Q2 2014 Financial Supplement

EX-99.2 3 axsex99-2.htm SECOND QUARTER 2014 INVESTOR FINANCIAL SUPPLEMENT Q2 2014 Financial Supplement

AXIS Capital Holdings Limited

INVESTOR FINANCIAL SUPPLEMENT

SECOND QUARTER 2014





		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.

AXIS Capital Holdings Limited

FINANCIAL SUPPLEMENT TABLE OF CONTENTS



		Page(s)
Basis of Presentation		i - iii
I. Financial Highlights		1
II. Income Statements
a. Consolidated Statements of Income - Quarterly		2
b. Consolidated Statements of Income - Year to Date		3
c. Consolidated Segment Data		4
d. Gross Premium Written by Segment by Line of Business		5
e. Segment Data - Quarterly		6-7
f. Net Investment Income - Quarterly and Year to Date		8
III. Balance Sheets
a. Consolidated Balance Sheets		9
b. Cash and Invested Assets:
• Cash and Invested Assets Portfolio		10
• Cash and Invested Assets Composition - Quarterly		11
• Geographic Distribution of Fixed Maturities and Equities		12
• Corporate Debt Composition		13
• Ten Largest Corporate Debt Holdings		14
• Mortgage-Backed and Asset-Backed Securities Composition		15
c. Reinsurance Recoverable Analysis		16-17
IV. Losses Reserve Analysis
a. Paid to Incurred Analysis		18
b. Paid to Incurred Analysis by Segment		19
c. Paid to Incurred Analysis by Segment - Quarterly		20-21
d. Net Probable Maximum Losses to Certain Peak Industry Catastrophe Exposures		22
V. Share Analysis
a. Earnings Per Common Share Information - As Reported, GAAP		23
b. Earnings Per Common Share Information and Common Share Rollforward - Quarterly		24
c. Diluted Book Value Per Common Share Analysis		25
VI. Non-GAAP Financial Measures
a. Non-GAAP Financial Measure Reconciliations		26
b. Use of Non-GAAP Financial Measures		27

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 sheet at December 31, 2013.


•	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 occurrence and magnitude of natural and man-made disasters,


•	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,


•	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,


•	changes in accounting policies or practices,


•	the use of industry catastrophe models and changes to these models,


•	changes in governmental regulations,


•	increased competition,


•	changes in the political environment of certain countries in which we operate or underwrite business,


•	fluctuations in interest rates, credit spreads, equity securities' prices and/or currency values, and


•	the other factors set forth in our most recent report on Form 10-K, Form 10-Q and other documents on file with the Securities and Exchange Commission.

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

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 in emerging markets. 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 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. excess and surplus lines markets. Target industry sectors include construction, manufacturing, transportation and trucking and other services. We also target middle to high excess liability business in the London and Bermuda wholesale markets and primary and excess business in the Canadian market place.

Accident and Health: includes accidental death, travel insurance and specialty health products for employer and affinity groups, as well as accident & 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.

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. 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 cedants for motor liability and property damage losses arising out of any one occurrence. The occurrence can involve one or many claimants where the ceding insurer aggregates the claims from the occurrence.

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.

Other: includes aviation, marine and personal accident reinsurance.

iii

AXIS Capital Holdings Limited

FINANCIAL HIGHLIGHTS



		Quarter ended June 30,									Six months ended June 30,
		2014			2013			Change			2014			2013			Change

HIGHLIGHTS	Gross premiums written	$	1,231,279		$	1,219,805		0.9	%		$	3,052,678		$	2,966,287		2.9	%
	Gross premiums written - Insurance	61.2		%	64.0		%	(2.8	)	pts	44.4		%	46.4		%	(2.0	)	pts
	Gross premiums written - Reinsurance	38.8		%	36.0		%	2.8		pts	55.6		%	53.6		%	2.0		pts
	Net premiums written	$	1,000,162		$	993,407		0.7	%		$	2,664,746		$	2,563,846		3.9	%
	Net premiums earned	$	1,000,400		$	945,873		5.8	%		$	1,946,349		$	1,819,911		6.9	%
	Net premiums earned - Insurance	45.7		%	44.7		%	1.0		pts	46.6		%	45.3		%	1.3		pts
	Net premiums earned - Reinsurance	54.3		%	55.3		%	(1.0	)	pts	53.4		%	54.7		%	(1.3	)	pts
	Net income available to common shareholders	$	190,664		$	72,447		163.2	%		$	327,890		$	375,261		(12.6	%)
	Operating income [a]	172,743			50,045			245.2	%		309,811			277,536			11.6	%
	Reserve for losses and loss expenses	9,805,988			9,342,817			5.0	%		9,805,988			9,342,817			5.0	%
	Total shareholders’ equity attributable to AXIS Capital	$	5,955,710		$	5,561,947		7.1	%		$	5,955,710		$	5,561,947		7.1	%


PER COMMON SHARE AND COMMON SHARE DATA	Basic earnings per common share		$1.81			$0.63		187.3	%			$3.06			$3.23		(5.3	%)
	Diluted earnings per common share	1.79			0.62			188.7	%		3.03			3.19			(5.0	%)
	Operating income per common share - diluted [b]		$1.63			$0.43		279.1	%			$2.86			$2.36		21.2	%
	Weighted average common shares outstanding	105,118			115,163			(8.7	%)		107,075			116,088			(7.8	%)
	Diluted weighted average common shares outstanding	106,289			116,671			(8.9	%)		108,329			117,660			(7.9	%)
	Book value per common share		$51.28			$44.22		16.0	%			$51.28			$44.22		16.0	%
	Diluted book value per common share (treasury stock method)	49.69			42.67			16.5	%		49.69			42.67			16.5	%
	Diluted tangible book value per common share (treasury stock method) [a]	48.85			41.88			16.6	%		48.85			41.88			16.6	%
	Accumulated dividends declared per common share		$8.42			$7.36		14.4	%			$8.42			$7.36		14.4	%


FINANCIAL RATIOS	ROACE [c]	14.5		%	5.6		%	8.9		pts	12.5		%	14.7		%	(2.2	)	pts
	Operating ROACE [d]	13.1		%	3.9		%	9.2		pts	11.8		%	10.9		%	0.9		pts
	Net loss and loss expense ratio	56.6		%	68.0		%	(11.4	)	pts	57.0		%	59.4		%	(2.4	)	pts
	Acquisition cost ratio	19.2		%	17.9		%	1.3		pts	18.7		%	17.3		%	1.4		pts
	General and administrative expense ratio	15.0		%	15.8		%	(0.8	)	pts	15.6		%	16.0		%	(0.4	)	pts
	Combined ratio	90.8		%	101.7		%	(10.9	)	pts	91.3		%	92.7		%	(1.4	)	pts


INVESTMENT DATA	Total assets	$	21,446,457		$	19,846,313		8.1	%		$	21,446,457		$	19,846,313		8.1	%
	Total cash and invested assets [e]	15,532,343			14,250,670			9.0	%		15,532,343			14,250,670			9.0	%
	Net investment income	114,867			83,112			38.2	%		197,610			192,019			2.9	%
	Net realized investment gains	$	33,261		$	16,235		104.9	%		$	43,882		$	60,713		(27.7	%)
	Total return on cash and investments [f]	1.6		%	(1.3		%)	2.9		pts	2.6		%	(0.7		%)	3.3		pts
	Return on other investments [g]	3.2		%	1.2		%	2.0		pts	4.8		%	5.9		%	(1.1	)	pts
	Book yield of fixed maturities	2.5		%	2.6		%	(0.1	)	pts	2.5		%	2.6		%	(0.1	)	pts


[a]	Operating income and diluted tangible book value per common share are “non-GAAP financial measures” as defined by Regulation G. See page 26 for reconciliation of operating income to net income available to common shareholders and diluted tangible book value per common share to diluted book value per common share.


[b]	Operating income per common share - diluted, is calculated by dividing operating income for the period by weighted average common shares and share equivalents.


[c]	Return on average common equity (“ROACE”) is calculated by dividing net income 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 for the quarter-periods is annualized.


[d]	Operating ROACE, also a “non-GAAP financial measure”, is calculated by dividing operating income 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. Operating income for the quarter-periods is annualized.


