AXIS Capital Reports Third Quarter Operating Income of $152 Million

http://www.businesswire.com/news/home/20091102006398/en

Diluted Operating Earnings Per Share of $1.00 and Annualized Operating Return on
Average Common Equity of 13.0%
PEMBROKE, Bermuda--(Business Wire)--
AXIS Capital Holdings Limited ("AXIS Capital") (NYSE: AXS) today reported net
loss available to common shareholders for the third quarter of 2009 of $96
million, or $0.70 per diluted common share, compared with a net loss of $249
million, or $1.79 per diluted common share, for the third quarter of 2008. Net
income for the nine months ended September 30, 2009 was $179 million, or $1.19
per diluted share, compared with $220 million, or $1.40 per diluted share, for
the corresponding period in 2008.

Operating income for the third quarter of 2009 was $152 million, or $1.00 per
diluted share, compared with an operating loss of $161 million, or $1.15 per
diluted common share, for the third quarter of 2008. This same item excluding
foreign exchange gains/losses, net of tax, for the third quarter of 2009 was
$160 million, or $1.05 per common share, compared with a loss of $171 million,
or $1.22 per diluted common share, for the third quarter of 2008.

Operating income for the first nine months of 2009 was $490 million, or $3.26
per diluted share, compared with $273 million, or $1.74 per diluted common
share, for the first nine months of 2008. This same item excluding foreign
exchange gains/losses, net of tax, for the first nine months of 2009 was $522
million, or $3.48 per diluted common share, compared with $251 million, or $1.59
per diluted common share, for the first nine months of 2008.

Third Quarter Highlights1

* Gross premiums written of $775 million, an increase of 7%;
* Net premiums written of $595 million, an increase of 8%;
* Net premiums earned of $706 million, an increase of 2%;
* Combined ratio of 73.2% compared with 128.0%;
* Favorable prior year reserve development of $122 million, benefiting the
combined ratio by 17.3 points, compared with $76 million, benefiting the
combined ratio in the same period last year by 11.0 points;
* Total underwriting income, adjusted for the impact of the change in fair value
of a longevity-exposed indemnity derivative contract, of $207 million compared
with a loss of $173 million;
* Net investment income of $135 million, an increase of 166% relative to the
prior year quarter and an increase of 20% relative to the second quarter of
2009;
* Cash and invested assets grew to $11.8 billion during the current quarter,
reflective of operating cash flows of $442 million and an improvement in asset
valuations of $354 million;
* The total return on our cash and investments portfolio was 4.3% for the
quarter and 7.5% for the year-to-date;
* Operating income for the third quarter of 2009 of $152 million represented an
annualized operating return on average common equity2 of 13.0% and operating
income for the nine months ended September 30, 2009 of $490 million represented
an annualized operating return on average common equity2 of 14.7%;
* Diluted book value per common share of $31.58, an increase of 10% from June
30, 2009 and 22% from December 31, 2008.

1 All comparisons are with the same periods last year unless stated otherwise.

2 Calculated using operating income divided by average common shareholders`
equity for the period. The presentation of operating income available to common
shareholder is a "non-GAAP financial measure" as defined in Regulation G. The
reconciliation of such measure to net income available to common shareholders
(the most directly comparable GAAP financial measure) in accordance with
Regulation G is included on page 12 of this release. A discussion of the
presentation of operating income begins on page 13 of this release.

Commenting on the third quarter 2009 financial results, John Charman, Chief
Executive Officer and President of AXIS Capital, stated: "I am pleased to report
that, during this third quarter of 2009, AXIS benefited from very good P&C
underwriting results as well as a strong recovery in asset valuations throughout
our investment portfolio. Importantly, our underwriting operations produced a
combined ratio of 73.2%. While the combined ratio benefited from a low level of
catastrophes, it continues to demonstrate our strong performance for the year
and the consistency of our underwriting performance through what has been so far
a very challenging phase of the underwriting cycle. Our results are particularly
strong given the impact of the global economic crisis over the last two years.

Our results this quarter were adversely impacted by an increase in the fair
value liability of our only insurance derivative contract. Despite this
adjustment, we were still able to deliver an increase in diluted book value per
share of 10% in the quarter and 22% for the year to date.

