Good morning and welcome to the First Quarter 2013 AXIS Capital Earnings Call. All participants will be in listen-only mode. (Operator Instructions) After today’s presentation, there will be an opportunity to ask questions. (Operator Instructions) Please note this event is being recorded and now, I would now like to turn the conference over to Linda Ventresca. Please go ahead.

Thank you, Amy and good morning, ladies and gentlemen. I am happy to welcome you to our conference call to discuss the financial results for AXIS Capital for the first quarter ended March, 31, 2013. Our earnings press release and financial supplements were issued yesterday evening after the market closed. If you would like copies, please visit the Investor Information section of our website, www.axiscapital.com. We set aside an hour for today’s call, which is also available as an audio webcast through the Investor Information section of our website. A replay of the teleconference will be available by dialing 877-344-7529 in the US. The international dial-in number is 412-317-0088. The conference code for both replay dial-in numbers is 10026491. With me on today’s call are Albert Benchimol, our President and CEO; and Joseph Henry, our CFO. Before I turn the call over to Albert, I will remind everyone that statements made during this call including the question-and-answer session, which are not historical facts may be forward-looking statements within the meaning of the US Federal Securities laws. Forward-looking statements contained in this presentation include, but are not necessarily limited to, information regarding our estimates of losses related to catastrophes, policies, and other loss events, general economic, capital and credit market conditions, future growth prospects, financial results and capital management initiatives, evaluation of losses and loss reserves, investment strategies, investment portfolio and market performance, impact to the marketplace with respect to changes in pricing models, and our expectations regarding pricing and other market conditions. These statements involve risks, uncertainties, and assumptions, which could cause actual results to differ materially from expectations. For a discussion of these matters, please refer to the Risk Factors section in our most recent Form 10-K 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. In addition, this presentation contains information regarding operating income and our consolidated underwriting income, which are non-GAAP financial measures within the meaning of the US Federal Securities laws. For a reconciliation of these items to the most directly comparable GAAP financial measures, please refer to our press release, which can be found on our website. With that, I’d like to turn the call over to Albert.

Thanks, Linda, and good morning, ladies and gentlemen. Thank you for joining us today. Last night, we reported a very good first quarter. Both insurance and reinsurance segments delivered strong and diversified premium growth, with consolidated gross premiums written up 15%. Both also contributed solid underwriting profits, with a consolidated combined ratio of 83%. We generated strong accident year results in the absence of meaningful catastrophe or weather activity, and continued to see favorable reserve development from prior years benefiting our results. Operating income for the quarter was $227 million or $1.92 per diluted share, and our operating ROE for the quarter was 17.1%. We ended the quarter with record book – diluted book value per share of $44.67, an increase of 4% from year-end 2012 and 13% growth over the last 12 months. That aside, I believe we’re also making meaningful progress in improving our risk-adjusted returns through portfolio diversification and optimization activities as can be seen in the evolution of our business mix. I’ll discuss market conditions in more detail following Joe’s remarks. And with that, I’ll turn over the call to Joe.

Thank you, Albert, and good morning, everyone. We produced strong results this quarter, generating underwriting income of $171 million and solid returns from our investment portfolio, producing an annualized 22.7% return on average common equity and operating ROE of 17.1%. Our diluted book value per common share increased by $1.70 or 4% during the quarter. On the underwriting side we benefited from a quite catastrophe and weather environment, and the continued recognition of net favorable prior-year reserve development this quarter. In addition, while the low interest rate environment continues to plague investment returns for the entire industry, our alternative investments contributed significantly to our income this quarter. Moving into the details of the income statement our first quarter gross premiums written were up 15% to more than $1.7 billion, reflective of similar growth rates in each of our segments. In reinsurance, our top line was up $149 million. Agriculture contributed $73 million of this growth as we initiated this new strategic global business. Most of this business related to US exposures but we also expanded in Asia and with much of this business binding later than usual this year, based upon what we know today, we expect to recognize at least another $50 million of new written premium for agriculture in the second quarter. In agriculture, we created a center of excellence that can be consultative and value-added proceedings facing an increasingly complex environment. Outside of our agriculture initiative, remaining growth was largely driven by the expansion of our Continental European reinsurance business at the key 1/1 renewal date. We expanded our European cat portfolio as well as our mode of business where we see positive developments in the UK market. Foreign exchange also contributed favorably in this line. In the US, we’ve seen restructurings of a number of launched…

