Axis’ Losses Are Higher Than Anticipated
Bermuda-based Axis Capital Holdings Ltd today [Apr. 29] posted a higher first quarter loss than expected — its balance sheet hurt by catastrophe losses from the earthquake in Japan and the New Zealand temblor and Australian floods– despite healthy premium growth in its insurance and reinsurance segments.
For the first quarter of 2011, the Bermuda nsurer and reinsurer posted a loss of $384 million, or $3.39 a share, compared with a profit of $112 million, or 79 cents a share, last year.
Operating loss was $414 million, or $3.65 a share.
“The first quarter of 2011 has been an extraordinarily challenging quarter, not only for AXIS but also for the industry as a whole, marked by an unprecedented series of natural catastrophes including one of the largest earthquakes ever recorded,” commented CEO John Charman. “The scale of these losses is indicative of the terrible human tragedies we have witnessed during the period and our deepest sympathies are with those who have suffered from these events.
“Currently, there is great uncertainty within the industry over the scale and distribution of total insured losses, which we believe are likely to exceed $50 billion. Against the backdrop of this uncertainty, we believe that we have been prudent in estimating our catastrophe losses. Therefore, our results this quarter are heavily influenced by an accumulation of expensive major natural catastrophes, slow pick-up in demand for our products, and continuing low investment yields.
“On a positive note, these industry-wide pressures, coming on the back of four to five years of aggressive price competition, are now driving an earlier exit from the absolute bottom of the property and casualty pricing cycle in a number of lines. We believe our major global businesses stand to gain meaningfully in the coming year.”
Net premiums earned rose 13 percent to $788 million.
Axis’ reinsurance segment reported an underwriting loss of $413 million for the quarter and its insurance segment reported an underwriting loss of $48 million.
Accident year loss ratio increased to 171.1 percent this quarter from 89.5 percent in the year-ago quarter, largely due to estimated net pre-tax losses of $84 million, $183 million and $260 million for the Australian events and the New Zealand and Japanese earthquakes, respectively.