[e]	Cash and invested assets represents the total cash, available for sale investments, other 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 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.

AXIS Capital Holdings Limited

CONSOLIDATED STATEMENTS OF INCOME - QUARTERLY



	Q2 2014			Q1 2014			Q4 2013			Q3 2013			Q2 2013			Q2 2012
UNDERWRITING REVENUES
Gross premiums written	$	1,231,279		$	1,821,399		$	825,957		$	904,797		$	1,219,805		$	1,014,375
Premiums ceded	(231,117		)	(156,815		)	(177,992		)	(188,408		)	(226,398		)	(212,800		)
Net premiums written	1,000,162			1,664,584			647,965			716,389			993,407			801,575

Gross premiums earned	1,194,367			1,133,052			1,129,147			1,125,289			1,139,904			1,019,808
Ceded premiums expensed	(193,967		)	(187,103		)	(187,236		)	(180,047		)	(194,031		)	(169,205		)
Net premiums earned	1,000,400			945,949			941,911			945,242			945,873			850,603
Other insurance related income	1,683			3,082			2,668			725			435			299
Total underwriting revenues	1,002,083			949,031			944,579			945,967			946,308			850,902

UNDERWRITING EXPENSES
Net losses and loss expenses	565,829			544,207			551,360			501,522			642,899			467,637
Acquisition costs	191,862			172,036			175,299			173,682			169,719			156,397
Underwriting-related general and administrative expenses [a]	117,811			124,022			123,761			117,675			123,769			107,129
Total underwriting expenses	875,502			840,265			850,420			792,879			936,387			731,163

UNDERWRITING INCOME [b]	126,581			108,766			94,159			153,088			9,921			119,739

OTHER OPERATING REVENUE (EXPENSES)
Net investment income	114,867			82,744			113,863			103,429			83,112			74,449
Net realized investment gains (losses)	33,261			10,620			19,558			(4,708		)	16,235			30,405
Interest expense and financing costs	(19,975		)	(16,594		)	(15,625		)	(15,260		)	(15,260		)	(15,170		)
Total other operating revenues	128,153			76,770			117,796			83,461			84,087			89,684

OTHER (EXPENSES) REVENUE
Foreign exchange (losses) gains	(9,705		)	(4,233		)	(14,484		)	(56,860		)	10,320			36,162
Corporate expenses [a]	(33,270		)	(28,707		)	(20,422		)	(23,024		)	(25,265		)	(54,202		)
Total other expenses	(42,975		)	(32,940		)	(34,906		)	(79,884		)	(14,945		)	(18,040		)

INCOME BEFORE INCOME TAXES	211,759			152,596			177,049			156,665			79,063			191,383

Income tax (expense) benefit	(9,500		)	(4,125		)	4,497			(6,030		)	4,662			(2,317		)

NET INCOME	202,259			148,471			181,546			150,635			83,725			189,066

Net income attributable to noncontrolling interests	(1,573		)	(1,222		)	—			—			—			—

NET INCOME ATTRIBUTABLE TO AXIS CAPITAL	200,686			147,249			181,546			150,635			83,725			189,066

Preferred share dividends	(10,022		)	(10,022		)	(10,022		)	(13,514		)	(8,197		)	(11,527		)
Loss on repurchase of preferred shares	—			—			—			—			(3,081		)	(9,387		)

NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	190,664		$	137,227		$	171,524		$	137,121		$	72,447		$	168,152

KEY RATIOS/PER SHARE DATA
Net loss and loss expense ratio	56.6		%	57.5		%	58.5		%	53.1		%	68.0		%	55.0		%
Acquisition cost ratio	19.2		%	18.2		%	18.6		%	18.4		%	17.9		%	18.4		%
General and administrative expense ratio [a]	15.0		%	16.2		%	15.4		%	14.8		%	15.8		%	18.9		%
Combined ratio	90.8		%	91.9		%	92.5		%	86.3		%	101.7		%	92.3		%

Weighted average basic shares outstanding	105,118			109,053			110,757			111,676			115,163			123,823
Weighted average diluted shares outstanding	106,289			110,391			112,702			113,355			116,671			124,983
Basic earnings per common share		$1.81			$1.26			$1.55			$1.23			$0.63			$1.36
Diluted earnings per common share		$1.79			$1.24			$1.52			$1.21			$0.62			$1.35
ROACE (annualized)	14.5		%	10.6		%	13.3		%	10.9		%	5.6		%	13.0		%
Operating ROACE (annualized)	13.1		%	10.6		%	12.3		%	15.6		%	3.9		%	8.7		%


[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 before income taxes) are presented above.

AXIS Capital Holdings Limited

CONSOLIDATED STATEMENTS OF INCOME - YEAR TO DATE



	Six months ended June 30,									Year ended December 31,
	2014			2013			2012			2013			2012
UNDERWRITING REVENUES
Gross premiums written	$	3,052,678		$	2,966,287		$	2,539,545		$	4,697,041		$	4,139,643
Premiums ceded	(387,932		)	(402,441		)	(370,783		)	(768,841		)	(802,187		)
Net premiums written	2,664,746			2,563,846			2,168,762			3,928,200			3,337,456

Gross premiums earned	2,327,419			2,204,833			2,035,180			4,459,269			4,141,037
Ceded premiums expensed	(381,070		)	(384,922		)	(338,212		)	(752,204		)	(725,574		)
Net premiums earned	1,946,349			1,819,911			1,696,968			3,707,065			3,415,463
Other insurance related income	4,766			1,030			931			4,424			2,676
Total underwriting revenues	1,951,115			1,820,941			1,697,899			3,711,489			3,418,139

UNDERWRITING EXPENSES
Net losses and loss expenses	1,110,036			1,081,313			978,328			2,134,195			2,096,028
Acquisition costs	363,899			315,209			324,793			664,191			627,653
Underwriting-related general and administrative expenses	241,834			243,698			212,347			485,134			431,321
Total underwriting expenses	1,715,769			1,640,220			1,515,468			3,283,520			3,155,002

UNDERWRITING INCOME	235,346			180,721			182,431			427,969			263,137

OTHER OPERATING REVENUE (EXPENSES)
Net investment income	197,610			192,019			190,472			409,312			380,957
Net realized investment gains	43,882			60,713			44,896			75,564			127,469
Interest expense and financing costs	(36,569		)	(31,095		)	(30,807		)	(61,979		)	(61,863		)
Total other operating revenues	204,923			221,637			204,561			422,897			446,563

OTHER (EXPENSES) REVENUE
Foreign exchange (losses) gains	(13,939		)	45,201			15,715			(26,143		)	(29,512		)
Corporate expenses [a]	(61,976		)	(46,810		)	(72,637		)	(90,256		)	(129,660		)
Total other expenses	(75,915		)	(1,609		)	(56,922		)	(116,399		)	(159,172		)

INCOME BEFORE INCOME TAXES	364,354			400,749			330,070			734,467			550,528

Income tax expense	(13,625		)	(5,469		)	(5,165		)	(7,002		)	(3,287		)

NET INCOME	350,729			395,280			324,905			727,465			547,241

Net income attributable to noncontrolling interests	(2,795		)	—			—			—			—

NET INCOME ATTRIBUTABLE TO AXIS CAPITAL	347,934			395,280			324,905			727,465			547,241

Preferred share dividends	(20,044		)	(16,938		)	(20,746		)	(40,474		)	(38,228		)
Loss on repurchase of preferred shares	—			(3,081		)	(14,009		)	(3,081		)	(14,009		)

NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	327,890		$	375,261		$	290,150		$	683,910		$	495,004

KEY RATIOS/PER SHARE DATA
Net loss and loss expense ratio	57.0		%	59.4		%	57.7		%	57.6		%	61.4		%
Acquisition cost ratio	18.7		%	17.3		%	19.1		%	17.9		%	18.4		%
General and administrative expense ratio [a]	15.6		%	16.0		%	16.8		%	15.5		%	16.4		%
Combined ratio	91.3		%	92.7		%	93.6		%	91.0		%	96.2		%

Weighted average basic shares outstanding	107,075			116,088			124,802			113,636			122,148
Weighted average diluted shares outstanding	108,329			117,660			125,825			115,328			123,654
Basic earnings per common share		$3.06			$3.23			$2.32			$6.02			$4.05
Diluted earnings per common share		$3.03			$3.19			$2.31			$5.93			$4.00
ROACE [b]	12.5		%	14.7		%	11.4		%	13.1		%	9.7		%
Operating ROACE [b]	11.8		%	10.9		%	9.8		%	12.1		%	8.2		%


[a]	Both underwriting-related general and administrative expenses and corporate expenses are included in the general and administrative expense ratio.


