Good day and welcome to the First Quarter 2015 AXIS Capital Earnings Conference Call and Webcast. All participants will be in a listen-only mode. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Richard Gieryn, General Counsel and Corporate Secretary. Please go ahead.

Thank you, Emily and good morning ladies and gentlemen. I am Rick Gieryn, General Counsel for AXIS Capital. And 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, 2015. Our earnings press release and financial supplement were issued yesterday evening after the market closed. If you would like copies, please visit the Investor Information section of our Web site 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 Web site. A replay of the telephone conference will be available by dialing 877-344-7529 in the United States and the international number is 412-317-0088. The conference code for both replay dial-in numbers is 10062982. With me on today's call are Albert Benchimol, our President and CEO; and Joe Henry, our CFO. Before I turn the call over to Albert, I will remind everyone that the 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 U.S. Federal Securities law. Forward-looking statements contained in this presentation include, but are not limited to information regarding our estimate of losses related to catastrophes 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, our expectations regarding prices and other market conditions, and any merger related statements. There are important factors that could cause actual results, level of activity, performance or achievements to differ materially from the results level of activity, performance or achievements expressed or implied by…

Thanks, Rick, and good morning everyone. Thank you for joining us today. Last night, AXIS reported first quarter 2015 operating income of $136 million or $1.35 per diluted share, representing annualized operating ROE for the quarter of 10.3%, adjusting for charges relating to announced merger agreement with PartnerRe, the operating ROE would have been 10.8%. We ended the quarter with diluted book value per share of $51.97, an increase of 10% over the last year. Adjusted for dividends, diluted book value grew 3% during the quarter and 13% over the last 12 months. Gross premiums written in the quarter declined 4% on a constant currency basis to $1.7 billion. Our insurance segment gross premiums written were up 1% on a constant currency basis. Gross premiums written for our reinsurance segment declined 7% on a constant currency basis. Primarily driven by the impact of higher levels of multi-year premiums written last year on an annual premium production basis, consolidated gross premiums were essentially flat operation on a constant dollar basis. In a transitioning market, we continue to focus more on consolidating our position and improving portfolio construction and underwriting profitability, rather than pursuing aggressive growth in lines of markets that offer fewer attractive opportunities. Still, we continued to achieve meaningful growth within certain business areas that continue to show promise and where we can differentiate ourselves. Our accident for health unit continues to positively contribute the income and we remain excited about growth opportunities. In that regard we recently completed the acquisition of Ternian Insurance Group to establish an anchor for more comprehensive A&H retail distribution in the United States. Ternian is a leading provider of coverages in the U.S. voluntary group limited benefits market. As AXIS already were a large share of Ternian's A&H business we do not expect much immediate incremental revenue from the transaction with the exception of a small amount of incremental fee income but we are confident that was Ternian now part of the AXIS family growth in that segment will accelerate. We delivered solid underwriting results during the quarter with the consolidated combined ratio of 94.3. This reflects low catastrophe and weather related losses, ongoing favorable reserve developments and broadly diversified well constructed portfolio of risks. As well as, incremental expenses related to our merger with PartnerRe. Our top and bottom line results reflected our tactical responses to the market environments and importantly demonstrated progress on our targeted portfolio enhancements at operational excellence initiatives. These initiatives combine with our meaningful market presence, our technical expertise and our financial strength position us well to continue to deliver strong value proposition for all of our stakeholders. Joe Henry our CFO will now discuss our financial result from the quarter.

Thank you, Albert, and good morning, everyone. During the quarter we generated good results with an annualized operating ROE of 10.3%. Our quarterly diluted book value per common share increased by 2.6% to $51.97 per share. The growth in our diluted book value over the last 12 months was over 10%. When our dividends declared during last 12 months of $1.12 per share are added to the growth in book value, the total value created for our shareholders over the last 12 months was $5.96 per share or 13%. Our latest quarterly results benefited from strong investment results, continued favorable prior year development and our loss reserves, a quiet quarter of natural catastrophe weather-related losses and positive results from our weather and commodities business. These positive factors were partially offset by a decrease in written and earned premiums and an increase in our current accident year loss ratio. We also reported an increase in our general and administrative expenses which included approximately $7 million or $0.07 per diluted share of cost related to the planned amalgamation with PartnerRe Limited and approximately $5 million or $0.05 per share of incremental expenses related to our ongoing expense reduction initiatives. Overall our operating income was comparable to the first quarter of prior year. While our net income increased primarily due to large increases in foreign exchange gains driven by the impact of the continued depreciation of the U.S. dollar on our foreign denominated liabilities which was partially offset by realized losses on our investment portfolio which were also largely driven by foreign exchange market volatility. Moving into the details of our income statement. Our first quarter gross premiums written decreased by 8% -- 4% on a constant currency basis and were flat after adjusting for the impact of multi-year premiums to 1.7 billion…

