq12017a04.jpg

AXIS Capital Holdings Limited
RESERVE FOR LOSSES AND LOSS EXPENSES: PAID TO INCURRED ANALYSIS
 
 
Quarter ended September 30, 2017
 
Nine months ended September 30, 2017
 
 
Gross
 
Recoveries
 
Net
 
Gross
 
Recoveries
 
Net
Reserve for unpaid losses and loss expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning of period
 
$
9,878,662

 
$
(2,110,869
)
 
$
7,767,793

 
$
9,697,827

 
$
(2,276,109
)
 
$
7,421,718

Incurred
 
1,550,221

 
(314,854
)
 
1,235,367

 
3,122,745

 
(675,105
)
 
2,447,640

Paid
 
(741,324
)
 
137,234

 
(604,090
)
 
(2,181,786
)
 
468,525

 
(1,713,261
)
Foreign exchange and other
 
100,016

 
(9,533
)
 
90,483

 
148,789

 
184,667

 
333,456

 
 
 
 
 
 
 
 
 
 
 
 
 
End of period [a]
 
$
10,787,575

 
$
(2,298,022
)
 
$
8,489,553

 
$
10,787,575

 
$
(2,298,022
)
 
$
8,489,553

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
[a]
At September 30, 2017, the gross reserve for losses and loss expenses included IBNR of $7,156 million, or 66%, of total gross reserves for loss and loss expenses. At December 31, 2016, the comparable amount was $6,339 million, or 65%.

19

axislogoq12017a04.jpg

AXIS Capital Holdings Limited
RESERVE FOR LOSSES AND LOSS EXPENSES: PAID TO INCURRED ANALYSIS BY SEGMENT
 
 
Quarter ended September 30, 2017
 
Nine months ended September 30, 2017
 
 
Insurance
 
Reinsurance
 
Total
 
Insurance
 
Reinsurance
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross losses paid
 
$
459,648

 
$
281,676

 
$
741,324

 
$
1,401,987

 
$
779,799

 
$
2,181,786

Reinsurance recoveries
 
(113,348
)
 
(23,886
)
 
(137,234
)
 
(435,345
)
 
(33,180
)
 
(468,525
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Net losses paid
 
346,300

 
257,790

 
604,090

 
966,642

 
746,619

 
1,713,261

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in:
 
 
 
 
 
 
 
 
 
 
 
 
Reported case reserves
 
34,012

 
158,461

 
192,473

 
(95,802
)
 
247,469

 
151,667

IBNR
 
266,928

 
349,496

 
616,424

 
343,197

 
446,095

 
789,292

Reinsurance recoveries on unpaid loss and loss expense reserves
 
(18,375
)
 
(159,245
)
 
(177,620
)
 
27,458

 
(234,038
)
 
(206,580
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Total net incurred losses and loss expenses
 
$
628,865

 
$
606,502

 
$
1,235,367

 
$
1,241,495

 
$
1,206,145

 
$
2,447,640

 
 
 
 
 
 
 
 
 
 
 
 
 
Gross reserve for losses and loss expenses
 
$
5,525,000

 
$
5,262,575

 
$
10,787,575

 
$
5,525,000

 
$
5,262,575

 
$
10,787,575

 
 
 
 
 
 
 
 
 
 
 
 
 
Net favorable prior year reserve development
 
$
2,603

 
$
45,165

 
$
47,768

 
$
30,740

 
$
112,755

 
$
143,495

 
 
 
 
 
 
 
 
 
 
 
 
 
Key Ratios
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net paid to net incurred percentage
 
55.1
%
 
42.5
%
 
48.9
%
 
77.9
%
 
61.9
%
 
70.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Net paid losses / Net premiums earned
 
