Good day. And welcome to the AXIS Capital Second Quarter 2017 Earnings Conference 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. I would now like to turn the conference over to Linda Ventresca of Investor Relations. Please go ahead.

Thank you, Alison, and good morning, ladies and gentlemen. I'm happy to welcome you to our conference call to discuss the financial results for AXIS Capital for the second quarter ended June 30, 2017. Our earnings press release and financial supplement were issued yesterday evening after the market close. 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 United States and the international number is 412-317-0088. The conference code for both replay dial-in numbers is 10109593. 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 fact, may be forward-looking statements. Forward-looking statements involve risks, uncertainties and assumptions. Actual events or results may differ materially from those projected in the forward-looking statements due to a variety of factors, including the risk factors set forth in AXIS's most recent report on Form 10-K filed with the SEC on February 17, 2017, as well as the additional risks identified in the cautionary note regarding forward-looking statements in our current report on Form 8-K filed with the SEC on July 6, 2017. We undertake no obligation to update or revise publicly any forward-looking statements. In addition, this presentation may contain non-GAAP financial measures. Reconciliations are included in our earnings press release and financial supplement, which can be found on the Investor Information section of our website. With that, I'd like to turn the call over to Albert.

Thank you, Linda. Good morning, everyone, and thank you for joining us today. In the second we continue to take tangible actions and made strong progress in advancing our strategy to build long-term profitable growth for AXIS. We continue to enhance the AXIS franchise, investing key areas like data and analytics, and in recruiting top talent, and we further grew scale and relevance in important markets. Last night, AXIS, reported second quarter operating income of $1.31 per diluted share and operating ROE of 8.6%. We ended the quarter with diluted book value per share of $60.45. Growth in diluted book value per share adjusted for dividends, which we believe is the best measure of value creation was up 3% in the quarter. Joe will shortly review the financial results in more detail, but before that, I would like to touch on a few highlights. Operating results improved significantly over the 2016 quarter due largely to lower catastrophe and weather-related events, but we also saw improvements in other line items. Adjusting for catastrophe and large weather losses, our ex-cat accident share loss ratio was up by less than a 0.5 point. To put things in perspective, the ongoing impact of the Ogden rate adjustment in the U.K. contributed a 0.5 point to the quarterly loss ratio. Thus, our ongoing portfolio enhancement activities allowed us to absorb both adverse rate and trend, and a higher frequency of property losses. The Ogden rate impact should dissipate by next year, and assuming loss frequency and property normalizes, we should see corresponding improvements in underlying results. Therefore, I am confident that further progress in underwriting results is achievable. We are starting to see improvements in our G&A ratio year-over-year, reflecting the efforts we have discussed with you in prior quarters. And our partnerships with strategic…

Thank you, Albert, and good morning, everyone. During the quarter we generated good results featuring net income of $85 million and an annualized ROE of 6.7%. Our non-GAAP operating income for the quarter was $110 million and annualized non-GAAP operating ROE was 8.6%. Our net income this quarter benefited from continued good underwriting performance, a lower level of catastrophe and weather-related losses, continued favorable prior year reserve development and strong investment income. During the quarter we closed on our acquisition of Aviabel, a premier insurer and reinsurer of aviation in the smaller general aviation arena and we recognized an associated bargain purchase gain. The bargain purchase gain is excluded from non-GAAP operating income. These positive factors were partially offset by a slight increase in our current accident year loss ratio, ex-cat and whether, and foreign exchange losses. The growth in book value per share in the quarter to $60.45 was driven by net income generated in the quarter, together with an increase in unrealized gains on our investment portfolio, which primarily reflected the tightening of credit spreads, strong equity market performance and the strengthening of the pound sterling and euro against the U.S. dollar, partially offset by common share dividends declared. Moving into the details of the income statement, our second quarter gross premiums written increased by 3%, with an increase in both, our reinsurance and insurance segments. Our reinsurance segment reported an increase of $30 million or 6% in gross premiums written in the second quarter of 2017, compared to the same period in 2016. The increase was primarily driven by our motor, catastrophe and property lines, partially offset by a decrease in our agricultural lines. The increase in our motor lines was largely due to timing differences as the renewal of several treaties was delayed to assess the…

Thank you, Joe. Turning to industry conditions, the state of competition in most of our market remains challenging. We do observe that rate reductions are less than what we've seen in the past few years, but they remain reductions nonetheless. In our insurance business, renewal rates were down 1% on average. This compares to minus 3.3% last year at this time. Encouragingly, about 53% of our insurance premium renewed flat to up in the quarter and this compares to 41% last year. But, of course, this is still not enough. In our international division, which had been the most competitive in recent quarters, the pace of average reductions has cut in half and we're seeing a growing number of renewals coming in flat or with modest increases. Within the U.S. property and casualty marketplace, rates are up 1% on average, reflecting reductions in property and increases in casualty. We would not, however, that in many cases the increases we see in casualty are not sufficient in some of the toughest classes. Some carriers are still reducing rates on difficult classes that have experienced increased loss severity. Trends in U.S. professional lines are similar to prior quarters, with flat or modestly declining rates in primary layers, with increasing reductions as you go up coverage [ph] dollars (18:50), E&O lines are generally better priced than D&O. Within this market, we have taken what we believe to be the right actions, reducing writings in less promising lines, what targeting growth in those lines still offering appropriate returns. We are pleased with our growth in attractive lines such as accident and health, cyber, E&S, property and casualty and renewable energy. Moving on to reinsurance, competition abounds across most of our major lines of business. We were encouraged early in the quarter by indications of…

Thank you. [Operator Instructions] And our first question will come from Elyse Greenspan of Wells Fargo. Please go ahead.