For the third quarter, our consolidated net premiums written were up 8% largely
due to the continued success of our reinsurance segment in accessing
underwriting opportunities. At this time, the reinsurance market continues to
remain the most disciplined and attractive area of the global P&C marketplace.

In our insurance segment, we have maintained a very defensive posture overall.
While rate improved across our insurance portfolio during the third quarter of
2009, this improvement was somewhat muted relative to the first half of this
year. As we have demonstrated in the past, when necessary, we will sacrifice
top-line growth to preserve underwriting profit.

As we work diligently through this challenging phase of the underwriting cycle,
we have continued to invest in broadening our franchise`s capabilities. This
includes the expansion of distribution capabilities and new target markets
including global accident and health. We expect these efforts to generate
significant returns to shareholders over time."

Segment Highlights

Insurance Segment

Our insurance segment reported an underwriting loss for the quarter of $54
million compared with a loss of $22 million in the third quarter of 2008. The
current quarter`s underwriting result also included an increase of $136 million
in the fair value liability of a longevity-exposed insurance derivative
contract, which is included in other insurance related income. The segment`s
combined ratio was 70.5% compared with 102.8% in the prior year quarter. The
improvement in the combined ratio primarily reflects a lower level of
catastrophe activity this quarter, compared to the third quarter of 2008, which
included significant losses from Hurricanes Ike and Gustav. Net favorable prior
period reserve development was $55 million, or 19.9 points, this quarter
compared with $42 million, or 14.2 points, in the prior year quarter.

Our insurance segment reported gross premiums written in the quarter of $414
million, up 3% from the third quarter of 2008, and net premiums written of $240
million, up 2% from the third quarter of 2008. These increases primarily reflect
attractive new business opportunities in our professional lines business. Ceded
premiums were 42% of gross premiums written in the current quarter, which was
comparable with the third quarter of 2008.

Reinsurance Segment

Our reinsurance segment reported underwriting income for the quarter of $125
million, compared with an underwriting loss of $164 million in the third quarter
of 2008. The segment`s combined ratio was 70.8% compared with 141.4% in the
prior year quarter. The improvement in the combined ratio primarily reflects a
lower level of catastrophe activity this quarter, compared to the third quarter
of 2008, which included significant losses from Hurricanes Ike and Gustav. Net
favorable prior period reserve development was $67 million, or 15.6 points, this
quarter compared with $35 million, or 8.7 points, in the prior year quarter.

Our reinsurance segment reported gross premiums written in the quarter of $361
million, up 12% from the third quarter of 2008, reflecting a combination of rate
increases, increased participation on certain renewals and new business
opportunities across several of our lines of business.

Investments

Net investment income for the quarter of $135 million represented an increase of
$23 million, or 20%, relative to the second quarter of this year and an increase
of $84 million, or 166%, relative to the third quarter of 2008, primarily due in
both cases to improved investment market conditions for our alternative
investment portfolio ("other investments"). Income from our other investments
was $39 million this quarter. This represented an increase of $27 million
relative to the second quarter of this year and an increase of $105 million
relative to the same period last year. The return on our other investments was
7.1% this quarter, reflecting a strong performance from our investments in hedge
funds and credit funds. For the year-to-date, our return on other investments
was 11.3% and is the primary driver of the increase of 27% in net investment
income relative to the same period last year.

During the quarter, we incurred net realized investment losses of $253 million
compared to net realized investment losses of $89 million in the prior year
quarter. Net realized investment losses for the quarter included $263 million in
OTTI losses from medium-term note investments in our fixed maturity portfolio,
for which we no longer expect full recovery. The recognition of these OTTI
losses does not indicate that sales will occur, that sales are imminent or that
sales are planned.

At September 30, 2009, net unrealized gains within our available for sale
investment portfolio were $103 million, an improvement of $354 million in the
quarter excluding the impact of the OTTI losses recognized in earnings. The
improvement in asset valuations experienced during the quarter was primarily due
to credit spread tightening on corporate debt and structured credit securities.

At September 30, 2009, we held cash and cash equivalent balances of $1.2
billion, or 10%, of total cash and investments. Our fixed maturity investment
portfolio, which represents 82% of total cash and investments, is well
diversified, has a weighted average credit quality of AA+, and has an average
duration of approximately 2.8 years. Our other investments represent 5% of our
total cash and investments at September 30, 2009.

Supplementary information relating to our investment portfolio at September 30,
2009 is available in the Investor Information section of our website.