69.8
%
 
49.5
%
 
59.4
%
 
66.7
%
 
50.1
%
 
58.3
%
Change in net loss and loss expense reserves / Net premiums earned
 
57.0
%
 
66.9
%
 
62.1
%
 
19.0
%
 
30.9
%
 
25.0
%
Net loss and loss expense ratio
 
126.8
%
 
116.4
%
 
121.5
%
 
85.7
%
 
81.0
%
 
83.3
%

20

axislogoq12017a04.jpg

AXIS Capital Holdings Limited
RESERVE FOR LOSSES AND LOSS EXPENSES: PAID TO INCURRED ANALYSIS
INSURANCE - QUARTERLY
 
 
Q3 2017
 
Q2 2017
 
Q1 2017
 
Q4 2016
 
Q3 2016
 
Q3 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross losses paid
 
$
459,648

 
$
424,631

 
$
517,708

 
$
456,485

 
$
365,160

 
$
388,142

Reinsurance recoveries
 
(113,348
)
 
(118,232
)
 
(203,766
)
 
(121,990
)
 
(102,625
)
 
(121,560
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Net losses paid
 
346,300

 
306,399

 
313,942

 
334,495

 
262,535

 
266,582

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in:
 
 
 
 
 
 
 
 
 
 
 
 
Reported case reserves
 
34,012

 
(57,989
)
 
(71,825
)
 
37,738

 
(5,561
)
 
(29,415
)
IBNR
 
266,928

 
95,220

 
(18,949
)
 
(88,366
)
 
55,505

 
46,941

Reinsurance recoveries on unpaid loss and loss expense reserves
 
(18,375
)
 
(17,902
)
 
63,735

 
4,294

 
(39,253
)
 
(836
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Total net incurred losses and loss expenses
 
$
628,865

 
$
325,728

 
$
286,903

 
$
288,161

 
$
273,226

 
$
283,272

 
 
 
 
 
 
 
 
 
 
 
 
 
Gross reserve for losses and loss expenses
 
$
5,525,000

 
$
5,200,224

 
$
5,055,410

 
$
5,345,655

 
$
5,430,238

 
$
5,243,445

 
 
 
 
 
 
 
 
 
 
 
 
 
Net favorable prior year reserve development
 
$
2,603

 
$
19,517

 
$
8,619

 
$
12,725

 
$
20,688

 
$
2,444

 
 
 
 
 
 
 
 
 
 
 
 
 
Key Ratios
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net paid to net incurred percentage
 
55.1
%
 
94.1
%
 
109.4
%
 
116.1
%
 
96.1
%
 
94.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Net paid losses/Net premiums earned
 
69.8
%
 
62.0
%
 
68.5
%
 
73.6
%
 
59.0
%
 
60.0
%
Change in net loss and loss expense reserves / Net premiums earned
 
57.0
%
 
4.0
%
 
(5.9
%)
 
(10.2
%)
 
2.4
%
 
3.7
%
Net loss and loss expense ratio
 
126.8
%
 
66.0
%
 
62.6
%
 
63.4
%
 
61.4
%
 
63.7
%


21

axislogoq12017a04.jpg

AXIS Capital Holdings Limited
RESERVE FOR LOSSES AND LOSS EXPENSES: PAID TO INCURRED ANALYSIS
REINSURANCE - QUARTERLY
 
 
Q3 2017
 
Q2 2017
 
Q1 2017
 
Q4 2016
 
Q3 2016
 
Q3 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross losses paid
 
$
281,676

 
$
254,182

 
$
243,941

 
$
297,741

 
$
231,506

 
$
212,859

Reinsurance recoveries
 
(23,886
)
 
(3,936
)
 
(5,358
)
 
(8,284
)
 
(5,463
)
 
(1,664
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Net losses paid
 
257,790

 
250,246

 
238,583

 
289,457

 
226,043

 
211,195

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in:
 
 
 
 
 
 
 
 
 
 
 
 
Reported case reserves
 
158,461

 
90,172

 
(1,164
)
 
37,735

 
20,139

 
22,545

IBNR
 
349,496

 
(8,890
)
 
105,490

 
(50,686
)
 
23,473

 
40,444

Reinsurance recoveries on unpaid loss and loss expense reserves
 
(159,245
)
 
(51,924
)
 
(22,870
)
 
(24,055
)
 
(10,553
)
 
2,931

 
 
 
 
 
 
 
 
 
 
 
 