Thank you Joe. Turning to market conditions, overall we are looking at environment that is bit more challenging than the last time we spoke. Across our insurance lines, we've seen overall pricing decline in the quarter led by reductions in property and certain specialty lines. Despite this, there remain attractive opportunities for profitable growth in many insurance lines of business and our production emphasizes those areas including casualty lines, certain targeted professional lines, and renewable energy among others. Our new business production was strong for the quarter and its quality consistent with that of our renewals. It reflects success on our various distribution initiatives and targeting of opportunities in the small E&O, aviation and renewable energy markets. The net of this was flat production in international markets and growth in our professional lines in U.S. divisions. We had lower production and credit and political risk, consistent with tightening spreads and a potentially more challenging credit outlook. Within our insurance segment, the overall AXIS insurance rate change for the first quarter of 2015, was minus 3% down from last quarter's minus 1% and down from the plus 1% achieved in first quarter of last year. This overall average rate change was primarily driven by short-tail lines and larger account that attract capacity. In our U.S. division, overall rate declined 4% of the quarter versus down 1% last quarter. The U.S. property market drove this reduction as it remains competitive reflecting a quiet wind season last year and the abundance of capacity in the market. Rate on cat-exposed accounts were under the most pressure. In U.S. casualty, market conditions are pointing to cresting in the market. Long-term indices indicate that rates are at a five-year peak and we're now seeing signs of accelerating competition. U.S. casualty rates are still very positive territory,…

Thank you. We will now begin the question-and-answer session. [Operator Instructions]. Our first question is from Cliff Gallant of Nomura. Please go ahead.

When I look at your combined ratio, excluding the impact of reserve releases, it looks like a 99.8 for the quarter, which is up over three points over the prior year quarter. And you've talked a lot about how things have changed, there is a lot of items at -- comparing the quarters it's not always apples-to-apples I realize, you talk of mix change as well. But I was wondering if you could give a little more detail discussing what would have caused that change, particularly when the catastrophe number seem to be similar for both quarters?

Sure let me start with the highlights and Joe I know will have some details to share with you. I think there are a couple of issues that go through that; one is, just the normal rate and trend that we embed in our lines of business on a regular basis. Number two, is that as Joe had mentioned earlier for a handful of lines of business, we've decided to take a somewhat more conservative approach to initial reserving this year and let me give you an example. Joe referred to agriculture where last year we were booking it in the early quarters of the pricing ratios whereas now we're simply booking it at a breakeven and frankly we have no more information today that we had at the first quarter of the last year, but we choose to book it at a higher level as a level of prudence. We are taking a more cautious approach to reserving both our credit and political risk book and some of our Latin-American surety book again in light of the economic environment that we're in, again we have no evidence that we need it. We just think that for the moment it is appropriate. So these are three areas Cliff where in the absence of actual client's activity we're just choosing to book a little more conservatively. So that will be one. The other issue is as Joe pointed out is that we did have higher mid-sized loss activity. And finally I would say that although the mix is fine and where it needs to be on the insurance side, there has been some technical changes in mix of business on the reinsurance side, we've been telling you now that property pricing on the reinsurance property in cat have been challenged over the last two years. As a result of that, and you will see this of course in our numbers, you'll see that earned premium on reinsurance cat and reinsurance property are smaller as a proportion of that book and other lines of business including motor are growing. And so clearly we think it's the right thing to do in a more challenging environment to reduce some of our premiums on the cat side; of course, in a no-claims quarter those who were willing to take on that cat business, potentially at less attractive rates still look good but we still think that right now that’s not the best transaction to pursue. So those are some of the things that have affected the portfolio going forward but I know that Joe has some specific metrics that he can share with you.

So Cliff; three things; first, let me work backwards and start with the expense ratio. Our expense ratio was up in the quarter to 18% as I said and if you'll focus on dollars term because I think that’s little important. Our expenses are at $163 million for the quarter, if you back out the merger related expensed of 6.6 million and what we're calling operational expense initiatives and that's IT sourcing as well as terminating some leases, these are steps that we're taking to improve our expense ratio on the long run that'll bring in down to about 16:7 in a ratio. We did get a benefit from foreign exchange in the first quarter on the expense side, so that's brings it up again. And then if you take out the volume impact the fact that we have lower earned premium, as we mentioned in the prepared remarks. You backed down to the low 16s which is frankly exactly where we thought it would be. And again if you normalize for those items on dollars, we're about the 156 million in expense which is very comparable to where we were a year ago. So, there is an aberration if you will in the expense ratio. Secondly, on acquisition costs while we are under pressure, no doubt about it both on the insurance and reinsurance side in terms of what I'll call gross commissions. We also were impacted by the fact of we've taken down prior year loss reserves in reinsurance and that has an impact of increasing our acquisition cost on loss sensitive features included within, certainly reinsurance treaties. So again, our acquisition cost are up a bit because of the fact that we've taken down prior year loss reserves but that's reflected if you will, in the current…

Our next question is from Charles Sebaski of BMO Capital. Please go ahead.

