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Press release from Business Wire

A.M. Best Affirms Ratings of AXIS Capital Holdings Limited and Its Subsidiaries

Friday, September 21, 2012

A.M. Best Affirms Ratings of AXIS Capital Holdings Limited and Its Subsidiaries10:44 EDT Friday, September 21, 2012 OLDWICK, N.J. (Business Wire) -- A.M. Best Co. has affirmed the financial strength rating (FSR) of A (Excellent) and issuer credit ratings (ICR) of “a+” of AXIS Specialty Limited (AXIS) and its operating affiliates. Concurrently, A.M. Best has affirmed the ICR of “bbb+” and all existing debt ratings of AXIS' parent, AXIS Capital Holdings Limited (ACHL) (both domiciled in Hamilton, Bermuda) [NYSE: AXS]. The outlook for all ratings is positive. (See below for a detailed list of the companies and ratings.) The ratings reflect AXIS' excellent risk-adjusted capitalization, consistently strong operating performance through varied market conditions and robust enterprise risk management controls. AXIS' operating strategy has historically emphasized underwriting profitability with a balanced risk profile. Given the current soft casualty market conditions, the company is well positioned with a diversified book of business and an expanding worldwide infrastructure. AXIS' book of business emphasizes short to medium-tail lines and focuses on specialty risks including property, marine and political risk, along with property catastrophe coverages. AXIS' historical operating performance has been strong, which places it among the top of its Bermudian peer group. In A.M. Best's opinion, AXIS' solid performance is attributable to its highly developed and integrated risk management controls and strong systems capabilities. Furthermore, AXIS retains a very strong level of risk-based capitalization under various A.M. Best stress scenarios. Partially offsetting these positive rating factors is AXIS' exposure to large catastrophe losses as well as the current soft casualty market environment. In addition, while A.M. Best considers the organization's executive management team to be strong, recently and within the past several months it has implemented changes at the senior management level and the Board of Directors, including the chief executive officer and chairman of the Board of Directors. While it is expected that the corporate culture and strategy of the organization will not change materially, A.M. Best will continue to monitor this period of transition. These challenges and other rating factors, which could lead to a downgrading of AXIS' ratings or a revision in its outlook to negative, include unfavorable operating profitability trends, outsized catastrophe or investment losses relative to its peers, significant adverse loss reserve development and/or a material decline in risk-adjusted capital. Alternatively, factors that could lead to an upgrading of the company's ratings include continued favorable operating profitability coupled with maintenance of strong risk-adjusted capital levels. The FSR of A (Excellent) and ICRs of “a+” have been affirmed for AXIS Specialty Limited and its following operating affiliates: AXIS Re SEAXIS Reinsurance CompanyAXIS Specialty Europe SEAXIS Surplus Insurance CompanyAXIS Insurance Company The following debt ratings have been affirmed: AXIS Capital Holdings Limited— -- “bbb+” on $500 million 5.75% senior unsecured notes, due 2014 -- “bbb-” on $250 million 7.25% non-cumulative preferred shares, Series A -- “bbb-” on $250 million 7.50% non-cumulative preferred shares, Series B -- “bbb-” on $400 million 6.875% non-cumulative preferred shares, Series C AXIS Specialty Finance LLC (guaranteed by AXIS Capital Holdings Limited)— -- “bbb+” on $500 million 5.875% senior unsecured notes, due 2020 The following indicative ratings have been affirmed under the current shelf registration: AXIS Capital Holdings Limited— -- “bbb+” on senior unsecured debt -- “bbb” on subordinated debt -- “bbb-” on preferred stock AXIS Capital Trust I, II & III (guaranteed by AXIS Capital Holdings Limited)— -- “bbb-” on preferred securities The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: “Understanding Universal BCAR”; “Catastrophe Analysis in A.M. Best's Ratings”; “Insurance Holding Company and Debt Ratings”; “Risk Management and the Rating Process for Insurance Companies”; “Understanding BCAR for Property/Casualty Insurers”; and “Rating Members of Insurance Groups.” Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology. Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com. Copyright © 2012 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.A.M. Best Co.Greg ReisnerManaging Senior Financial Analyst(908) 439-2200, ext. 5224greg.reisner@ambest.comorPeter DickeyAssistant Vice President(908) 439-2200, ext. 5053peter.dickey@ambest.comorRachelle MorrowSenior Manager, Public Relations(908) 439-2200, ext. 5378rachelle.morrow@ambest.comorJim PeavyAssistant Vice President, Public Relations(908) 439-2200, ext. 5644james.peavy@ambest.com