 
Total net incurred losses and loss expenses
 
$
606,502

 
$
279,604

 
$
320,039

 
$
252,451

 
$
259,102

 
$
277,115

 
 
 
 
 
 
 
 
 
 
 
 
 
Gross reserve for losses and loss expenses
 
$
5,262,575

 
$
4,678,438

 
$
4,486,553

 
$
4,352,172

 
$
4,444,569

 
$
4,460,138

 
 
 
 
 
 
 
 
 
 
 
 
 
Net favorable prior year reserve development
 
$
45,165

 
$
51,416

 
$
16,174

 
$
55,522

 
$
55,331

 
$
42,681

 
 
 
 
 
 
 
 
 
 
 
 
 
Key Ratios
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net paid to net incurred percentage
 
42.5
%
 
89.5
%
 
74.5
%
 
114.7
%
 
87.2
%
 
76.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Net paid losses / Net premiums earned
 
49.5
%
 
51.3
%
 
49.7
%
 
62.0
%
 
46.2
%
 
44.5
%
Change in net loss and loss expense reserves / Net premiums earned
 
66.9
%
 
6.0
%
 
16.9
%
 
(8.0
%)
 
6.7
%
 
13.9
%
Net loss and loss expense ratio
 
116.4
%
 
57.3
%
 
66.6
%
 
54.0
%
 
52.9
%
 
58.4
%

22

axislogoq12017a04.jpg

AXIS Capital Holdings Limited
IMPACT OF THIRD QUARTER 2017 CATASTROPHE EVENTS
At September 30, 2017
(Amounts in millions of U.S. dollars)
 
Hurricane Harvey
 
Hurricane Irma
 
Hurricane Maria
 
Mexico Earthquakes
 
Total
 
 
 
 
 
 
 
 
 
 
Gross loss and loss expenses
 
 
 
 
 
 
 
 
 
Insurance
$
148

 
$
137

 
$
26

 
$
10

 
$
321

Reinsurance
139

 
158

 
126

 
35

 
458

Total
$
287

 
$
295

 
$
152

 
$
45

 
$
779

 
 
 
 
 
 
 
 
 
 
Net loss and loss expenses
 
 
 
 
 
 
 
 
 
Insurance
$
144

 
$
136

 
$
25

 
$
10

 
$
315

Reinsurance
99

 
104

 
96

 
23

 
322

Total
$
243

 
$
240

 
$
121

 
$
33

 
$
637

 
 
 
 
 
 
 
 
 
 
Net reinstatement premiums
 
 
 
 
 
 
 
 
 
Reinsurance
$
3

 
$
12

 
$
5

 
$

 
$
20

 
 
 
 
 
 
 
 
 
 
Total impact before income tax
 
 
 
 
 
 
 
 
 
Insurance
$
144

 
$
136

 
$
25

 
$
10

 
$
315

Reinsurance
96

 
92

 
91

 
23

 
302

Total
$
240

 
$
228

 
$
116

 
$
33

 
$
617

 
 
 
 
 
 
 
 
 
 
Income tax benefit
20

 
15

 
3

 
1

 
39

 
 
 
 
 
 
 
 
 
 
Total impact after income tax
$
220

 
$
213

 
$
113

 
$
32

 
$
578















23

axislogoq12017a04.jpg

AXIS Capital Holdings Limited
NET PROBABLE MAXIMUM LOSSES TO CERTAIN PEAK INDUSTRY CATASTROPHE EXPOSURES - AS OF OCTOBER 1, 2017

 
 
 
 
Estimated Net Exposures
(millions of U.S. dollars)
Territory
 
Peril
 
50 Year
Return
Period
 
100 Year
Return
Period
 
250 Year
Return
Period
Single zone, single event
 
 
 
 
 
 
 