I guess the first question, Albert, I guess just sort of conceptually on your business, I know you can't talk about, the PRE deal per se. But the theory on that is kind of larger scale and how that plays out in the market going forward. And I guess, my thought is, if scale is important, how does that coincide with the capital management activities over the last few years. So if I look back, you guys have given back, getting upwards of $2 billion over the last three years of total capital management. If scale in RI was important, why not have held on to all that capital and deployed it into your business over the last three years?

That's a good question. I think the first thing is that when we talk about scale, the first thing that we need to do is recognize that, I do believe that scale is important, but I don’t believe the scale was determinant of our deals with PartnerRe, where we are as I mentioned in my prepared remarks, we’re already one of the larger midsize companies, we are not challenged by scale. So, if we were a $2 billion, $3 billion company, it would be a different story, but that’s not what we are. We’re already a well diversified, well establish company, we have years of having established relationships with our clients and our brokers, scale is not our problem. And so we continue to be I believe prudent users of capital and you can rest assure that to the extent that we could have used that capital to grow at attractive rates of return, we would have done so. We did not believe that it was in the best interest of our shareholders to pursue less attractive business simply to pile on premium. So I think what really matters is return on risk and market positioning, not whether you have $1 billion or $2 billion worth of incremental capital. So that I think should address the first thing. But with regards to the going back again, which I can’t repeat since it's relates to the original rationale for the transaction with Partner, is that our merger of equals was not simply about scale, it was about creating opportunities that we would not be able to create as a successful midsize company for a few more years yet, there were significant expense synergies that were available to us in this that would not simply be available if we grew a billion dollars of premium. There were market positioning that would be so much better and as much as we would now be very well established with the three-legged stool with very strong leading market positions in all three of our businesses. Scale for the scale itself is not a guarantee of success, what matters is how are you utilizing that scale? Hopefully that addresses your questions.

On that answer and the opportunity in the marketplace that you see through this combined entity, if we were to find ourselves two quarters from now and PRE shareholders in turn vote for EXOR. Does that not put you into a position of having to do something else?

Somehow the first-half of my question -- my answer didn’t seem to connect, I told you that we do not have a problem with scale as a standalone company. We’re already one of the largest….

No, I'm not talking about scale. I guess, I was asking about the market opportunity portion, not the scale portion. The market opportunity portion, the second part of your answer.

I think that both opportunities provide different sets of market opportunities. As both scenarios provide different sets of market opportunities, Charles I think we’re getting close to -- starting to talk about hypothetical scenarios around the transaction and I am advised that, we should change the topic.

Your next question is from Ryan Byrnes of Janney Capital. Please go ahead.

Just had a quick first question on the alternative returns. It kind of ran a good deal higher than I think that most of us were expecting and obviously it seem like it was a pretty quiet quarter for equities. Just trying to figure out what led to that strong performance there?

Ryan its Joe, we have within our alternative portfolio equity long-short hedge funds that performed very well during the quarter. We actually have four different funds that we invest in and two that was performed very well relative to the benchmarks. So it's simply outperformance by two of the four hedge funds within that asset class.

And then quickly -- obviously we went in pretty good detail there about the one timers from the cost synergies as well as the as well as the Partner stuff. Can you maybe help us out with the second quarter as well and maybe, I guess excluding the PartnerRe stuff, but how much on an absolute basis, we should expect from kind of restructuring charges and did those all run through the corporate expense line?

The second quarter of your question is, yes, they run through the corporate expense line. But, the integration of the merger is expected to take place over several quarters; I'm not going to get into predicting what our expense level is going to be relative to merger related expenses but let's just say that the integration as Albert mentioned is progressing we're in full tilt and we would expect to continue on that pace throughout the second quarter and probably into the third.

Our next question is from Jay Cohen of Bank of America Merrill Lynch. Please go ahead.