[b]	Annualized for the six-month periods.

AXIS Capital Holdings Limited

CONSOLIDATED SEGMENT DATA



	Quarter ended June 30, 2014									Six months ended June 30, 2014
	Insurance			Reinsurance			Total			Insurance			Reinsurance			Total
UNDERWRITING REVENUES
Gross premiums written	$	754,110		$	477,169		$	1,231,279		$	1,355,831		$	1,696,847		$	3,052,678
Net premiums written	541,097			459,065			1,000,162			997,789			1,666,957			2,664,746

Gross premiums earned	641,335			553,032			1,194,367			1,270,760			1,056,659			2,327,419
Ceded premiums expensed	(183,665		)	(10,302		)	(193,967		)	(363,876		)	(17,194		)	(381,070		)
Net premiums earned	457,670			542,730			1,000,400			906,884			1,039,465			1,946,349
Other insurance related income	—			1,683			1,683			—			4,766			4,766
Total underwriting revenues	457,670			544,413			1,002,083			906,884			1,044,231			1,951,115

UNDERWRITING EXPENSES
Net losses and loss expenses	290,466			275,363			565,829			569,889			540,147			1,110,036
Acquisition costs	71,039			120,823			191,862			136,096			227,803			363,899
Underwriting-related general and administrative expenses	83,512			34,299			117,811			171,459			70,375			241,834
Total underwriting expenses	445,017			430,485			875,502			877,444			838,325			1,715,769

UNDERWRITING INCOME	$	12,653		$	113,928		$	126,581		$	29,440		$	205,906		$	235,346

KEY RATIOS
Current accident year loss ratio	70.7		%	60.4		%	65.1		%	67.8		%	60.1		%	63.7		%
Prior period reserve development	(7.2		%)	(9.7		%)	(8.5		%)	(5.0		%)	(8.1		%)	(6.7		%)
Net loss and loss expense ratio	63.5		%	50.7		%	56.6		%	62.8		%	52.0		%	57.0		%
Acquisition cost ratio	15.5		%	22.3		%	19.2		%	15.0		%	21.9		%	18.7		%
Underwriting-related general and administrative expense ratio	18.2		%	6.3		%	11.7		%	19.0		%	6.7		%	12.4		%
Corporate expense ratio							3.3		%							3.2		%
Combined ratio	97.2		%	79.3		%	90.8		%	96.8		%	80.6		%	91.3		%

AXIS Capital Holdings Limited

GROSS PREMIUM WRITTEN BY SEGMENT BY LINE OF BUSINESS



															Six months ended June 30,
	Q2 2014		Q1 2014		Q4 2013			Q3 2013		Q2 2013		Q2 2012			2014		2013

INSURANCE SEGMENT
Property	$	207,788	$	139,929	$	144,321		$	147,485	$	228,741	$	228,962		$	347,717	$	380,165
Marine	84,833		85,722		23,148			38,406		88,047		91,652			170,555		167,940
Terrorism	9,478		6,978		10,264			10,418		9,478		11,167			16,456		17,691
Aviation	10,568		2,717		23,250			4,379		12,321		15,857			13,285		15,697
Credit and political risk	7,179		18,307		23,563			7,099		19,537		5,124			25,486		29,540
Professional lines	244,011		154,248		269,524			208,174		262,611		243,258			398,259		422,373
Liability	106,643		74,366		84,447			100,018		104,952		73,810			181,009		162,762
Accident & health	83,610		119,454		28,074			58,799		55,368		5,179			203,064		181,601
TOTAL INSURANCE SEGMENT	754,110		601,721		606,591			574,778		781,055		675,009			1,355,831		1,377,769

REINSURANCE SEGMENT
Catastrophe	117,245		171,260		15,537			71,851		138,461		124,237			288,505		306,264
Property	61,027		239,620		20,689			58,294		63,457		58,604			300,646		285,333
Professional lines	104,801		68,219		166,377			66,017		57,406		47,561			173,021		147,961
Credit and surety	20,359		208,468		10,372			29,487		20,327		22,670			228,827		228,635
Motor	2,676		274,019		(3,789		)	4,286		16,557		17,876			276,696		241,548
Liability	82,566		102,644		15,118			75,100		78,868		56,096			185,210		178,456
Agriculture	76,665		103,165		(11,214		)	8,659		55,319		6,920			179,830		135,336
Engineering	8,772		36,510		5,142			12,462		5,741		6,783			45,282		46,653
Other	3,058		15,773		1,134			3,863		2,614		(1,381		)	18,830		18,332
TOTAL REINSURANCE SEGMENT	477,169		1,219,678		219,366			330,019		438,750		339,366			1,696,847		1,588,518

CONSOLIDATED TOTAL	$	1,231,279	$	1,821,399	$	825,957		$	904,797	$	1,219,805	$	1,014,375		$	3,052,678	$	2,966,287

AXIS Capital Holdings Limited

INSURANCE SEGMENT DATA - QUARTERLY



	Q2 2014			Q1 2014			Q4 2013			Q3 2013			Q2 2013			Q2 2012
UNDERWRITING REVENUES
Gross premiums written	$	754,110		$	601,721		$	606,591		$	574,778		$	781,055		$	675,009
Net premiums written	541,097			456,692			427,647			393,627			559,584			465,238

Gross premiums earned	641,335			629,425			631,695			626,005			611,585			552,045
Ceded premiums expensed	(183,665		)	(180,211		)	(181,230		)	(177,933		)	(189,240		)	(165,465		)
Net premiums earned	457,670			449,214			450,465			448,072			422,345			386,580
Other insurance related income	—			—			681			725			435			299
Total underwriting revenues	457,670			449,214			451,146			448,797			422,780			386,879

UNDERWRITING EXPENSES
Net losses and loss expenses	290,466			279,423			285,634			216,440			330,992			225,900
Acquisition costs	71,039			65,057			65,266			61,087			58,749			58,654
General and administrative expenses	83,512			87,946			89,722			82,548			88,526			77,770
Total underwriting expenses	445,017			432,426			440,622			360,075			478,267			362,324

UNDERWRITING INCOME (LOSS)	$	12,653		$	16,788		$	10,524		$	88,722		$	(55,487	)	$	24,555

KEY RATIOS
Current accident year loss ratio	70.7		%	64.8		%	64.3		%	55.9		%	80.0		%	67.6		%
Prior period reserve development	(7.2		%)	(2.6		%)	(0.9		%)	(7.6		%)	(1.6		%)	(9.2		%)
Net loss and loss expense ratio	63.5		%	62.2		%	63.4		%	48.3		%	78.4		%	58.4		%
Acquisition cost ratio	15.5		%	14.5		%	14.5		%	13.6		%	13.9		%	15.2		%
General and administrative expense ratio	18.2		%	19.6		%	19.9		%	18.5		%	20.9		%	20.1		%
Combined ratio	97.2		%	96.3		%	97.8		%	80.4		%	113.2		%	93.7		%

AXIS Capital Holdings Limited

REINSURANCE SEGMENT DATA - QUARTERLY



	Q2 2014			Q1 2014			Q4 2013			Q3 2013			Q2 2013			Q2 2012
UNDERWRITING REVENUES
Gross premiums written	$	477,169		$	1,219,678		$	219,366		$	330,019		$	438,750		$	339,366
Net premiums written	459,065			1,207,892			220,318			322,762			433,823			336,337

Gross premiums earned	553,032			503,627			497,452			499,284			528,319			467,763
Ceded premiums expensed	(10,302		)	(6,892		)	(6,006		)	(2,114		)	(4,791		)	(3,740		)
Net premiums earned	542,730			496,735			491,446			497,170			523,528			464,023
Other insurance related income	1,683			3,082			1,987			—			—			—
Total underwriting revenues	544,413			499,817			493,433			497,170			523,528			464,023