 
Southeast
 
U.S. Hurricane
 
$
468

 
$
530

 
$
675

Northeast
 
U.S. Hurricane
 
39

 
114

 
279

Mid-Atlantic
 
U.S. Hurricane
 
103

 
298

 
538

Gulf of Mexico
 
U.S. Hurricane
 
316

 
390

 
462

California
 
Earthquake
 
318

 
437

 
516

Europe
 
Windstorm
 
173

 
239

 
307

Japan
 
Earthquake
 
143

 
183

 
294

Japan
 
Windstorm
 
50

 
86

 
122

The above table shows our Probable Maximum Loss (“PML”) to a single natural peril catastrophe event within certain defined single zones which correspond to peak industry catastrophe exposures at October 1, 2017. The return period refers to the frequency with which losses of a given amount or greater are expected to occur. A zone is a geographic area in which the insurance risks are considered to be correlated to a single catastrophic event. Estimated losses from a modeled event are grouped into a single zone, as shown above, based on where the majority of the total estimated industry loss is expected to occur.
As indicated in the table above, our modeled single occurrence 1-in-100 year return period PML for a Southeast hurricane, net of reinsurance, is approximately $0.5 billion. According to our modeling, there is a one percent chance that on an annual basis, our losses incurred from a Southeast hurricane event could be in excess of $0.5 billion. Conversely, there is a 99% chance that on an annual basis, the loss from a Southeast hurricane will fall below $0.5 billion.
We have developed our PML estimates using multiple commercially available catastrophe vendor models, including AIR and RMS. We weight the use of these vendor models based upon our own judgment and experience, and include in our estimates non-modeled perils and other factors which we believe provide us with a more complete view of catastrophe risk.
A supplementary disclosure entitled “Overview of AXIS Natural Peril Catastrophe Risk Measurement and Management” dated August 3, 2011 is available in the Investor Information section of our website. This disclosure provides an overview of our PML methodology, including our approach to zonal aggregation, as well as information about zonal definitions commonly used by other external parties.
Our PML estimates are based on assumptions that are inherently subject to significant uncertainties and contingencies. These uncertainties and contingencies can affect actual losses and could cause actual losses to differ materially from those expressed above. We aim to reduce the potential for model error in a number of ways, foremost by ensuring that management’s judgment supplements the model outputs. We also perform ongoing model validation both within our business units and through our catastrophe model validation unit. These validation procedures include sensitivity testing of models to understand their key variables and, where possible, back testing the model outputs to actual results.
Our estimated net losses from peak zone catastrophes may change from period to period as a result of several factors, which include but are not limited to, updates to vendor catastrophe models, changes in our own modeling, changes in our underwriting portfolios, changes to our reinsurance purchasing strategy and changes in foreign exchange rates.

24

axislogoq12017a04.jpg

AXIS Capital Holdings Limited
EARNINGS PER COMMON SHARE INFORMATION - AS REPORTED, GAAP
 
 
Quarter ended September 30,
 
Nine months ended September 30,
 
 
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
 
 
Net income (loss) available to common shareholders
 
$
(467,740
)
 
$
176,644

 
$
(377,695
)
 
$
334,554

 
 
 
 
 
 
 
 
 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
 
 
 
 
 
 
 
 
Weighted average shares outstanding - basic
 
83,305

 
89,621

 
84,479

 
91,852

Dilutive share equivalents:
 
 
 
 
 
 
 
 
Share-based compensation plans [a]

 

 
730

 

 
727

Weighted average shares outstanding - diluted
 
83,305

 
90,351

 
84,479

 
92,579

 
 
 
 
 
 
 
 
 
EARNINGS (LOSS) PER COMMON SHARE
 
 
 
 
 
 
 
 
Basic
 

($5.61
)
 

$1.97

 

($4.47
)
 

$3.64

Diluted
 

($5.61
)
 

$1.96

 

($4.47
)
 

$3.61

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
[a] Due to the net loss incurred in the three and nine months ended September 30, 2017, all the share equivalents were anti-dilutive.