Thank you, Joe. While the nature of our business is such that predictions above the future or fought with risks, we are nevertheless cautiously optimistic about improving fundamentals in many parts of our business. We continue to be encouraged by the overall trends in pricing and market conditions that have continued into 2013. Within our insurance segment, the overall access insurance rate change for the first quarter of 2013 stands at plus 5%, up from the plus 4% last quarter and the plus 3% in the first quarter of last year. Rates are continuing to increase across most classes and geographies other than a few notable exceptions. In our US division which is dominated by wholesale E&S property and casualty business, continues to show the strongest rate improvement. Overall, rate change this quarter was plus 9%, in line with last quarter. For the property classes in this division, this is the eighth consecutive quarter of rate increases. While rate increases averaged about 10% last year, they were in the high single-digits by the fourth quarter. And in the first quarter of this year, we see them in the mid to high single-digit range. So as we enter our third year of increases, which by the way is something rarely seen in our careers, we’re seeing a modest slowdown in the scale of increases but the trend remains uniformly positive. The strongest increases remain in accounts with the recent loss activity, winter flood concerns, or accumulation issues within specific geographic regions. Casualty business in the US division, which is primarily E&S business umbrella continue to show the double-digit rate increases that commenced in the second quarter of 2011. Premium increases are occurring across primary, buffer and excess layers. The largest increases are naturally associated with the tougher classes. Overall in the…

Thank you. (Operator Instructions) Our first question comes from Vinay Misquith at Evercore. Vinay Misquith – Evercore: Hi. Good morning and congratulations on a great quarter. The first question is on the accident year margins. Historically, I believe AXIS used to put a very high loss ratio in the first quarter and lower that as the quarters went by. Has that changed now because you’ve changed your regional programs?

Yes, Vinay. It’s Joe. As I mentioned in my prepared remarks, there are really the two reasons for that, the Midwest aggregate contracts that we’re mostly out of and the changes in our insurance MGA programs. So we felt – as I said, we felt much more comfortable that with them behind us, if we had a favorable experience in the quarter, we recognize that in the quarter. So yes, you’re correct. Vinay Misquith – Evercore: Okay, that’s helpful. The second question is really on margin improvement if you look at it year-over-year. Primary insurance, plus 5, reinsurance getting the underlying rates from the primary insurers. How much of margin expansion should we expect this year versus last year?

You know, Vinay, it’s difficult on the insurance side. We’ve really got three different things going on. We’ve got improvements in our property and casualty lines. And those rate increases are being earned through and they are in excess of trends. So we’re seeing improvements in the combined ratios in those businesses. As Albert mentioned in professional lines, our rate increases have just started to increase. So we haven’t really seen the full benefit of earning through of those rate increases yet. And then, we’ve got a third set of lines like terrorism and aviation, where we’ve had continued pressure on rates. However, our returns are good in those lines of business. So we’ve got really three different things going on. So I’d say on balance, we haven’t really reflected much in our loss ratio or combined ratio from rate increases in the past couple of years. However, we expect to have that earned through as we go through in 2013 and 2014. And probably, we’ll expect to see a two-point improvement in our loss ratios in insurance. Go ahead. I’m sorry. Vinay Misquith – Evercore: No, no. That’s helpful. Thank you very much.

Okay.

Our next question comes from Mickey Nannizzi at Goldman Sachs. Mickey Nannizzi – Goldman Sachs: Yes. This is Mickey. Hi. Thanks for taking the call.

Good morning, Mickey. Mickey Nannizzi – Goldman Sachs: Good morning, good morning. Just a couple of questions actually if you don’t mind. On deployment, I think I remember and I think I got this right, last quarter you said 50% to 100% of deployment and that 2014 would be at the low end of that range. So now, we’re here, you’re back up to 100%. What is the outlook next year? Is that different?