UNDERWRITING EXPENSES
Net losses and loss expenses	275,363			264,784			265,726			285,082			311,907			241,737
Acquisition costs	120,823			106,979			110,033			112,595			110,970			97,743
General and administrative expenses	34,299			36,076			34,039			35,127			35,243			29,359
Total underwriting expenses	430,485			407,839			409,798			432,804			458,120			368,839

UNDERWRITING INCOME	$	113,928		$	91,978		$	83,635		$	64,366		$	65,408		$	95,184

KEY RATIOS
Current accident year loss ratio	60.4		%	59.7		%	62.0		%	66.6		%	66.3		%	60.5		%
Prior period reserve development	(9.7		%)	(6.4		%)	(7.9		%)	(9.3		%)	(6.7		%)	(8.4		%)
Net loss and loss expense ratio	50.7		%	53.3		%	54.1		%	57.3		%	59.6		%	52.1		%
Acquisition cost ratio	22.3		%	21.5		%	22.4		%	22.6		%	21.2		%	21.1		%
General and administrative expense ratio	6.3		%	7.3		%	6.9		%	7.2		%	6.7		%	6.3		%
Combined ratio	79.3		%	82.1		%	83.4		%	87.1		%	87.5		%	79.5		%

AXIS Capital Holdings Limited

NET INVESTMENT INCOME - QUARTERLY AND YEAR TO DATE



																			Six months ended June 30,
	Q2 2014			Q1 2014			Q4 2013			Q3 2013			Q2 2013			Q2 2012			2014			2013

Fixed maturities	$	78,523		$	72,957		$	74,732		$	74,691		$	74,503		$	76,544		$	151,480		$	144,185
Other investments	32,492			16,760			41,408			32,127			11,848			(2,304		)	49,252			55,279
Equity securities	5,301			2,286			2,478			3,871			3,134			5,071			7,587			4,548
Cash and cash equivalents	6,183			863			3,423			382			1,265			1,663			7,046			2,533
Short-term investments	246			214			125			127			397			33			459			929

Gross investment income	122,745			93,080			122,166			111,198			91,147			81,007			215,824			207,474
Investment expense	(7,878		)	(10,336		)	(8,303		)	(7,769		)	(8,035		)	(6,558		)	(18,214		)	(15,455		)

Net investment income	$	114,867		$	82,744		$	113,863		$	103,429		$	83,112		$	74,449		$	197,610		$	192,019

AXIS Capital Holdings Limited

CONSOLIDATED BALANCE SHEETS



	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,
	2014			2014			2013			2013			2013			2012
ASSETS
Investments:
Fixed maturities, available for sale, at fair value	$	12,598,897		$	12,095,839		$	11,986,327		$	11,984,740		$	11,644,912		$	11,504,448
Equity securities, available for sale, at fair value	744,760			708,412			701,987			650,627			618,795			631,731
Other investments, at fair value	1,044,492			1,005,762			1,045,810			994,572			962,315			798,233
Short-term investments, at fair value and amortized cost	100,166			296,800			46,212			84,709			45,904			71,277
Total investments	14,488,315			14,106,813			13,780,336			13,714,648			13,271,926			13,005,689
Cash and cash equivalents	1,189,403			1,294,709			987,876			1,109,998			1,116,248			872,751
Accrued interest receivable	91,278			89,536			97,132			98,285			95,098			97,417
Insurance and reinsurance premium balances receivable	2,422,983			2,292,954			1,688,957			1,920,985			2,166,982			1,888,238
Reinsurance recoverable on paid and unpaid losses	1,954,985			1,912,840			1,929,988			1,899,510			1,981,441			1,792,358
Deferred acquisition costs	623,573			634,413			456,122			505,002			543,069			502,413
Prepaid reinsurance premiums	337,608			299,994			330,261			340,280			331,528			271,262
Receivable for investments sold	366			1,972			1,199			1,317			1,399			596
Goodwill and intangible assets	90,025			90,350			89,528			91,656			91,370			98,203
Other assets	247,921			274,053			273,385			251,268			247,252			192,485
TOTAL ASSETS	$	21,446,457		$	20,997,634		$	19,634,784		$	19,932,949		$	19,846,313		$	18,721,412

LIABILITIES
Reserve for losses and loss expenses	$	9,805,988		$	9,667,841		$	9,582,140		$	9,484,516		$	9,342,817		$	8,600,651
Unearned premiums	3,411,108			3,372,166			2,683,849			2,990,301			3,209,055			2,958,223
Insurance and reinsurance balances payable	272,062			207,909			234,412			261,737			292,572			211,704
Senior notes	1,490,427			1,490,198			995,855			995,699			995,546			994,951
Payable for investments purchased	237,019			162,747			21,744			174,034			234,001			112,855
Other liabilities	221,348			218,502			248,822			238,833			210,375			145,188
TOTAL LIABILITIES	15,437,952			15,119,363			13,766,822			14,145,120			14,284,366			13,023,572

SHAREHOLDERS’ EQUITY
Preferred shares	627,843			627,843			627,843			627,843			627,843			502,843
Common shares	2,189			2,188			2,174			2,172			2,172			2,141
Additional paid-in capital	2,261,084			2,247,102			2,240,125			2,225,826			2,213,204			2,153,467
Accumulated other comprehensive income	272,664			182,254			117,825			130,373			24,755			240,939
Retained earnings	5,331,199			5,170,948			5,062,706			4,921,716			4,813,687			4,383,405
Treasury shares, at cost	(2,539,269		)	(2,403,286		)	(2,232,711		)	(2,120,101		)	(2,119,714		)	(1,584,955		)
TOTAL SHAREHOLDERS’ EQUITY ATTRIBUTABLE TO AXIS CAPITAL	5,955,710			5,827,049			5,817,962			5,787,829			5,561,947			5,697,840
Noncontrolling interests	52,795			51,222			50,000			—			—			—
TOTAL SHAREHOLDERS' EQUITY	6,008,505			5,878,271			5,867,962			5,787,829			5,561,947			5,697,840

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	21,446,457		$	20,997,634		$	19,634,784		$	19,932,949		$	19,846,313		$	18,721,412

Basic common shares outstanding	103,906			106,745			109,485			111,651			111,588			122,773
Diluted common shares outstanding	107,228			110,327			113,325			115,684			115,631			128,117
Book value per common share		$51.28			$48.71			$47.40			$46.22			$44.22			$42.31
Diluted book value per common share	49.69			47.13			45.80			44.60			42.67			40.55
Diluted tangible book value per common share		$48.85			$46.31			$45.01			$43.81			$41.88			$39.78
Debt to total capital [a]	20.0		%	20.4		%	14.6		%	14.7		%	15.2		%	14.9		%
Debt and preferred equity to total capital	28.4		%	28.9		%	23.8		%	23.9		%	24.8		%	22.4		%


[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 attributable to AXIS Capital and our senior notes.

AXIS Capital Holdings Limited

CASH AND INVESTED ASSETS PORTFOLIO

At June 30, 2014



	Cost or Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value			Percentage
Fixed Maturities, available for sale
U.S. government and agency	$	1,607,568	$	4,761	$	(14,009	)	$	1,598,320		10.3	%
Non-U.S. government	1,238,471		30,486		(21,290		)	1,247,667			8.0	%
Corporate debt	4,177,454		91,862		(5,342		)	4,263,974			27.5	%
Agency RMBS	2,076,932		37,725		(9,078		)	2,105,579			13.6	%
CMBS	923,294		17,187		(787		)	939,694			6.0	%
Non-Agency RMBS	80,243		5,069		(366		)	84,946			0.5	%
ABS	1,309,555		5,162		(7,792		)	1,306,925			8.4	%
Municipals	1,014,616		39,099		(1,923		)	1,051,792			6.8	%
Total fixed maturities	12,428,133		231,351		(60,587		)	12,598,897			81.1	%

Equity securities, available for sale
Common stocks	307,392		80,750		(3,140		)	385,002			2.5	%
Exchange traded funds	193,582		41,790		—			235,372			1.5	%
Non-U.S. bond mutual funds	113,200		11,186		—			124,386			0.8	%
Total equity securities	614,174		133,726		(3,140		)	744,760			4.8	%

Total available for sale investments	$	13,042,307	$	365,077	$	(63,727	)	13,343,657			85.9	%

Other investments (see below)								1,044,492			6.7	%

Short-term investments								100,166			0.6	%

Total investments								14,488,315			93.2	%

Cash and cash equivalents [a]								1,189,403			7.7	%

Accrued interest receivable								91,278			0.6	%

Net receivable/(payable) for investments sold (purchased)								(236,653		)	(1.5	%)

Total cash and invested assets								$	15,532,343		100.0	%

								Fair Value			Percentage
Other Investments:
Long/short equity funds								$	373,539		35.8	%
Multi-strategy funds								306,215			29.3	%
Event-driven funds								191,735			18.4	%
Leveraged bank loan funds								48,430			4.6	%
Direct lending funds								33,467			3.2	%
Collateralized loan obligations - equity tranches								91,106			8.7	%
Total								$	1,044,492		100.0	%


[a]	Includes $145 million of restricted cash and cash equivalents.