25

axislogoq12017a04.jpg

AXIS Capital Holdings Limited
EARNINGS PER COMMON SHARE INFORMATION AND COMMON SHARES ROLLFOWARD - QUARTERLY
 
 
 
Q3 2017
 
Q2 2017
 
Q1 2017
 
Q4 2016
 
Q3 2016
 
Q3 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) available to common shareholders
 
$
(467,740
)
 
$
85,030

 
$
5,014

 
$
130,912

 
$
176,644

 
$
247,620

 
 
 
 
 
 
 
 
 
 
 
 
 
COMMON SHARES OUTSTANDING
 
 
 
 
 
 
 
 
 
 
 
 
Common shares - at beginning of period
 
83,203

 
85,170

 
86,441

 
88,439

 
90,654

 
100,284

Shares issued, including those sourced from treasury
 
5

 
37

 
958

 
11

 
37

 
22

Shares repurchased for treasury
 
(51
)
 
(2,004
)
 
(2,229
)
 
(2,009
)
 
(2,252
)
 
(4,257
)
Common shares - at end of period
 
83,157

 
83,203

 
85,170

 
86,441

 
88,439

 
96,049

 
 
 
 
 
 
 
 
 
 
 
 
 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding - basic
 
83,305

 
84,141

 
86,022

 
87,552

 
89,621

 
98,226

Dilutive share equivalents:
 
 
 
 
 
 
 
 
 
 
 
 
Share-based compensation plans [a]

 

 
370

 
771

 
922

 
730

 
898

Weighted average shares outstanding - diluted
 
83,305

 
84,511

 
86,793

 
88,474

 
90,351

 
99,124

 
 
 
 
 
 
 
 
 
 
 
 
 
EARNINGS (LOSS) PER COMMON SHARE
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 

($5.61
)
 

$1.01

 

$0.06

 

$1.50

 

$1.97

 

$2.52

Diluted
 

($5.61
)
 

$1.01

 

$0.06

 

$1.48

 

$1.96

 

$2.50

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
[a] Due to the net loss incurred in the three and nine months ended September 30, 2017, all the share equivalents were anti-dilutive.


26

axislogoq12017a04.jpg

AXIS Capital Holdings Limited
DILUTED BOOK VALUE PER COMMON SHARE ANALYSIS - TREASURY STOCK METHOD [a]
 
 
At September 30, 2017
 
 
 
 
 
 
 
 
 
 
 
Common
Shareholders’
Equity
 
Outstanding
Common Shares
net of
Treasury Shares
 
Per share
 
 
 
 
 
 
 
 
Closing stock price
 
 
 
 
 
 

$57.31

 
 
 
 
 
 
 
 
Book value per common share
 
 
$
4,679,699

 
83,157

 

$56.28

 
 
 
 
 
 
 
 
Dilutive securities: [b]
 
 
 
 
 
 
 
Restricted units
 
 
 
 
1,418

 
(0.95
)
Diluted book value per common share
 
 
$
4,679,699

 
84,575

 

$55.33

 
 
 
 
 
 
 
 
 
 
At December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
Common
Shareholders’
Equity
 
Outstanding
Common Shares
net of
Treasury Shares
 
Per share
 
 
 
 
 
 
 
 
Closing stock price
 
 
 
 
 
 

$65.27

 
 
 
 
 
 
 
 
Book value per common share
 
 
$
5,146,296

 
86,441

 

$59.54

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dilutive securities: [b]
 
 
 
 
 
 
 
Restricted units
 
 
 
 
1,876

 
(1.27
)
Diluted book value per common share
 
 
$
5,146,296

 
88,317

 

$58.27

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
[a]
Under this method unvested restricted stock units are added to determine the diluted common shares outstanding.
[b]
Excludes cash-settled restricted stock unit awards.



27

axislogoq12017a04.jpg

AXIS Capital Holdings Limited
NON-GAAP OPERATING INCOME [a]
 
 
 
 
 
 
 
 
 
 
NON-GAAP OPERATING INCOME
 
Quarter ended September 30,
 
Nine months ended September 30,
 
 
2017
 
2016
 
2017
 
2016
Net income (loss) available to common shareholders
 
$
(467,740
)
 
$
176,644

 
$
(377,695
)
 
$
334,554

Adjustment for:
 
 
 
 
 
 
 
 
Net realized investment (gains) losses
 
(14,632
)
 
(5,205
)
 
