EX-99.1 2 d782063dex991.htm EX-99.1

AXIS Capital KBW Annual Insurance Conference New York, NY Albert Benchimol, President & CEO September 3, 2014 Exhibit 99.1

Safe Harbor Statement 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 value of our investment portfolio, our expectations regarding pricing and other market conditions and valuations of the potential impact of movements in interest rates, equity 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, • 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, and • Fluctuations in interest rates, credit spreads, equity prices and/or currency values. 2

AXIS delivers a broad range of risk transfer products and services, meaningful capacity and unquestioned financial strength Hybrid (Re)insurer with Strategic Flexibility o AXIS Re: Diversified global reinsurer with 2013 GWP of $2.1bn o AXIS Insurance: Global specialty insurer with 2013 GWP of $2.6bn Experienced leadership team with average industry experience of 29 years Excellent financial strength and flexibility o Financial Strength Ratings: A+/ Stable (S&P, A.M. Best, Fitch), A2/ Stable (Moody’s) o Solid reserve position: 2013 IBNR of 62% of net loss reserves o Average aggregate Fixed Income portfolio rating of AA- with average duration of 2.9 yrs AXIS Capital: Investment Highlights 3

Hybrid (Re)insurer with Strategic Flexibility (1) (2) AXIS Insurance AXIS Re ‘02-’13 GPW $22.8 ‘02-’13 Underwriting Income $2.2 ’02-’13 Aggregate Combined Ratio 84% ‘02-’13 GPW $17.8 ‘02-’13 Underwriting Income $1.9 ‘02-’13 Aggregate Combined Ratio 88% 2002-2013 Aggregate Gross Premiums Written ($ in Billions) Consolidated AXIS ‘02-’13 GPW $40.6 ‘02-’13 Underwriting Income $4.1 (1) ‘02-’13 Aggregate Combined Ratio 89% (2) 4 44% 56% AXIS Insurance • 742 Employees • • Underwriting Profit every year • 212 Employees • • Underwriting Profit 10 of 12 years Includes corporate expenses. Underwriting income is a “non-GAAP financial measure” as defined in SEC Regulation G. A reconciliation of this amount to the nearest GAAP financial measure (income before income taxes) is provided on slide 18, as is a discussion of the rationale for the presentation of this item. GPW CAGR 2002 – 2013 = 11% GPW CAGR 2002 – 2013 = 19%

2002-2013 Average ROACE vs. Volatility (Standard Deviation) Volatility by Quintile 1 st 5 th 2 nd 3 rd 4 th US Specialty US Scale Bermuda Hybrid Reinsurance Predominating Property Cat Delivering Top-Quintile Average ROACE 5 Sources: Company documents. Note: US Specialty group includes American Financial, HCC, Markel, RLI, W.R. Berkley, and Alleghany. US Scale group includes Chubb, CNA, Hartford, and Travelers. Bermuda Hybrid group includes ACE, Arch, Argo, Aspen, Allied World, AXIS, Endurance, and XL. Reinsurance Predominating group includes Partner Re, Platinum, and Everest Re. Property Catastrophe Reinsurance group includes Montpelier and RenRe. Aspen and Platinum average ROACE calculated from 2003-2013. Lowest Highest

Delivering Excellent Shareholder Value Creation Total Value Creation = Growth in Diluted Book Value per Share (1) + Accumulated Declared Dividends 2002 – 2014Q2 CAGR = 13.2% 6 (1) Diluted book value per share calculated using treasury stock method. 12/31/02 diluted BVPS is pro forma for AXIS Capital IPO.

$291 $176 $710 $66 $318 $472 $318 $106 $113 $108 $206 $120 $118 $61 $397 $289 $818 $272 $438 $590 $379 $0 $200 $400 $600 $800 $1,000 2008 2009 2010 2011 2012 2013 2014 H1 Share Buybacks(2) Common Dividends Paid (1) Operating Income represents after-tax operational results without consideration of after-tax net realized investment gains (losses), foreign exchange losses (gains) and losses on the repurchase of preferred shares. (2) Share buybacks include open market and employee-related purchases. Stable capital levels Increasing capital efficiency supporting business expansion ($ in Millions) ‘08 – ’14 H1 Dividends Paid + Share Buybacks = 106% of ‘08 – ’14 H1 Aggregate Operating Income (1) Significant Return of Capital to Shareholders 7

8 Long-term track record of success Recent challenges driven by catastrophe exposure and frequency of severity in underwriting portfolios Initiatives in process to deliver strategic goals Realization of targeted benefits not dependent on pricing cycle Dual insurance/reinsurance platform is a strategic advantage Well-positioned for current environment On Course to Deliver Consistently Superior Results