Yes. I think what we – obviously always a little cautious at the beginning of the year when you look at it. When you’re trying to balance the opportunities as well as the growth in capital, I think we have – the way we’re looking at our book of business this year, we see ourselves now more comfortable aiming towards especially returning all of our earnings in the form of our normal dividends plus share buybacks. With regard to 2014, I think again, it’s a little early to give any guidance or thoughts on that. We’re very enthusiastic here at AXIS about our opportunities to take advantage at market opportunities and if they’re out there, we’ll do it. If they aren’t, we’ll be just as happy to give the shareholders the capital back. Mickey Nannizzi – Goldman Sachs: Great. Thanks. And I guess because it look like the way I was thinking about it after first quarter was that you would see more opportunities potentially to grow in some of the more capital intensive ones. It looks like you grew in some property cat. So that actually maybe a little bit more than I expected and then I’m just trying to reconcile that with the outlook. It’s really just that kind of being very conservative even more so at the beginning of the year and even though you have more property cat right, did you still feel good about kind of extending that level of deployment?

It’s a good question, and I think it has to do with efficient use of capital. And I think that one of the things that I’m especially pleased about with regards to the production this quarter is if you look at it, it’s all in diversifying business. We did not add the peak zones. We added new types of risks, added new geographies. And so that allows us to make more efficient use of our capital and obviously that continues to move us forward and what we have been telling you is our short term strategy, which is to add balance and diversification and overall reduce the volatility of earnings. All of that means that we can use our capital more efficiently and to the extent that we can use our capital more efficiently. Again, we’re happy to give all the excess back to our shareholders. Mickey Nannizzi – Goldman Sachs: Very logical answer. That makes a lot of sense. Thank you. And then just one if I could. Just on crop, I mean, I guess, I notice we’re seeing a lot of folks building out crop reinsurance businesses and the delta is from 1Q 2012 to now and a lot of cases are really significant. How do you think about or how should we think about whether or not – and then some of the insurers are talking about really holding the line firm on rate. How do we screw all that to make sure that the margins, the new are kind of really growing reinsurers, are securing our substantial enough for the risks they’re taking?

Well, I think at the end of the day, I don’t see that the ag business is any different from any other business which is you need to distinguish naïve capacity from professional experts. And we started by getting some of the best minds in the agriculture reinsurance business and trying to build not simply a capacity provider but rather a partnership with people who need both consistent capacity on the one hand, and assistance in designing, modeling products and portfolios. So when you look at our business, frankly we did not do that much of it last year altogether around $14 million for the full year of losses. Once we brought on our team last summer, we can – we reengaged with a number of these relationships. And today, we have increased both on the quarter share and some growth on the excess and loss. I think in terms of pricing, pricing fundamentally for the bulk of the business has been stable. Especially again for those users of reinsurance that are – the strategic dependents on capacity, there’s been a handful of opportunistic quarter shares that were able to be done at very good prices and good for those seasons. We do not participate in those. What we are really looking for are partnerships with individuals who need capacity every year, good year, bad year, and who are willing to share, if you would, the economics with us. So on quarter share, I would say generally stable terms. On excess of loss, clearly, meaningful increases in pricing. In some cases, 60%-plus for those areas of the country that were affected last year. Mickey Nannizzi – Goldman Sachs: Very much appreciate the thoughtful answers, Albert. Thank you.

Our next question comes from Arash Soleimani at KBW. Arash Soleimani – KBW: Hi. Thanks. Just a couple of quick questions. First, in terms of accident and health growth, to what extent do you expect that to benefit the expense ratio going forward?