14,811

 
40,295

Associated tax impact
 
2,657

 
2,479

 
1,892

 
2,372

Foreign exchange losses (gains)
 
32,510

 
(13,795
)
 
90,093

 
(69,781
)
Associated tax impact
 
(4,439
)
 
566

 
(4,242
)
 
2,010

Bargain purchase gain
 

 

 
(15,044
)
 

Associated tax impact
 

 

 

 

Transaction related expenses

 
5,970

 

 
5,970

 

Associated tax impact
 
(221
)
 

 
(221
)
 

Non-GAAP operating income (loss)
 
$
(445,895
)
 
$
160,689

 
$
(284,436
)
 
$
309,450

 
 
 
 
 
 
 
 
 
Net earnings (loss) per share - diluted
 
$
(5.61
)
 
$
1.96

 
$
(4.47
)
 
$
3.61

Adjustment for:
 
 
 
 
 
 
 
 
Net realized investment (gains) losses
 
(0.18
)
 
(0.06
)
 
0.16

 
0.44

Associated tax impact
 
0.03

 
0.03

 
0.03

 
0.02

Foreign exchange losses (gains)
 
0.39

 
(0.15
)
 
1.07

 
(0.75
)
Associated tax impact
 
(0.05
)
 

 
(0.05
)
 
0.02

Bargain purchase gain
 

 

 
(0.18
)
 

Associated tax impact
 

 
$

 

 

Transaction related expenses

 
0.07

 

 
0.07

 

Associated tax impact
 

 
$

 

 

Non-GAAP operating income (loss) per share - diluted
 
$
(5.35
)
 
$
1.78

 
$
(3.37
)
 
$
3.34

 
 
 
 
 
 
 
 
 
Weighted average common shares and common share equivalents - diluted
 
83,305

 
90,351

 
84,479

 
92,579

 
 
 
 
 
 
 
 
 
Average common shareholders' equity
 
$
4,898,698

 
$
5,369,921

 
$
4,912,998

 
$
5,319,849

 
 
 
 
 
 
 
 
 
Annualized return on average common equity
 
nm
 
13.2
%
 
(10.3
)%
 
8.4
%
 
 
 
 
 
 
 
 
 
Annualized non-GAAP operating return on average common equity
 
nm
 
12.0
%
 
(7.7
)%
 
7.8
%
 
 
 
 
 
 
 
 
 
[a]
Non-GAAP operating income is a “non-GAAP financial measure” as defined by Regulation G. A reconciliation of non-GAAP operating income to net income available to common shareholders is presented above.

28

axislogoq12017a04.jpg

AXIS Capital Holdings Limited
DILUTED TANGIBLE BOOK VALUE PER COMMON SHARE

DILUTED TANGIBLE BOOK VALUE PER COMMON SHARE - TREASURY STOCK METHOD [a]
 
September 30,
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
September 30,
 
2017
 
2017
 
2017
 
2016
 
2016
 
2015
Common shareholders' equity
$
4,679,699

 
$
5,117,695

 
$
5,104,291

 
$
5,146,296

 
$
5,400,658

 
$
5,198,523

Less: goodwill and intangible assets
(87,206
)
 
(86,220
)
 
(84,613
)
 
(85,049
)
 
(85,501
)
 
(87,329
)
Tangible common shareholders' equity
$
4,592,493

 
$
5,031,475

 
$
5,019,678

 
$
5,061,247

 
$
5,315,157

 
$
5,111,194

 
 
 
 
 
 
 
 
 
 
 
 
Outstanding diluted common shares, net of treasury shares
84,575

 
84,655

 
86,670

 
88,317

 
90,363

 
98,213

 
 
 
 
 
 
 
 
 
 
 
 
Diluted book value per common share
$
55.33

 
$
60.45

 
$
58.89

 
$
58.27

 
$
59.77

 
$
53.68

 
 
 
 
 
 
 
 
 
 
 
 
Diluted tangible book value per common share
$
54.30

 
$
59.44

 
$
57.92

 
$
57.31

 
$
58.82

 
$
52.78

 
 
 
 
 
 
 
 
 
 
 
 
[a]
This method assumes that proceeds received upon exercise of options will be used to repurchase our common shares at the closing market price. Unvested restricted stocks and units and unrestricted phantom stock units are also added to determine the diluted common
shares outstanding. Cash-settled restricted stock unit awards are excluded.



