AXIS Allotment Exercised; Best Affirms Ratings

April 26, 2004

Bermuda-based AXIS Capital Holdings Limited announced that the underwriters of its secondary offering have exercised their option to purchase an additional 3,000,000 common shares, in full, at a price of $27.91 to cover over-allotments.

In a separate announcement A.M. Best affirmed its “A” (Excellent) rating for the company and its affiliates with a stable outlook.

AXIS said that the number of shares sold in the offering now totals 23 million. The company did not sell any common shares and will not receive any proceeds from the offering.

Best said the “rating reflects the company’s superior risk-based capitalization, excellent operating performance, highly experienced management team and strong broker relationships.” It noted that “since commencing operations, AXIS has established a diversified book of business, both geographically and by line of business, which focuses on broker-sourced short- and medium-tail lines, principally specialty lines in property, marine, energy and aerospace, along with property catastrophe reinsurance coverage.

“In order to provide additional diversification and to take advantage of improved market conditions, AXIS has selectively expanded into professional lines and increased its writings in umbrella and excess liability coverages,” it continued.

“Since its inception, AXIS has successfully expanded its operating platform through the formation of affiliated companies in Ireland and the United States,” Best noted. Each affiliate’s capital is protected by both quota share and stop loss agreements with AXIS. The company’s Irish affiliates have also established branches in the United Kingdom and Switzerland.”

Best also noted that the company’s original $1.7 billion capitalization had increased to $2.8 billion as of December 31, 2003. “This growth is primarily attributable to earnings but also includes approximately $316 million of proceeds from a successful initial public offering in July 2003,” said Best. “In 2003, AXIS achieved a 22 percent return on equity (ROE). This level of return was attributable to favorable market rates, light catastrophes and an unencumbered balance sheet, in addition to well-established underwriting and risk management controls.”

The rating agency indicated, however, that is potential market pressure on pricing, which could dampen expected returns, and exposure to low frequency, high severity property catastrophe losses constituted partial offsetting factors. Best said it would ” continue to closely monitor AXIS’ operations and performance.”

The financial strength rating of “A” (Excellent) applies both to AXIS and the following affiliates:
— AXIS Re Ltd.
— AXIS Specialty Europe Limited
— AXIS Reinsurance Company
— AXIS Specialty Insurance Company
— AXIS Surplus Insurance Company

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