Well, it’s a good question. I think just to put the frame of A&H back in context, I think it’s very important. As we’ve said all along, the A&H initiative was a multi-year program to establish a global platform. And what we said all along was that we think it’ll take us an earned premium base of about $300 million to be able to spread our expenses over the premium base and achieve a combined ratio below 100. And our target is to achieve that in a positive contribution to our bottom line in 2014. So that’s – that plan is on and that’s still something that we’re aiming for and certainly, our 30% growth this quarter highlighted by very good production in the US reinsurance business makes us feel very good about that. What I’ve said all along is that I’m actually quite satisfied with the technical ratio of our A&H business. In fact, our technical ratio which is the loss plus the acquisition expense. That’s improved another couple of points this quarter over last year’s first quarter. The real issue here is getting the expenses global platform to be served by the marginal return. And again, in this quarter, we got another two-point reduction in the G&A ratio year-over-year. So we’re making the progress that we want to see in terms of getting this combined ratio down to below 100% and making positive contributions. There’s no question that in 2013, A&H will be net-net a drag on earnings but it could be because it’ll be a combined ratio above 100%. But that’s consistent with our plan. That’s consistent with our expectations. And in my mind, we’re still on line to make a positive contribution in 2014. Arash Soleimani – KBW: Thanks. That’s very helpful and just one follow-up question. In terms of the recent departure of the AIG Executive, (inaudible), I was just curious if you have any thoughts on that, if it has any implications for the market?

Well, I think that’s reasonably be announced. I think we’ll see what that means but fundamentally, we’ve – let’s just take one step back. We’ve been competing with 1,000-pound gorillas from the first day we were born. Arash Soleimani – KBW: Right.

Sometimes they have one name and sometimes, they have a different name. This is a business where you need to distinguish yourselves by the quality of the service, your expertise, and your risk selection. Whoever is in the market, that’s still going to be what matters, the quality of our service, our people, our risk selection, and we will continue to compete on that basis. Arash Soleimani – KBW: That’s great. Thanks. It’s very helpful. That’s all for me.

Our next question comes from Dan Farrell of Sterne, Agee. Dan Farrell – Sterne Agee: Hi and good morning.

Good morning, Dan. Dan Farrell – Sterne Agee: Just a quick question, I was wondering if you could expand a little bit more on the trends that you’re seeing in UK Motor? I know you said that you saw some favorable things going on there, maybe just add a little more to that?

Sure. And again, the UK Motor probably needs to be separated into the quota share and the excess of loss market because there’s been a lot of volatility around that. Fundamentally, this is a business which continues to improve. So we are happy to participate on a quota share basis and we have grown that business. Most of the growth that you saw in the first quarter was there. We historically were a meaningful player in the excess of loss market in the UK. Although as you know, a few years ago, there’s been some developments in court award moving towards PPO and periodic payment orders, which essentially kept the liability open for the life of the injured party. We were very concerned by that because obviously, it extended the tail and the uncertainty of that risk. And so we made significant cutbacks in our participation in the excess of loss motor business. However, we also felt that we should find a way to help our clients. And so we worked very hard to try and create new structures where we could provide the capacity that our clients needed, but in a way that made sense for us. And so we worked very closely with our clients, with the industry and developed a commutation clause that basically said we will work with you, we will provide with you capacity, but we would like to be taken out of our liability by the 10th year as opposed to having essentially unlimited tail. A lot of people said, no, the market is good enough. We can keep riding on those bases and so obviously, we were not able to support them. But a small percentage of the market said, yes, we’re prepared to work on that basis. And so I would say that perhaps less than 10% of the UK excess of loss motor market have these what I would call commutation clauses. And within that segment, we’re actually a meaningful player. So we have found a way through a creative product structure to re-enter the UK market in a way that makes sense for us. Dan Farrell – Sterne Agee: Okay. That’s helpful detail. Thank you.

Our next question comes from Ryan Byrnes at Janney. Ryan Byrnes – Janney: Hey. Good morning, everybody.

Good morning.

Good morning, Ryan. Ryan Byrnes – Janney: Hey. Just quickly, one clarification question on the capital management. Is it net income or operating income that you guys gauge your – I guess the kind of payout ratio off of?

We usually think of it as operating income. But I got to tell you, there’s no formula here. So we look at our capital. We could be a little less. It could be a little bit more. I would – there could be an opportunity to make – to buy a large chunk and we would do that. I wouldn’t think of it as that formulaic. But if you needed something, I would use operating income as a model. Ryan Byrnes – Janney: Okay, great. Thank you. And then my other question was with the repositioning of I guess more of the US prop set book kind of trying to take on more homeowners type of risk, just want to see I guess how you guys are viewing I guess the midyear renewals? And will you be able to kind of get the shift to more homeowners fold in place by this year? Is it a multi-year type event? I just want to see how you guys use I guess the homeowners prop cat market right now.