29

axislogoq12017a04.jpg

AXIS Capital Holdings Limited
USE OF NON-GAAP FINANCIAL MEASURES


We present our results of operations in the way we believe will be most meaningful and useful to investors, analysts, rating agencies and others who use our financial information to evaluate our performance. Some of the measurements we use are "non-GAAP financial measures" under Securities and Exchange Commission ("SEC") rules and regulations. In this document, we present underwriting-related general and administrative expenses, consolidated underwriting income, non-GAAP operating income (in total and on a per share basis), diluted tangible book value per common share and pre-tax total return on cash and investments excluding foreign exchange movements, which are "non-GAAP financial measures" as defined in SEC Regulation G. We believe that these non-GAAP measures, which may be defined and calculated differently by other companies, better explain and enhance the understanding of our results of operations. However, these measures should not be viewed as a substitute for those determined in accordance with U.S. GAAP.

Underwriting-Related General and Administrative Expenses
Underwriting-related general and administrative expenses include those general and administrative expenses that are incremental and/or directly attributable to our individual underwriting operations. While these measures are presented in the Segment Information footnote to our Consolidated Financial Statements, they are considered non-GAAP financial measures when presented elsewhere on a consolidated basis.

Corporate expenses include holding company costs necessary to support our worldwide insurance and reinsurance operations and costs associated with operating as a publicly-traded company. As these costs are not incremental and/or directly attributable to our individual underwriting operations, we exclude them from underwriting-related general and administrative expenses and, therefore, consolidated underwriting income. Our total general and administrative expenses (the nearest GAAP financial measure to underwriting-related general and administrative expenses) also includes corporate expenses.

A reconciliation of underwriting-related general and administrative expenses to general and administrative expenses, the most comparable GAAP measure, is included in the ''Consolidated Statements of Income - Quarterly'' and ''Consolidated Statements of Income - Year to Date'' sections of this document.

Consolidated Underwriting Income
Consolidated underwriting income is a pre-tax measure of underwriting profitability that takes into account net premiums earned and other insurance related income (losses) as revenues and net losses and loss expenses, acquisition costs and underwriting-related general and administrative costs as expenses. While this measure is presented in the Segment Information footnote to our Consolidated Financial Statements, it is considered a non-GAAP financial measure when presented elsewhere on a consolidated basis.

We evaluate our underwriting results separately from the performance of our investment portfolio. As such, we believe it appropriate to exclude net investment income and net realized investment gains (losses) from our underwriting profitability measure. Interest expense and financing costs primarily relate to interest payable on our senior notes and are excluded from consolidated underwriting income for the same reason.


30

axislogoq12017a04.jpg

As noted above, foreign exchange losses (gains) in our Consolidated Statement of Income primarily relate to our net insurance-related liabilities. However, we manage our investment portfolio in such a way that unrealized and realized foreign exchange rate losses (gains) on our investment portfolio generally offset a large portion of the foreign exchange losses (gains) arising from our underwriting portfolio. As a result, we believe that foreign exchange losses (gains) are not a meaningful contributor to our underwriting performance and, therefore, exclude them from consolidated underwriting income.

The bargain purchase gain, recognized upon the acquisition of Aviabel, reflects the amount by which the fair value of the net identifiable assets acquired exceeds the fair value of consideration transferred and should be excluded from consolidated underwriting income since it is not related to underwriting operations.

Transaction related expenses and reorganization and related expenses are driven by business decisions, the nature and timing of which are unrelated to the underwriting process and for this reason they are excluded from consolidated underwriting income.

We believe that presentation of underwriting-related general and administrative expenses and consolidated underwriting income provides investors with an enhanced understanding of our results of operations, by highlighting the underlying pre-tax profitability of our underwriting activities. The reconciliation of consolidated underwriting income to income before income taxes and interest in income (loss) of equity method investments (the most comparable GAAP financial measure) is included in the''Consolidated Statements of Income - Quarterly'' and ''Consolidated Statements of Income - Year to Date'' sections of this document.