Yes, I just wanted to drill down a little bit on the insurance accident year loss ratio, excluding cats. Joe, as you mentioned, up from the last several quarters and there were some issues that you highlighted. I guess my question is when you look at the last three quarters you got two really good quarters. This one was less good, would you lead us to a number that might be a normalized one. In other words, should we think about the second half of last year is pretty reasonable as a starting point or is the first quarter more of a reasonable number or likely somewhere in the middle?

Yes Jay I think we mentioned in Q4 that we had an extraordinary performance within insurance on an accident year basis, so I would necessarily say continue with the extrapolation of the fourth quarter of last year. But I do think the first quarter of this was high. We had as I mentioned two fairly large marine losses and two other losses in other lines of business. So it was a higher quarter than normal in terms of mid-sized losses for us. So I think my answer would be to lien you more towards the middle.

And then I guess Albert, your comment on capital management looking forward, the desire to basically use up the earnings with buybacks and dividends. Just to remember you saying that, recently post to PartnerRe deal. Is that new information or was that consistent with what you've been saying?

My recollection Jay is that it’s consistent with what we’ve been saying. Look, the fundamental issue with us -- with our capital is that if we have an opportunity to use that capital profitably to grow that is always our first choice. On the other hand if we don’t like the opportunities in front of us then rather than keep the capital we will give it back to you. It’s the two things that have happened to us over the last couple of years with regards to our portfolio to our capital management is that we found less opportunities if you would in growth on the cat side which is very cat intensive but on the other hand as we’ve discussed with you the shift in our portfolio mix made us much more capital efficient. And as a result of the diversification benefit of the more balanced portfolio we were able to grow over the last two years and still return the capital back to our shareholders. So we felt that that was the right call to make from a capital efficiency perspective. When we announced our merger of equals with Partner in January, what we did say was that -- we expect it to have both expense synergies and capital synergies in the combined company and although both companies had suspended their share repurchase program ahead of the closing of the merger but was it the expectation of both companies that post the merger we would give that accumulative capital. So it remains our intent given where we see the world today, it still remains our intent post the close to take the accumulative earnings between now and the close and add them to our stock repurchase budgets as we move forward post the close, I believe that was always consistent.

Our next question is from Meyer Shields of KBW. Please go ahead.

Also to focus on the insurance segment. With regards to the higher initial expected loss ratio picks, I guess two questions on whether that's quantifiable at all? And how long the tails of the associated lines of business are, so that if it proves that you're too conservative when will we know that?

I think that there are -- it depends by line. So I think with regard to the picks, we’re already reflecting lower picks in our professional lines reflecting what I consider to have been excellent work that has been done by our professional lines team and repositioning our U.S. D&O portfolio and we’ve seen a lot of progress and by the way we expect to continue to see further progress in that area. The area where we've decided to be more conservative on the insurance side certainly in the credit and political risk area as the economy improves, as we see these projects pay down, as we see different thing, we may decide that we will book these lower. My guess is a year or two to be safe, just to make sure that we put this behind us. And by the way if you look at the tail of our portfolio and our credit risk solutions part of what we call our credit, political risk unit, it's not a long tail book, I mean it's got an average tail of a little over three year. So there is a relatively rapid reduction in the outstandings. And so as long as projects evolve and continue to pay down an increase of their debt coverages, we can see that relatively quickly. I think that those will be the areas, I think as you know our general reserving philosophy is that for longer tail lines, we are going to be more prudent in the midpoint. But those are going to take a little longer, because one of the reasons we increase reserves above the midpoint is because we know that they're are longer tail lines and it takes some time to get some visibility.

There was a little bit of accident year strengthening also -- prior year strengthening in a few lines in insurance, and I was hoping you could talk about which accident years were contributing to that?

I think there were couple of things, right Joe?

There are -- there is one liability claim is it 2006 -- we’ll look that up for that in a second, I am sorry 2008.

And then just lastly, was there material foreign exchange impact on the fixed maturities investment income?

Yes, it was about $80 million which flows through most of our equity. If you look at foreign exchange across the whole -- whole financial statements the net impact to our results was about $35 million hit.

That's $35 million to equity, not to the earnings?

Correct, the earnings benefit was about $71 million in total.

Are you referring to the absolute dollars of net investment income that we’re reporting?

Yes.

We’ll have to go back to that, I don’t think it was a major number. We’ll get back to you on that.

[Operator Instructions]. So no additional questions. This concludes the question-and-answer session. I’d like to turn the conference back over to Albert Benchimol for any closing remarks.

Thank you very much and thank you for your presence and for your questions. I am sure that many of you have additional questions and I can assure you that Linda will do an excellent job of responding to those. So if any of you have additional questions, please feel free to call Linda Ventresca to 212-500-7620. And we look forward to speaking with you soon. Bye, bye.

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