AXIS Capital Holdings Limited

CASH AND INVESTED ASSETS COMPOSITION - QUARTERLY



	Q2 2014		Q1 2014		Q4 2013		Q3 2013		Q2 2013		Q2 2012
	Fair Value %		Fair Value %		Fair Value %		Fair Value %		Fair Value %		Fair Value %
CASH AND INVESTED ASSETS PORTFOLIO
Fixed Maturities:
U.S. government and agency	10.3	%	11.0	%	9.4	%	10.1	%	9.4	%	8.2	%
Non-U.S. government	8.0	%	8.0	%	7.9	%	8.2	%	8.3	%	9.1	%
Corporate debt	27.5	%	25.0	%	24.3	%	23.8	%	24.4	%	26.3	%
MBS:
Agency RMBS	13.6	%	15.4	%	16.5	%	17.0	%	16.4	%	20.1	%
CMBS	6.0	%	5.6	%	5.4	%	5.0	%	5.4	%	4.5	%
Non-agency RMBS	0.5	%	0.6	%	0.5	%	0.5	%	0.6	%	1.1	%
ABS	8.4	%	6.3	%	6.4	%	6.2	%	6.4	%	4.8	%
Municipals	6.8	%	6.9	%	10.4	%	10.5	%	10.8	%	8.9	%

Total Fixed Maturities	81.1	%	78.8	%	80.8	%	81.3	%	81.7	%	83.0	%
Equity securities	4.8	%	4.6	%	4.8	%	4.4	%	4.3	%	4.6	%
Other investments	6.7	%	6.6	%	7.0	%	6.7	%	6.8	%	5.8	%
Short-term investments	0.6	%	2.0	%	0.1	%	0.6	%	0.3	%	0.5	%

Total investments	93.2	%	92.0	%	92.7	%	93.0	%	93.1	%	93.9	%
Cash and cash equivalents	7.7	%	8.4	%	6.7	%	7.5	%	7.8	%	6.2	%
Accrued interest receivable	0.6	%	0.6	%	0.7	%	0.7	%	0.7	%	0.7	%
Net receivable/(payable) for investments sold or purchased	(1.5	%)	(1.0	%)	(0.1	%)	(1.2	%)	(1.6	%)	(0.8	%)
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	12.7	%	13.9	%	11.6	%	12.4	%	11.5	%	9.9	%
AAA	34.2	%	34.7	%	34.7	%	35.8	%	35.8	%	44.6	%
AA	12.6	%	12.1	%	15.0	%	15.2	%	14.9	%	9.0	%
A	19.7	%	18.2	%	18.5	%	17.6	%	18.3	%	17.7	%
BBB	12.8	%	12.7	%	12.3	%	11.3	%	11.5	%	12.0	%
Below BBB	8.0	%	8.4	%	7.9	%	7.7	%	8.0	%	6.8	%
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	4.0	%	4.5	%	5.9	%	5.6	%	5.5	%	5.5	%
From one to five years	43.7	%	43.7	%	42.7	%	42.7	%	40.7	%	41.8	%
From five to ten years	15.2	%	14.4	%	14.9	%	15.4	%	17.6	%	16.4	%
Above ten years	1.9	%	1.9	%	0.8	%	1.0	%	0.9	%	0.8	%
Asset-backed and mortgage-backed securities	35.2	%	35.5	%	35.7	%	35.3	%	35.3	%	35.5	%
Total	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%

CASH AND INVESTED ASSETS PORTFOLIO CHARACTERISTICS
Book yield of fixed maturities	2.5	%	2.5	%	2.5	%	2.6	%	2.6	%	2.8	%
Yield to maturity of fixed maturities	2.0	%	2.1	%	2.3	%	2.2	%	2.4	%	1.9	%
Average duration of fixed maturities (inclusive of duration hedges)	2.9 yrs		3.0 yrs		3.2 yrs		3.2 yrs		3.5 yrs		2.8 yrs
Average credit quality	AA-		AA-		AA-		AA-		AA-		AA-

AXIS Capital Holdings Limited

GEOGRAPHIC DISTRIBUTION OF FIXED MATURITIES AND EQUITIES

At June 30, 2014



				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:
Germany	$	32,500		$	9,356	$	106,444	$	48,050	$	163,850	$	—	$	—	$	3,339	$	199,689	$	8,918		$	208,607
Supranational [a]	115,129			—		—		—		—		—		—		—		115,129		—			115,129
Netherlands	19,242			16,071		47,023		—		63,094		—		4,222		—		86,558		4,345			90,903
France	—			6,371		38,469		—		44,840		—		—		1,334		46,174		19,174			65,348
Spain	—			—		18,410		—		18,410		—		—		—		18,410		800			19,210
Ireland	—			2,725		9,177		—		11,902		—		—		5,880		17,782		4,163			21,945
Luxembourg	—			—		16,137		—		16,137		—		—		—		16,137		—			16,137
Italy	—			—		13,960		—		13,960		—		—		—		13,960		—			13,960
Belgium	—			—		8,818		—		8,818		—		—		—		8,818		1,498			10,316
Finland	—			—		—		—		—		—		—		—		—		2,374			2,374
Slovenia	1,989			—		—		—		—		—		—		—		1,989		—			1,989
Austria	1,227			—		559		—		559		—		—		—		1,786		—			1,786
Other [b]	—			—		—		—		—		—		—		—		—		124,386			124,386
Total eurozone	170,087			34,523		258,997		48,050		341,570		—		4,222		10,553		526,432		165,658			692,090
Other concentrations:
United Kingdom	180,351			35,780		157,783		630		194,193		—		23,231		2,363		400,138		18,970			419,108
Canada	145,050			98,889		64,964		15,444		179,297		—		—		—		324,347		13,543			337,890
Australia	196,020			56,271		27,087		—		83,358		—		—		2,350		281,728		4,191			285,919
Mexico	98,410			—		22,459		2,422		24,881		—		—		—		123,291		2,194			125,485
Brazil	95,139			—		8,397		—		8,397		—		—		—		103,536		—			103,536
Other	362,610			38,770		98,738		5,130		142,638		—		4,986		—		510,234		130,855		[c]	641,089
Total other concentrations	1,077,580			229,710		379,428		23,626		632,764		—		28,217		4,713		1,743,274		169,753			1,913,027

Total Non-U.S. concentrations	1,247,667			264,233		638,425		71,676		974,334		—		32,439		15,266		2,269,706		335,411			2,605,117

United States	1,435,966		[d]	1,511,115		1,778,525		—		3,289,640		2,105,579		992,201		1,291,659		9,115,045		409,349		[e]	9,524,394
United States agencies	162,354			—		—		—		—		—		—		—		162,354		—			162,354
United States local governments	1,051,792			—		—		—		—		—		—		—		1,051,792		—			1,051,792
Total U.S. concentrations	2,650,112			1,511,115		1,778,525		—		3,289,640		2,105,579		992,201		1,291,659		10,329,191		409,349			10,738,540

Totals	$	3,897,779		$	1,775,348	$	2,416,950	$	71,676	$	4,263,974	$	2,105,579	$	1,024,640	$	1,306,925	$	12,598,897	$	744,760		$	13,343,657


[a]	Represents holdings of the European Investment Bank.