Well, I think I shared with you in my prepared remarks we think that for the strategic large buyers, I think there’s going to be some consistency in the business. I think that it is likely that the Florida-dominated domestic market is probably going to see some price reductions although I think people need to recall that this is probably the best price to reinsurance business, and even after the adjustments that people are contemplating. It should continue to be a very, very good business. And of course, as you know, we’re seeing a lot more of capital markets participation and all of that. So going back to us, on the Florida business, the Florida domestic business is literally less than 1% of our expiring premium. So it’s not a major part of our business. We will continue to participate in that. Obviously, we don’t see huge opportunities to increase still under the conditions that we have today, so be it. With regard to the shift between personal lines and commercial lines, if there’s one thing that we know is that relationships matter and you want to work with your clients and we will work with our clients to make sure that as we transition our book of business, we do so in a way that gives our clients a fair amount of foresight and allows them to manage around that. So we’re not going to shut down our commercial catastrophe reinsurance business but we will gradually move it over time. It is not a 2013 target for 100%. You’ll see more progress being made in 2013, more so being made in 2014 and so on. But gradually, the trend will be absolute. Ryan Byrnes – Janney: Great. Thanks for the answer guys.

The next question comes from Charles Sebaski at BMO Capital Markets. Charles Sebaski – BMO Capital Markets: Good morning. Thanks for taking my call.

Good morning.

Good morning. Charles Sebaski – BMO Capital Markets: I just, one follow-up and I don’t know if you guys provided this was – in the growth on the agriculture business, if you gave a breakdown between how much came in the excess of loss versus the proportional.

We didn’t give the exact breakdown but most of it was quarter share. Charles Sebaski – BMO Capital Markets: Okay. Excellent. And then I just wondered about if there’s any additional color on I think you said, Jo, that you increased your exposure on European cat at the 1/1 period. I’m wondering on what scale that is or what kind of PML change you’d be seeing on that exposure shift?

What we did is we did participate a little bit more. I think we were $20 million more of European cat business last year. But in terms of scale, you can see in our P&L schedule in the financial supplement that, just bear with me as I pull that out. There was a bigger increase in the lower layer. So we did participate in some of the lower layers but we shifted that portfolio again to try and optimize it. We took down some of the upper layers. We replaced that with some capacity on the lower layers. Charles Sebaski – BMO Capital Markets: Okay.

But this continues to be certainly well within our idea of a balanced global cat portfolio. Charles Sebaski – BMO Capital Markets: Okay, great. That’s all I had.

Our next question comes from Ray Iardella at Macquarie. Ray Iardella – Macquarie: Thanks and good morning. I was wondering if you can provide a little bit more color on the insurance liability and professional liability. I think you had mentioned in the prepared remarks, you had increased some case reserves. Just curious what you’re seeing in those books of business.

Yes. Ray, for the most part, we had a couple of claims, case reserve changes on during the accident years, 2005 and 2008 in particular. And we just decided to get a little bit more conservative with IBNR. However as you know, we’ve been releasing IBNR from professional lines for other accident years. So they’re really kind of netted against each other. We don’t see it as a trend. We see it as an unusual situation. Obviously, we’re going to keep an eye on it but I really wouldn’t draw any particular attention to it. Ray Iardella – Macquarie: Okay. And then on the liability side of the...

Yes. Again, the same thing there. We had two claims and we just decided to strengthen reserves in that line of business. As you know in the fourth quarter, we started a liability reserve release program for insurance. We just frankly sat on that in the first quarter and recognized the additional case reserve development we had on a few claims. So again, just a few case reserves – some case reserve activity in two lines in the first quarter which will monitor – we just decided to take a conservative look and strengthen reserves in both lines. Ray Iardella – Macquarie: Okay, that’s helpful. Thanks again.

Welcome.

