Previous Statements by AXS
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These statements involve risks, uncertainties, and assumptions which could cause actual results to differ materially from our expectations. For a discussion of these matters, please refer to the risk factor section in our most recent Form 10K on file with the Securities & Exchange Commission. We undertake no obligation to update or revise publically any forward-looking statements whether as a result of new information, future events, or otherwise.In addition, this presentation contains information regarding operating income which is a non-GAAP financial measure within the meaning of the US federal securities laws. For a reconciliation of this item to the most directly comparable GAAP financial measure, please refer to our press release which can be found on our website. With that, I’d like to turn the call over to John. John R. Charman I will start by providing a brief overview of our financial results for the quarter and then leave it to Albert to provide more detail. Following that, I will discuss our underwriting operations and our view of the market outlook, and then open the line for questions. The market continues to experience cycle change. Many foolishly expect instant gratification across the board. That is not what cycle change brings. I said three quarters ago that absent a major market changing event, the insurance market was on the cusp of cycle change characterized by a day-by-day battle, geography-by-geography, product line by product line, and account-by-account. This battle is being fought by underwriters to stem the overwhelming broad rate reductions over the last five years and move towards much needed rate increases. Gradually and deliberately the shorter term specialty lines are responding. There is still significant ground to be covered in many professional and casualty lines. Investment yields being at all time lows are having increased pressure for positive pricing change. It is not a matter of if for these other lines, more a matter of when. At Axis we are patient but demanding. Our underwriters will not participate in what we consider to be underpriced product lines or individual accounts. Our underwriters are however, responding appropriately in those lines where we see opportunity as well as driving growth in newer lines as well as new geographies.
On balance, this means gross premiums were up 11% for the quarter and net premiums were up 8% for the quarter. Our third quarter underwriting results were very good in light of catastrophe activity which we would consider higher than normal for the quarter. Our total net catastrophe losses, net of reinstatements in the quarter were $91 million. In addition to these catastrophe losses, our underwriting results for the quarter absorbed a higher level of large property losses as a result of the cumulative impact of major and tragic weather disasters throughout the United States. US events for the year-to-date are estimated to exceed $35 billion in economic losses and are in addition to the highest insured earthquake losses in history.Our prior year reserves continue to develop favorably and during the quarter we recorded a combined ratio of 91.5% which we believe is a very healthy result consider the prevailing overall adverse market conditions. Net investment income was under significant pressure in the quarter due to continued low interest rates and a reduction in the valuation of our alternatives portfolio driven by the extreme volatility in the global financial markets. Read the rest of this transcript for free on seekingalpha.com