[b]	Represents holdings in two non-U.S. bond mutual funds with underlying exposure to primarily sovereign and corporate debt. The primary countries of risk for these underlying securities are countries within the eurozone.


[c]	Contains $6 million exchange-traded funds (“ETF’s”) 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 $225 million of common stocks of companies with the United States as their primary country of risk and $184 million of ETF’s designed to track the S&P 500, an index consisting primarily of exposure to the United States.

AXIS Capital Holdings Limited

CORPORATE DEBT COMPOSITION

At June 30, 2014



	Fair Value		% of Total Corporate Debt		% of Total Cash and Invested Assets
Composition by sector - Investment grade
Financial institutions:
U.S. banking	$	1,056,965	24.8	%	6.8	%
Corporate/commercial finance	228,581		5.4	%	1.5	%
Foreign banking [a]	200,490		4.7	%	1.3	%
Insurance	180,658		4.2	%	1.2	%
Investment brokerage	12,019		0.3	%	0.1	%
Total financial institutions	1,678,713		39.4	%	10.9	%
Communications	357,588		8.4	%	2.3	%
Consumer cyclical	292,255		6.9	%	1.9	%
Consumer non-cyclicals	257,704		6.0	%	1.7	%
Energy	206,521		4.8	%	1.3	%
Industrials	146,723		3.4	%	0.9	%
Utilities	128,668		3.0	%	0.8	%
Transportation	91,495		2.1	%	0.6	%
Non-U.S. government guaranteed [b]	71,677		1.7	%	0.5	%
Technology	68,414		1.6	%	0.4	%
Total investment grade	3,299,758		77.3	%	21.3	%

Total non-investment grade	964,216		22.7	%	6.2	%

Total corporate debt	$	4,263,974	100.0	%	27.5	%


[a]	Located in Canada, Australia, Japan, United Kingdom, Germany, New Zealand and Switzerland.


[b]	Includes $48 million from Germany. No other corporate debt guaranteed by a eurozone country.

AXIS Capital Holdings Limited

INVESTMENT PORTFOLIO

TEN LARGEST CORPORATE DEBT HOLDINGS

At June 30, 2014



	Amortized Cost		Net Unrealized Gain		Fair Value		% of Total Fixed Maturities
ISSUER [a]
BANK OF AMERICA CORP	$	165,381	$	5,217	$	170,598	1.4	%
GOLDMAN SACHS GROUP	138,285		5,291		143,576		1.1	%
JP MORGAN CHASE & CO	140,125		3,086		143,211		1.1	%
WELLS FARGO & COMPANY	124,263		2,018		126,281		1.0	%
MORGAN STANLEY	117,500		5,619		123,119		1.0	%
CITIGROUP INC	105,532		3,807		109,339		0.9	%
FORD MOTOR COMPANY	77,404		1,601		79,005		0.6	%
DAIMLER AG	77,785		825		78,610		0.6	%
VERIZON COMMUNICATIONS INC	76,589		1,664		78,253		0.6	%
AT&T INC	67,489		219		67,708		0.5	%


[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.

AXIS Capital Holdings Limited

MORTGAGE-BACKED AND ASSET-BACKED SECURITIES COMPOSITION

At June 30, 2014



	Agencies			AAA			AA			A			BBB			Non-Investment Grade			Total

Residential MBS	$	2,105,579		$	30,336		$	3,329		$	5,318		$	11,569		$	34,394		$	2,190,525
Commercial MBS	—			537,465			216,200			122,858			61,375			1,796			939,694
ABS	—			928,685			318,007			33,105			24,082			3,046			1,306,925

Total mortgage-backed and asset-backed securities	$	2,105,579		$	1,496,486		$	537,536		$	161,281		$	97,026		$	39,236		$	4,437,144

Percentage of total	47.5		%	33.7		%	12.1		%	3.6		%	2.2		%	0.9		%	100.0		%

AXIS Capital Holdings Limited

REINSURANCE RECOVERABLE ANALYSIS



	Q2 2014			Q1 2014			Q4 2013			Q3 2013			Q2 2013			Q2 2012
Reinsurance recoverable on paid losses and loss expenses:
Insurance	$	24,680		$	26,943		$	29,897		$	16,713		$	35,648		$	29,724
Reinsurance	1,281			1,077			(21		)	—			—			—
Total	$	25,961		$	28,020		$	29,876		$	16,713		$	35,648		$	29,724

Reinsurance recoverable on unpaid losses and loss expenses: OSLR
Insurance	$	625,142		$	575,811		$	587,727		$	608,886		$	635,089		$	533,052
Reinsurance	15			36			—			—			—			—
Total	$	625,157		$	575,847		$	587,727		$	608,886		$	635,089		$	533,052

Reinsurance recoverable on unpaid losses and loss expenses: IBNR
Insurance	$	1,319,543		$	1,322,309		$	1,321,597		$	1,285,078		$	1,258,113		$	1,188,349
Reinsurance	2,725			5,289			9,280			6,982			69,897			60,080
Total	$	1,322,268		$	1,327,598		$	1,330,877		$	1,292,060		$	1,328,010		$	1,248,429

Provision against reinsurance recoverables:
Insurance	$	(18,401	)	$	(18,625	)	$	(18,492	)	$	(18,149	)	$	(17,306	)	$	(18,319	)
Reinsurance	—			—			—			—			—			(528		)
Total	$	(18,401	)	$	(18,625	)	$	(18,492	)	$	(18,149	)	$	(17,306	)	$	(18,847	)

Net reinsurance recoverables:
Insurance	$	1,950,964		$	1,906,438		$	1,920,729		$	1,892,528		$	1,911,544		$	1,732,806
Reinsurance	4,021			6,402			9,259			6,982			69,897			59,552
Total	$	1,954,985		$	1,912,840		$	1,929,988		$	1,899,510		$	1,981,441		$	1,792,358

AXIS Capital Holdings Limited

REINSURANCE RECOVERABLE ANALYSIS

At June 30, 2014



Categories	Gross Recoverable		Collateral			Gross Recoverable Net of Collateral		% of Total Gross Recoverable Net of Collateral	% of Total Shareholders’ Equity Attributable to AXIS Capital	Provision Against Reinsurance Recoverable			Provision Against Reinsurance Recoverable as % of Gross Recoverable	Net Recoverable
Top 10 reinsurers based on gross recoverables	$	1,516,936	$	(24,623	)	$	1,492,313	78.2%	25.1%	$	(13,077	)	0.9%	$	1,503,859
Other reinsurers balances > $20 million	210,159		(2,342		)	207,817		10.9%	3.5%	(2,201		)	1.0%	207,958
Other reinsurers balances < $20 million	246,291		(37,026		)	209,265		10.9%	3.5%	(3,123		)	1.3%	243,168
Total	$	1,973,386	$	(63,991	)	$	1,909,395	100.0%	32.1%	$	(18,401	)	0.9%	$	1,954,985

At June 30, 2014, 98.7% (December 31, 2013: 98.8%) 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 Attributable to AXIS Capital
Transatlantic Reinsurance Company	14.1%	4.5%
Partner Reinsurance Company of the US	11.1%	3.6%
Lloyds of London	10.7%	3.4%
Swiss Reinsurance America Corporation	10.5%	3.4%
Berkley Insurance Company	8.4%	2.7%
Ace Property & Casualty Insurance	6.2%	2.0%
XL Reinsurance America Inc	5.1%	1.6%
Hannover Ruckversicherungs Aktiengesellschaft	4.3%	1.4%
Everest Reinsurance Company	4.2%	1.3%
Liberty Mutual Insurance Company	3.6%	1.2%
	78.2%	25.1%

AXIS Capital Holdings Limited

RESERVE FOR LOSSES AND LOSS EXPENSES: PAID TO INCURRED ANALYSIS



	Quarter ended June 30, 2014									Six months ended June 30, 2014
	Gross			Recoveries			Net			Gross			Recoveries			Net
Reserve for unpaid losses and loss expenses

Beginning of period	$	9,667,841		$	(1,884,820	)	$	7,783,021		$	9,582,140		$	(1,900,112	)	$	7,682,028
Incurred	693,274			(127,445		)	565,829			1,292,565			(182,529		)	1,110,036
Paid	(579,228		)	86,720			(492,508		)	(1,108,655		)	158,433			(950,222		)
Foreign exchange and other	24,101			(3,479		)	20,622			39,938			(4,816		)	35,122

End of period [a]	$	9,805,988		$	(1,929,024	)	$	7,876,964		$	9,805,988		$	(1,929,024	)	$	7,876,964


[a]	At June 30, 2014, the gross reserve for losses and loss expenses included IBNR of $6,310 million, or 64%, of total gross reserves for loss and loss expenses. At December 31, 2013, the comparable amount was $6,082 million, or 63%.