Top-quintile risk-adjusted returns over the cycle 9 Continue with Strategy to Achieve Goals Invest in our people and culture Underwriting talent which delivered top-tier underwriting results since inception Successfully attracting and adding new top-tier underwriting talent Deliver diversified growth Bring specialist underwriting to new target markets Develop new specialist franchises in AXIS model More balance and lower volatility Optimize enterprise-wide risk portfolio Constantly improving data and analytics Informed, not ruled, by models Enhance operational excellence Optimal organizational structure Investments in IT Competitive cost structure

Significant contributions from new, diversifying initiatives Accident and Health unit Global agriculture reinsurance line New, diversifying initiatives in early stages Lloyd’s presence Re-entry into U.S. primary casualty New distribution initiatives in U.S. excess casualty Expanded professional liability, energy and marine specialties in Asia & Australia Established Weather and Commodities Markets unit Established third party capital management business New healthcare liability insurance unit 10 Delivering Diversified Growth Diversifying and strengthening distribution Stronger relationships with major providers Retail distribution Adding resources to distribution management at both corporate and segment levels Delivering product to Canada, Australia, Asia, South America, as appropriate

11 Low Volatility Requiring Lower UW Returns (Agriculture QS, Motor Proportional) Mid / Long Tail Requiring Lower UW Returns (Liability, Professional, Motor XOL) Mid Volatility Requiring Mid Range UW Returns (Property, Credit & Surety, Engineering) High Volatility Requiring Higher UW Returns (Agriculture Stop Loss, Catastrophe) Low Volatility Requiring Lower UW Returns (Accident & Health) Mid / Long Tail Requiring Lower UW Returns (Liability, Professional) Mid Volatility Requiring Mid Range UW Returns (Property, Marine) High Volatility Requiring Higher UW Returns (Terrorism, Aviation, Credit and Political Risk) Reinsurance Insurance Current Year Underwriting Margin Characteristics Targeting More Stable Returns with Changed Mix Increased Capital Efficiency Offsets Higher Combined Ratios to Deliver High ROEs

Largest Modeled 1 in 100 and 250 Year PML as a % of Common Equity 1 in 250 All Perils Net Annual Aggregate Loss as a % of Common Equity 12 Rebalanced Natural Catastrophe Exposure

Quality of Loss Ratio Profitable Growth Expense Ratio Reduction Optimal Capital Structure Initiatives in Process Designed to Deliver Improved Returns Independent of Cycle • Continued management of catastrophe risk • More stable accident year loss ratio ex-cats • Enhanced data and analytics supporting optimization of portfolios • Effective reinsurance purchasing • Prudent reserving • Lower aggregate catastrophe exposure and reduced volatility • Effective reinsurance purchasing • Third party capital • Robust and appropriate capital return including share repurchase and dividend payment • Appropriate financial leverage • More scale from newer initiatives reducing expense drag • Investments in operational effectiveness expected to bear fruit after 2015 • Significant, new diversifying initiatives, including A&H and Agriculture • Initiatives focused on expanded distribution, product and geography • Lines with lower volatility support net investment income growth Targeting 4-5 CR points of incremental margin by 2017, leading to higher ROEs Focus on Drivers of Shareholder Value 13

Environment Continues to Support Good Margins AXIS Insurance Current Business Mix Rate Change Index 14

15 AXIS Re Well-Positioned Large Companies Capital Markets Smaller Companies (Capital <$3Bn) The capital markets product has disadvantages, but plays a role We offer stability and respect the “implied put” Capital markets are complex for buyers and their staff Versus Capital Markets Broad product offering Global presence Strong leaders of specialty businesses Usually in top 10 on panel for large buyers Versus Smaller (Re)insurers Buyers are attempting to diversify away from Large Companies Broker-friendly alternative as brokers actively target direct markets Versus Large (Re)insurers

16 Scale advantage with ~$7 billion in capital Established brand name and reputation with clients Whole account capabilities with expertise in multiple products and geographies Superior claims service Strong insurance platform Unquestioned financial strength Strategies to improve performance independent of P&C cycle Well Positioned to Succeed in Current Environment

Question & Answer Session

Non-GAAP Financial Measures ($ in Billions) ’02 – ’13 Aggregate ’02 – ’13 Consolidated underwriting income $4.1 Corporate expenses (0.9) Net investment income 3.7 Net realized investment gains 0.1 Foreign exchange gains 0.1 Interest expense and financing costs (0.4) Income before income taxes $6.7 18 In this presentation, we present consolidated underwriting income, which is a “non-GAAP financial measure” as defined in Regulation G. Consolidated underwriting income 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 to income before income taxes (the nearest GAAP financial measure) is included below. 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 "consolidated underwriting income", which incorporates "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. Interest expense and financing costs primarily relate to interest payable on our senior notes and are excluded from consolidated underwriting income for the same reason. 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 from our underwriting profitability measure. As noted above, foreign exchange gains 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 are not a meaningful contributor to our underwriting performance and, therefore, exclude them from consolidated underwriting income. We believe that presentation of consolidated underwriting income provides investors with an enhanced understanding of our results of operations, by highlighting the underlying pre-tax profitability of our underwriting activities.