Capitalization / Shareholders` Equity

Total capitalization at September 30, 2009 was $5.9 billion, including $0.5
billion of long-term debt and $0.5 billion of preferred equity, compared to $5.0
billion at December 31, 2008. At September 30, 2009, diluted book value per
common share, on a treasury stock basis, was $31.58 and book value per common
share was $35.54, compared to $25.79 and $29.08 respectively, as of December 31,
2008.

Conference Call

We will host a conference call on Tuesday, November 3, 2009 at 8:00 AM (Eastern)
to discuss the third quarter financial results and related matters. The
teleconference can be accessed by dialing (866) 843-0890 (U.S. callers) or (412)
317-9250 (international callers) and entering the pass-code 5501909
approximately ten minutes in advance of the call. A live, listen-only webcast of
the call will also be available via the Investor Information section of the
Company`s website at www.axiscapital.com.

In addition, a financial supplement relating to our financial results for the
quarter ended September 30, 2009 is available in the Investor Information
section of our website.

AXIS Capital is a Bermuda-based global provider of specialty lines insurance and
treaty reinsurance with shareholders` equity at September 30, 2009 of $5.4
billion and locations in Bermuda, the United States, Europe, Singapore, Canada
and Australia. Its operating subsidiaries have been assigned a rating of "A+"
("Strong") by Standard & Poor`s and "A" ("Excellent") by A.M. Best. AXIS Capital
has been assigned a senior unsecured debt rating of A- (stable) by Standard &
Poor`s and Baa1 (stable) by Moody`s Investors Service. For more information
about AXIS Capital, visit our website at www.axiscapital.com.

AXIS CAPITAL HOLDINGS LIMITED

CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 2009 (UNAUDITED) AND DECEMBER 31, 2008

2009 2008
Assets (in thousands)
Investments:
Fixed maturities, available for sale, at fair value $ 9,682,932 $ 7,750,654
Equity securities, available for sale, at fair value 137,544 107,283
Other investments, at fair value 541,447 492,082
Short-term investments 282,737 261,879
Total investments 10,644,660 8,611,898
Cash and cash equivalents 1,239,471 1,820,673
Accrued interest receivable 82,169 79,232
Insurance and reinsurance premium balances receivable 1,497,639 1,185,785
Reinsurance recoverable balances 1,369,824 1,304,551
Reinsurance recoverable balances on paid losses 36,625 74,079
Deferred acquisition costs 363,739 273,096
Prepaid reinsurance premiums 284,922 279,553
Securities lending collateral 135,122 412,823
Goodwill and intangible assets 93,049 60,417
Other assets 172,248 180,727
Total assets $ 15,919,468 $ 14,282,834

Liabilities
Reserve for losses and loss expenses $ 6,579,914 $ 6,244,783
Unearned premiums 2,548,072 2,162,401
Insurance and reinsurance balances payable 170,664 202,145
Securities lending payable 138,092 415,197
Senior notes 499,449 499,368
Other liabilities 426,068 233,082
Net payable for investments purchased 159,102 64,817
Total liabilities 10,521,361 9,821,793

Shareholders' Equity
Preferred shares - Series A and B 500,000 500,000
Common shares 1,901 1,878
Additional paid-in capital 2,003,417 1,962,779
Accumulated other comprehensive income (loss) 74,974 (706,499 )
Retained earnings 3,319,467 3,198,492
Treasury shares, at cost (501,652 ) (495,609 )
Total shareholders' equity 5,398,107 4,461,041
Total liabilities and shareholders' equity $ 15,919,468 $ 14,282,834

AXIS CAPITAL HOLDINGS LIMITED

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008

Three months ended Nine months ended
2009 2008 2009 2008
(in thousands, except per share amounts)
Revenues
Net premiums earned $ 706,025 $ 689,970 $ 2,078,154 $ 2,028,895
Net investment income 134,788 50,583 346,300 273,249
Other insurance related loss (135,738 ) (13,806 ) (159,394 ) (19,073 )
Net realized investment loss:
Other-than-temporary impairment losses (283,418 1,922 $ 9,474 $ (76,565 ) $ 20,460
Net loss from discontinued operations (13,358 ) (4,123 ) (117,523 ) (896 )
Net (loss) earnings (11,436 ) 5,351 (194,088 ) 19,564