AXIS Capital Holdings Limited

RESERVE FOR LOSSES AND LOSS EXPENSES: PAID TO INCURRED ANALYSIS BY SEGMENT



	Quarter ended June 30, 2014									Six months ended June 30, 2014
	Insurance			Reinsurance			Total			Insurance			Reinsurance			Total

Gross losses paid	$	323,513		$	255,715		$	579,228		$	573,777		$	534,878		$	1,108,655
Reinsurance recoveries	(86,537		)	(183		)	(86,720		)	(154,217		)	(4,216		)	(158,433		)

Net losses paid	236,976			255,532			492,508			419,560			530,662			950,222

Change in:
Reported case reserves	101,943			(55,460		)	46,483			112,576			(144,102		)	(31,526		)
IBNR	(5,143		)	72,706			67,563			68,388			147,048			215,436
Reinsurance recoveries on unpaid loss and loss expense reserves	(43,310		)	2,585			(40,725		)	(30,635		)	6,539			(24,096		)

Total net incurred losses and loss expenses	$	290,466		$	275,363		$	565,829		$	569,889		$	540,147		$	1,110,036

Gross reserve for losses and loss expenses	$	5,068,149		$	4,737,839		$	9,805,988		$	5,068,149		$	4,737,839		$	9,805,988

Net favorable prior year reserve development	$	32,963		$	52,391		$	85,354		$	44,571		$	84,276		$	128,847

Key Ratios

Net paid to net incurred percentage	81.6		%	92.8		%	87.0		%	73.6		%	98.2		%	85.6		%

Net paid losses / Net premiums earned	51.8		%	47.1		%	49.2		%	46.3		%	51.1		%	48.8		%
Change in net loss and loss expense reserves / Net premiums earned	11.7		%	3.6		%	7.4		%	16.5		%	0.9		%	8.2		%
Net loss and loss expense ratio	63.5		%	50.7		%	56.6		%	62.8		%	52.0		%	57.0		%

AXIS Capital Holdings Limited

RESERVE FOR LOSSES AND LOSS EXPENSES: PAID TO INCURRED ANALYSIS

INSURANCE - QUARTERLY



	Q2 2014			Q1 2014			Q4 2013			Q3 2013			Q2 2013			Q2 2012

Gross losses paid	$	323,513		$	250,264		$	342,952		$	275,082		$	269,569		$	245,704
Reinsurance recoveries	(86,537		)	(67,679		)	(98,263		)	(89,562		)	(89,115		)	(70,266		)

Net losses paid	236,976			182,585			244,689			185,520			180,454			175,438

Change in:
Reported case reserves	101,943			10,632			(30,643		)	8,348			144,059			53,570
IBNR	(5,143		)	73,532			87,794			14,979			73,154			23,814
Reinsurance recoveries on unpaid loss and loss expense reserves	(43,310		)	12,674			(16,206		)	7,593			(66,675		)	(26,922		)

Total net incurred losses and loss expenses	$	290,466		$	279,423		$	285,634		$	216,440		$	330,992		$	225,900

Gross reserve for losses and loss expenses	$	5,068,149		$	4,960,559		$	4,873,184		$	4,819,976		$	4,771,435		$	4,238,463

Net favorable prior year reserve development	$	32,963		$	11,608		$	4,000		$	34,065		$	6,693		$	35,394

Key Ratios

Net paid to net incurred percentage	81.6		%	65.3		%	85.7		%	85.7		%	54.5		%	77.7		%

Net paid losses/Net premiums earned	51.8		%	40.6		%	54.3		%	41.4		%	42.7		%	45.4		%
Change in net loss and loss expense reserves / Net premiums earned	11.7		%	21.6		%	9.1		%	6.9		%	35.7		%	13.1		%
Net loss and loss expense ratio	63.5		%	62.2		%	63.4		%	48.3		%	78.4		%	58.4		%

AXIS Capital Holdings Limited

RESERVE FOR LOSSES AND LOSS EXPENSES: PAID TO INCURRED ANALYSIS

REINSURANCE - QUARTERLY



	Q2 2014			Q1 2014			Q4 2013			Q3 2013			Q2 2013			Q2 2012

Gross losses paid	$	255,715		$	279,163		$	249,816		$	224,578		$	236,602		$	240,991
Reinsurance recoveries	(183		)	(4,033		)	(6		)	—			—			—

Net losses paid	255,532			275,130			249,810			224,578			236,602			240,991

Change in:
Reported case reserves	(55,460		)	(88,642		)	64,636			19,370			(3,577		)	29,106
IBNR	72,706			74,341			(46,422		)	(21,781		)	81,998			(25,695		)
Reinsurance recoveries on unpaid loss and loss expense reserves	2,585			3,955			(2,298		)	62,915			(3,116		)	(2,665		)

Total net incurred losses and loss expenses	$	275,363		$	264,784		$	265,726		$	285,082		$	311,907		$	241,737

Gross reserve for losses and loss expenses	$	4,737,839		$	4,707,282		$	4,708,956		$	4,664,540		$	4,571,382		$	4,362,188

Net favorable prior year reserve development	$	52,391		$	31,885		$	38,788		$	45,970		$	35,422		$	39,218

Key Ratios

Net paid to net incurred percentage	92.8		%	103.9		%	94.0		%	78.8		%	75.9		%	99.7		%

Net paid losses / Net premiums earned	47.1		%	55.4		%	50.8		%	45.2		%	45.2		%	51.9		%
Change in net loss and loss expense reserves / Net premiums earned	3.6		%	(2.1		%)	3.3		%	12.1		%	14.4		%	0.2		%
Net loss and loss expense ratio	50.7		%	53.3		%	54.1		%	57.3		%	59.6		%	52.1		%

AXIS Capital Holdings Limited

NET PROBABLE MAXIMUM LOSSES TO CERTAIN PEAK INDUSTRY CATASTROPHE EXPOSURES - AS OF JULY 1, 2014



		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	$	559	$	774	$	941
Northeast	U.S. Hurricane	59		189		358
Mid-Atlantic	U.S. Hurricane	100		317		698
Gulf of Mexico	U.S. Hurricane	351		514		794
California	Earthquake	357		493		608
Europe	Windstorm	244		349		447
Japan	Earthquake	188		337		520
Japan	Windstorm	63		102		144

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 July 1, 2014. 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 $0.8 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 $0.8 billion. Conversely, there is a 99% chance that on an annual basis, the loss from a Southeast hurricane will fall below $0.8 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.

