S&P Affirms AXIS ‘A’, ‘BBB’ Ratings

September 7, 2004

Standard & Poor’s Ratings Services announced that it has assigned its “BBB+” counterparty credit rating to Bermuda-based AXIS Capital Holdings Ltd. It also affirmed its “A” ratings on AXIS Specialty Ltd. and all other “interactively rated subsidiaries of AXIS Capital.” The outlook on all the companies is stable.

S&P also said it has “assigned its preliminary ‘BBB+’ senior debt, ‘BBB’ subordinated debt, and ‘BBB-‘ preferred stock ratings to AXIS Capital’s $2.4 billion universal shelf, which was filed on Aug. 6, 2004. Out of the $2.4 billion, only $750 million are securities that AXIS Capital may issue as additional capital. The remaining portion of the shelf consists of a registration statement to allow some of its founding shareholders to sell their ownership shares if they wish.”

S&P credit analyst Laline Carvalho indicated: “The ratings are based on the group’s (collectively referred to as AXIS) seasoned management, very strong capital adequacy, very strong initial operating results, good risk management, and very strong balance sheet. Partially offsetting these factors are AXIS’ short track record and high-risk coverages.”

S&P noted that “AXIS’ operating performance remained strong through the first six months of 2004. Capital adequacy has declined because of continued growth in premium writings but remains very strong. Over the medium term, financial leverage is expected to be conservative for the rating.”

The rating agency said it “expects AXIS to continue to generate very strong average operating returns, though results in any period are subject to volatility from large losses. Estimated net losses from Hurricane Charley were relatively modest at $60 million-$80 million, and the group is expected to report third-quarter earnings and strong results for full-year 2004. Capital adequacy is expected to remain very strong over the medium term.”

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