FINANCIAL POSITION
(in thousands, except per-share amounts) 9/25/2009 12/26/2008
(unaudited)

Cash and equivalents $ 39,516 $ 41,401
Trade receivables, net 66,823 128,010
Inventories 43,124 127,074
Other current assets 19,336 58,568
Assets held for sale 85,047 0
Fixed assets 42,588 152,731
Other assets 83,688 262,127
Total assets 380,122 769,911
Current portion of long-term debt 0 17,189
Short-term debt 0 0
Accounts payable 53,512 75,511
Accrued expenses 60,169 86,477
Liabilities held for sale 30,092 0
Long-term debt 127,000 326,000
Other long-term liabilities 51,049 56,602
Total liabilities 321,822 561,779
Shareholders' equity 58,300 208,132
Net worth per share 1.42 5.08
Shares outstanding 41,169 40,998

NON-GAAP MEASURES (UNAUDITED)
(in thousands except per-share amounts)

1. Adjusted EBITDA
Quarter Ended
9/25/09 6/26/09 9/26/08

Net (loss) earnings attributable to Technitrol, Inc. $ (11,436 ) $ (108,104 ) $ 5,351
Net loss from discontinued operations 13,358 103,100 4,123
Non-controlling interest 352 111 204
Income taxes 1,368 1,544 (2,902 )
Interest expense, net 757 655 1,022
Other (income) expense (3,190 ) 2,031 833
Depreciation and amortization 4,555 4,330 6,504
EBITDA 5,764 3,667 15,135
Severance, impairment and other associated costs 2,619 3,193 4,860
Adjusted EBITDA 8,383 6,860 19,995

2. Net (loss) earnings per diluted share excluding severance, impairment and
other associated costs and other adjustments

Quarter Ended
9/25/09 6/26/09 9/26/08

Net (loss) earnings per diluted share $ (0.28 ) $ (2.65 ) $ 0.13
Diluted loss per share from discontinued operations 0.33 2.53 0.10
After-tax severance, impairment and other associated costs, per share 0.06 0.07 0.10
Net earnings (loss) per diluted share excluding severance, impairment and other associated costs 0.11 (0.05 ) 0.33

3. Operating profit excluding severance, impairment and other associated costs

Quarter Ended
9/25/09 6/26/09 9/26/08

Operating profit (loss) $ 1,209 $ (663 ) $ 8,631
Pre-tax severance, impairment and other associated costs 2,619 3,193 4,860
Operating profit, excluding severance, impairment and other associated costs 3,828 2,530 13,491

1. Adjusted EBITDA (net income plus income taxes, depreciation and amortization,
excluding interest and other expense/income and excluding severance, impairment
and other associated costs and other adjustments) is not a measure of
performance under accounting principles generally accepted in the United States.
Adjusted EBITDA should not be considered a substitute for, and an investor
should also consider, net income, cash flow from operations and other measures
of performance as defined by accounting principles generally accepted in the
United States as indicators of our profitability or liquidity. EBITDA is often
used by shareholders and analysts as an indicator of a company`s ability to
service debt and fund capital expenditures. We believe it enhances a reader`s
understanding of our financial condition, results of operations and cash flow
because it is unaffected by capital structure and, therefore, enables investors
to compare our operating performance to that of other companies. We understand
that our presentation of adjusted EBITDA may not be comparable to other
similarly titled captions of other companies due to differences in the method of
calculation.

2,3. Based on discussions with investors and equity analysts, we believe that a
reader`s understanding of Technitrol`s operating performance is enhanced by
references to these non-GAAP measures. Removing charges for severance,
impairment and other associated costs facilitates comparisons of operating
performance among financial periods and peer companies. These charges result
exclusively from production relocations and capacity reductions and / or
restructuring of overhead and operating expenses to enhance or maintain
profitability in an increasingly competitive environment. Impairment charges
represent adjustments to asset values and are not part of the normal operating
expense structure of the relevant business in the period in which the charge is
recorded.

Copyright © 2009 Technitrol, Inc. All rights reserved. All brand names and
trademarks are properties of their respective holders.

Investors:
AXIS Capital Holdings Limited
Linda Ventresca, 441-405-2727
info@axiscapital.com
or
Media:
Kekst and Company
Joseph Kuo, 212-521-4863
joe-kuo@kekst.com

Copyright Business Wire 2009