Our next question from Ian Gutterman at Adage. Ian Gutterman – Adage: Hi, guys. Albert, I guess my first question is there’s been stories in the trade press that you guys have looked at some more syndicates and obviously, that was a big taboo prior till you joined the company. I just was wondering if you could talk about your interest in Lloyd’s and how you think about acquisitions.

That’s a very wide range of question, Ian. Let’s talk about acquisitions and Lloyd’s in particular. Fundamentally, I like what we have here. I think we’ve got the right people. We’ve got the right offices. We’ve got the right resources. This company has no need for what I would call transformational M&A. We have been very public about the fact that we would gladly look at opportunistic bolt-on acquisitions that will advance one or the other of our initiatives. And as a matter of practice, I try to show Linda everything that’s in the market. So I wouldn’t read into the fact that we want to see everything that’s in the market as anything other than just being on top of development. With regard to Lloyd’s in particular, we are of the belief that Lloyd’s is a particular and unique environment not so much because of the business that is there, because the business that is there is business that fundamentally we have access to through our London market. But the issue is that it does also provide access to a number of jurisdictions, and that is a positive for us. So we are in fact exploring whether or not Lloyd’s makes sense for us as an additional vehicle, as an additional, if you would, licensed piece of paper to allow us to expand in our international expansion. But with regard to the book of business at Lloyd’s itself, there was actually very little that we would be going after within the Lloyd’s market. We already service the US market locally and we think that’s a better way to service it. With regard to the international wholesale line, we obviously – one of our flagship offices is our London specialty lines office. We already get that. We already accessed the Canadian market, the Australian market locally. We have – we accessed the Asian markets through our Singapore branch. So we’re not looking to simply to go in and steal business from Lloyd’s, we’re looking to use the Lloyd’s platform as an opportunity to expand internationally. Ian Gutterman – Adage: Great. That’s very helpful actually. My other one is on your comments about diversifying the cat book and obviously from a capital standpoint, that’s a healthy thing to do. I guess my question is can you talk a little bit more about how you avoid the sort of diversification aspect right where – we’ve seen a number of sort of lesser cat companies over the years follow that strategy and put themselves out of existence because they diversify into lower return areas. So can you just talk about how you’re confident you’re getting high enough returns in the areas that aren’t peak zones?

That’s very important and in fact, I think the issue that we have is if you were to talk to our reinsurance people from AIG, one of the things that you’re going to be hearing over and over again is return on risk, return on risk, return on risk. It really is about are we getting paid for the risk? How does this risk fit in the overall portfolio? There’s a real focus and you’ve seen the results of that. I mean, when you think about the shift in our portfolio over the last 18 months or so. There is no question that that has been driven by our desire to have a more balanced, more capital efficient ultimately more profitable portfolio. Ian Gutterman – Adage: Okay, great. And then as a one quick numbers question, just to make sure I got all the puts and takes on the reserve development. I mean and I know every quarter there is always things that maybe are a little non-repeating. But the $54 million reported, you had the $16 million sort of new thing from releasing liability which is offset by the $16 million that went the other way. And then there was a $30 million adverse development on cat. So it’s sort of $84 million the right way to think of the quarter – releases this quarter because that will be a pretty strong number compared with what you traditionally seeing.

I would never annualize any reserve release number. Ian Gutterman – Adage: No, right, right, right. But I’m just trying to get a sense of what was there, is there an inference that reserve releases were maybe stronger than trend in this quarter on a quarterly basis?

Ian, all I want you to take away from this is that we are very comfortable with the totality of our reserves. Ian Gutterman – Adage: Great. got it. Thank you guys.

(Operator Instructions) At this time, there are no further questions. And I would like to turn the conference back over to management for any closing remarks.

Thank you very much operator and thank you all for participating in our quarterly conference call. As you know, there has been much happening at AXIS over the last little while and we look forward to spending more time explaining it to you and discussing it with you. And as a result of that, we did schedule an Investor Day in New York on June 12 and certainly invites all of you who are interested to participate. If you haven’t already been reached, please feel free to call Linda Ventresca and we’ll make sure that you have all the details of our Investor Day on June 12 in New York. Thank you all. Good bye.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.