Non-GAAP Operating Income
Non-GAAP operating income represents after-tax operational results without consideration of after-tax net realized investment gains (losses), foreign exchange losses (gains), bargain purchase gain and transaction related expenses.

Although the investment of premiums to generate income and realize investment gains (losses) is an integral part of our operations, the determination to realize investment gains (losses) is independent of the underwriting process and is heavily influenced by the availability of market opportunities. Furthermore, many users believe that the timing of the realization of investment gains (losses) is somewhat opportunistic for many companies.

Foreign exchange losses (gains) in our Consolidated Statements of Income are primarily driven by the impact of foreign exchange rate movements on net insurance-related liabilities. However, this movement is only one element of the overall impact of foreign exchange rate fluctuations on our financial position. In addition, we recognize unrealized foreign exchange losses (gains) on our available-for-sale investments in other comprehensive income and foreign exchange losses (gains) realized upon the sale of these investments in net realized investment gains (losses). These unrealized and realized foreign exchange movements generally offset a large portion of the foreign exchange losses (gains) reported separately in earnings, thereby minimizing the impact of foreign exchange rate movements on total shareholders’ equity. As such, the Statement of Income foreign exchange losses (gains) in isolation are not a fair representation of the performance of our business.

The bargain purchase gain, recognized upon the acquisition of Aviabel, reflects the amount by which the fair value of the net identifiable assets acquired exceeds the fair value of consideration transferred and is not indicative of future revenues of the company.

31

axislogoq12017a04.jpg


Transaction related expenses are primarily driven by business decisions, the nature and timing of which are unrelated to the underwriting process and which are not representative of underlying business performance.

In this regard, certain users of our financial statements evaluate earnings excluding after-tax net realized investment gains (losses), foreign exchange losses (gains), bargain purchase gain and transaction related expenses to understand the profitability of recurring sources of income.

We believe that showing net income available to common shareholders exclusive of net realized gains (losses), foreign exchange losses (gains), bargain purchase gain and transaction expenses reflects the underlying fundamentals of our business. In addition, we believe that this presentation enables investors and other users of our financial information to analyze performance in a manner similar to how our management analyzes the underlying business performance. We also believe this measure follows industry practice and, therefore, facilitates comparison of our performance with our peer group. We believe that equity analysts and certain rating agencies that follow us, and the insurance industry as a whole, generally exclude these items from their analyses for the same reasons. The reconciliation of non-GAAP operating income to net income available to common shareholders, the most comparable GAAP measure, is presented in the "Non-GAAP Operating Income" section in this document.

Diluted Tangible Book Value per Common Share
Tangible book value is defined as common shareholders' equity excluding goodwill and intangible assets. Diluted tangible book value per common share uses this measure as the numerator, with the denominator being outstanding diluted common shares calculated under the treasury stock method. A reconciliation of diluted tangible book value per common share to diluted book value per common share (the nearest GAAP financial measure) is included in the "Diluted Tangible Book Value per Common Share'"section of this document.

Diluted tangible book value per common share removes certain effects of purchase accounting. We believe that this measure, in combination with diluted book value per common share, is useful in assessing value generated for our common shareholders.

Non-GAAP Financial Measures
We present pre-tax total return on cash and investments excluding foreign exchange movements, which measures net investment income (loss), net realized investments gains (losses), interest in income (loss) of equity method investments, and pre-tax change in unrealized gains (losses) generated by our average cash and investment balances which is derived from pre-tax total return on cash and investments and reconciled to the most comparable GAAP financial measure in the "Financial Highlights" section of this document". We believe this presentation enables investors and other users of our financial information to analyze the performance of our investments.

We also present diluted non-GAAP operating income per share and annualized non-GAAP operating return on average common equity ("annualized non-GAAP operating ROACE"), which are derived from the non-GAAP operating income measure and are reconciled to the most comparable GAAP financial measure in the "Non-GAAP Operating Income" section of this document.



32