AXIS Capital Holdings Limited

EARNINGS PER COMMON SHARE INFORMATION - AS REPORTED, GAAP



	Quarter ended June 30,				Six months ended June 30,
	2014		2013		2014		2013

Net income available to common shareholders	$	190,664	$	72,447	$	327,890	$	375,261

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Weighted average shares outstanding - basic	105,118		115,163		107,075		116,088
Dilutive share equivalents:
Stock compensation plans	1,171		1,508		1,254		1,572
Weighted average shares outstanding - diluted	106,289		116,671		108,329		117,660

EARNINGS PER COMMON SHARE
Basic		$1.81		$0.63		$3.06		$3.23
Diluted		$1.79		$0.62		$3.03		$3.19

AXIS Capital Holdings Limited

EARNINGS PER COMMON SHARE INFORMATION AND COMMON SHARE ROLLFOWARD - QUARTERLY



	Q2 2014			Q1 2014			Q4 2013			Q3 2013			Q2 2013			Q2 2012

Net income available to common shareholders	$	190,664		$	137,227		$	171,524		$	137,121		$	72,447		$	168,152

COMMON SHARES OUTSTANDING
Common shares - at beginning of period	106,745			109,485			111,651			111,588			116,306			125,365
Shares issued, including those sourced from treasury	219			1,296			162			74			404			60
Shares repurchased for treasury	(3,058		)	(4,036		)	(2,328		)	(11		)	(5,122		)	(2,652		)
Common shares - at end of period	103,906			106,745			109,485			111,651			111,588			122,773

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Weighted average shares outstanding - basic	105,118			109,053			110,757			111,676			115,163			123,823
Dilutive share equivalents:
Stock compensation plans	1,171			1,338			1,945			1,679			1,508			1,160
Weighted average shares outstanding - diluted	106,289			110,391			112,702			113,355			116,671			124,983

EARNINGS PER COMMON SHARE
Basic		$1.81			$1.26			$1.55			$1.23			$0.63			$1.36
Diluted		$1.79			$1.24			$1.52			$1.21			$0.62			$1.35

AXIS Capital Holdings Limited

DILUTED BOOK VALUE PER COMMON SHARE ANALYSIS - TREASURY STOCK METHOD [a]



	At June 30, 2014

	Weighted Average Strike Price		Common Shareholders’ Equity		Outstanding Common Shares net of Treasury Shares	Per share

Closing stock price							$44.28

Book value per common share			$	5,327,867	103,906		$51.28

Dilutive securities: [b]
Restricted stocks					1,368	(0.67		)
Options		$27.99			51	(0.02		)
Restricted and phantom stock units					1,903	(0.90		)
Diluted book value per common share			$	5,327,867	107,228		$49.69

	At December 31, 2013

	Weighted Average Strike Price		Common Shareholders’ Equity		Outstanding Common Shares net of Treasury Shares	Per share

Closing stock price							$47.57

Book value per common share			$	5,190,119	109,485		$47.40

Dilutive securities: [b]
Restricted stocks					2,515	(1.06		)
Options		$27.98			88	(0.04		)
Restricted and phantom stock units					1,237	(0.50		)
Diluted book value per common share			$	5,190,119	113,325		$45.80


[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.


[b]	Excludes cash-settled restricted stock unit awards.

AXIS Capital Holdings Limited

NON-GAAP FINANCIAL MEASURE RECONCILIATIONS



OPERATING INCOME
	Quarter ended June 30,						Six months ended June 30,
	2014			2013			2014			2013
Net income available to common shareholders	$	190,664		$	72,447		$	327,890		$	375,261
Adjustment for:
Net realized investment gains	(33,261		)	(16,235		)	(43,882		)	(60,713		)
Associated tax impact	6,149			1,631			12,470			5,039
Foreign exchange losses (gains)	9,705			(10,320		)	13,939			(45,201		)
Associated tax impact	(514		)	(559		)	(606		)	69
Loss on repurchase of preferred shares	—			3,081			—			3,081
Associated tax impact	—			—			—			—
Operating income	$	172,743		$	50,045		$	309,811		$	277,536


Net earnings per share - diluted	$	1.79		$	0.62		$	3.03		$	3.19
Adjustment for:
Net realized investment gains	(0.31		)	(0.14		)	(0.41		)	(0.52		)
Associated tax impact	0.06			0.01			0.12			0.04
Foreign exchange losses (gains)	0.09			(0.09		)	0.13			(0.38		)
Associated tax impact	—			—			(0.01		)	—
Loss on repurchase of preferred shares	—			0.03			—			0.03
Associated tax impact	—			—			—			—
Operating income per share - diluted	$	1.63		$	0.43		$	2.86		$	2.36

Weighted average common shares and common share equivalents - diluted	106,289			116,671			108,329			117,660

Average common shareholders' equity	$	5,263,537		$	5,160,346		$	5,258,993		$	5,105,511

Annualized return on average common equity	14.5		%	5.6		%	12.5		%	14.7		%

Annualized operating return on average common equity	13.1		%	3.9		%	11.8		%	10.9		%



DILUTED TANGIBLE BOOK VALUE PER COMMON SHARE - TREASURY STOCK METHOD [a]
	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,
	2014			2014			2013			2013			2013			2012
Common shareholders' equity	$	5,327,867		$	5,199,206		$	5,190,119		$	5,159,986		$	4,934,104		$	5,194,997
Less: goodwill and intangible assets	(90,025		)	(90,350		)	(89,528		)	(91,656		)	(91,370		)	(98,203		)
Tangible common shareholders' equity	$	5,237,842		$	5,108,856		$	5,100,591		$	5,068,330		$	4,842,734		$	5,096,794

Outstanding diluted common shares, net of treasury shares	107,228			110,327			113,325			115,684			115,631			128,117

Diluted book value per common share	$	49.69		$	47.13		$	45.80		$	44.60		$	42.67		$	40.55

Diluted tangible book value per common share	$	48.85		$	46.31		$	45.01		$	43.81		$	41.88		$	39.78


[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.

AXIS Capital Holdings Limited

USE OF NON-GAAP FINANCIAL MEASURES

In this document, we present operating income, consolidated underwriting income (loss), underwriting-related general and administrative expenses and diluted tangible book value per common share, which are “non-GAAP financial measures” as defined in Regulation G.

Operating income represents after-tax operational results without consideration of after-tax net realized investment gains (losses), foreign exchange losses (gains) and losses on the repurchase of preferred shares. We also present diluted operating earnings per share and operating return on average common equity ("operating ROACE"), which are derived from the non-GAAP operating income measure. Reconciliations of operating income, diluted operating earnings per share and operating ROACE to the nearest GAAP financial measures (based on net income available to common shareholders) are included on the previous page.

Consolidated underwriting income (loss) is a pre-tax measure of underwriting profitability that takes into account net premiums earned and other insurance related income as revenues and net losses and loss expenses, acquisition costs and underwriting-related general and administrative costs as 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. A reconciliation of consolidated underwriting income (loss) to income before income taxes (the nearest GAAP financial measure) is included in the 'Consolidated Statements of Income - Quarterly' and 'Consolidated Statements of Income - Year To Date' sections of this document. Our total general and administrative expenses (the nearest GAAP financial measure to underwriting-related general and administrative expenses) also includes corporate expenses; the two components are separately presented in the 'Consolidated Statements of Income - Quarterly' and 'Consolidated Statements of Income - Year To Date' sections of this document.

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 on the previous page.

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. This includes the presentation of “operating income” (in total and on a per share basis), “annualized operating ROACE” (which is based on the “operating income” measure), "consolidated underwriting income (loss)" (which incorporates "underwriting-related general and administrative expenses") and diluted tangible book value per common share.

Operating Income

Although the investment of premiums to generate income and realized investment gains (or losses) is an integral part of our operations, the determination to realize investment gains (or 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 (or losses) is somewhat opportunistic for many companies.

Foreign exchange gains (losses) in our Consolidated Statements of Operations 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 gains (losses) on our available-for-sale investments in other comprehensive income and foreign exchange gains (losses) 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 gains (losses) reported separately in earnings, thereby minimizing the impact of foreign exchange rate movements on total shareholders’ equity. As such, the Statement of Operations foreign exchange gains (losses) in isolation are not a fair representation of the performance of our business.

Losses on repurchase of preferred shares arise from capital transactions and, therefore, are not reflective 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 gains (losses) and losses on repurchase of preferred shares 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 gains (losses) and losses on repurchase of preferred shares 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.

Consolidated Underwriting Income (Loss)/Underwriting-Related General and Administrative Expenses

Corporate expenses include holding company costs necessary to support our worldwide (re)insurance 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 (loss). Interest expense and financing costs primarily relate to interest payable on our senior notes and are excluded from consolidated underwriting income (loss) for the same reason.

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.

As noted above, foreign exchange gains (losses) in our Consolidated Statement of Operations 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 gains (losses) on our investment portfolio generally offset a large portion of the foreign exchange gains (losses) arising from our underwriting portfolio. As a result, we believe that foreign exchange gains (losses) are not a meaningful contributor to our underwriting performance and, therefore, exclude them from consolidated underwriting income (loss). We believe that presentation of underwriting-related general and administrative expenses and consolidated underwriting income (loss) provides investors with an enhanced understanding of our results of operations, by highlighting the underlying pre-tax profitability of our underwriting activities.

Diluted Tangible Book Value per Common Share

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.