Hi. Good morning. My first question, so in some of your commentary on, Albert, it seems like you guys were existing in some liability reinsurance business. I thought last year you guys have written some multiyear covers, which is seems the business wasn’t down as much as I would spot. Are there still multiyear covers that you are writing or is it just not the appropriate comparison?

No. There is no doubt that in the past we have written more multiyear covers, and frankly, as you know that strategy has helped us, because we were able to maintain pricing for multiple years and sustain pricing in second years and third years of treaties, while the market was actually going down. So it was the right strategy for us and it actually protects the profitability. There are a handful of multiyear trees occurring this year, but significantly less than we wrote in prior years.

Okay. And then, based on your market commentary, it seem like things are maybe getting very modestly better on the margin, I am talking about the primary insurance market. I think some folks are saying maybe we are getting towards the bottoming. I mean, how would you kind of put it altogether. Do you think we are getting closer to kind of seeing an inflections point on the primary insurance side or just on the margin maybe just a little better than last quarter?

I think, it’s wonderful to take comfort that price reductions are 1% instead of 3%, but that’s still not good enough really. We -- and there's real reason, frankly, for the market to be more disciplined and its pricing -- and increases pricing. So we certainly observe the trends, but put us front of the line and saying that absolutely not enough.

Okay. And then a couple numbers questions, the acquisition costs seem to have picked up in the quarter really in the insurance segment and the ratio obviously as a result. Is that something that we should be modeling going forward?

So, Elyse, it’s Joe, just couple comments, on insurance the acquisition costs are up 2.4 points. As I said in my commentary, some of that was driven by profit commissions and usually high level of profit commissions in the quarter on our accident and health business. But on the insurance side I’ll admit there is pressure with respect to base rates or as we call variable rates. So there is some pressure. I’d just say our acquisition costs are little bit higher than normal because of the profit commissions I’d referred to. Secondly, I want to point on the reinsurance side, gross acquisition costs are actually down in the quarter. There is a little bit of an offset because of the mix of business that that show -- that reflects a slight increased two-tenths of a point of an increase, but that's really due to mix, not necessarily acquisition costs. So our reinsurance teams are experiencing actually acquisition costs which have stabilized or in some cases have gone down.

Okay. And then in terms G&A, the total kind of G&A costs were about just under $150 million in the quarter. I think, Albert, that was kind of the level you had pointed to last quarter as more or less the go forward expense level, anything out of the ordinary in that number in the quarter?

No. Only comment that I would make is that expense, management is a very important part of what we do going forward and we discussed the $150 million the right level for the rest of this year. But we continue to be looking further opportunities. Joe, do you want to add to that?

Yeah. The only thing I will add there, Elyse, remember we are consolidating Aviabel for the first time, so we have $3 million worth of expenses booked in Aviabel, which we wouldn’t have had in the prior year. We also didn’t -- if we also have the revenue, so from a ratio standpoint it’s not there, but in terms of pure costs, our costs are up, because of the fact we consolidated Aviabel.

Okay. Great. Thank you very much for the color.

Yeah. Thanks, Elyse.

Our next question will come from Meyer Shields with KBW. Please go ahead.

Great. Thanks. Albert, could we be seeing really good performance from the various underwriting actions intended to offset the impacts of rate and trend. Philosophically, do you look at those -- sort of like a finite group of actions or is that something that you will always be able to do?

I think improving portfolio, quality portfolio results and reducing volatility is a full time job from now until God knows when. There's always an opportunity to analyze the portfolio, scrub it, get more granular with the data. So, no, I don't believe that this is a job that we ever stopped. As I mentioned to you earlier, I continue to have a fair amount of confidence that there is more progress to be achieved. We absorbed a couple of issues this quarter, the ongoing impact of the Ogden rate, which obviously as we run-off the UPR will disappear. There's obviously some volatility in quarterly loss activity. This quarter we had some higher property losses. But not only that, I'm really encouraged by the way our team works together engaging analytics actuary claims personnel, the underwriters through the whole thing and looking for ways to continue to improve the portfolio. So improving the portfolio quality and profitability is job one here and we will continue doing it.

Okay. Thanks. That's helpful. Second, I guess, related question, we are hearing some commentary about may be a return to normal levels of social inflation compared to the depressed levels or the benign levels we have seen the last few years, you see on your book?

To be fair, we haven't seen much of that. We're not saying any real changes in loss trends. Now, as you know, just to be clear, we continue to be reserving on the basis of long-term trends, which of course, is one of the issues that’s driving reserve releases, because where as we have consistently been reserving on the base of long-term trends, those have not come through. Are there a couple of lines and where you had some increases? Of course, auto liability is one that is well known in that area. But with regard to our book, for the moment we have not seen any significant trend with regards to social inflation or any particularly deterioration in our loss trends. So for the moment it's within what I would call the normal realm of normal quarterly volatility, nothing special.

Okay. Great. Thanks so much.

You’re welcome.

[Operator Instructions] And having no further questions, this will conclude our question-and-answer session. I would like to turn the conference back over to Mr. Albert Benchimol for any closing remarks.

Okay. Well, thank you all for your questions and interest in AXIS. Again, just to summarize we discussed that, I think, this quarter we continue to make strong progress in advancing our strategy to build long-term profitable growth and we remain committed to our steady execution of the strategy. And so we look forward to reporting further progress in our upcoming conversation. Thank you everybody.

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