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

OLDWICK, N.J.--(Business Wire)--
A.M. Best Co. has affirmed the financial strength rating (FSR) of
A (Excellent) and the 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 Capital Holdings Limited (both of Hamilton, Bermuda) (NYSE:
AXS). The outlook for all ratings is stable. (See below for a detailed
list of the companies and ratings.)

The ratings of AXIS reflect its continued strong operating
performance, excellent risk-based capitalization, solid risk
management controls and its highly experienced management team. AXIS'
operating strategy is to maintain a diversified book of business, both
geographically and by line of business, with a focus on broker sourced
short- and medium-tail lines, principally specialty insurance lines
including property, marine, aerospace and political risk, along with
property catastrophe reinsurance coverage and other specialty
reinsurance coverages. The company also has selectively expanded into
professional lines and umbrella and excess liability coverages.

AXIS' overall operating performance has been consistently strong
with a six-year average combined ratio of 80.5% and a six-year average
return on equity of 17.9%, both of which place the company among the
leaders in its Bermuda peer group. AXIS' excellent performance is
directly attributable to its well established risk management controls
and systems. Furthermore, AXIS continues to maintain a very strong
level of risk-based capitalization under A.M. Best's stress scenarios.
A.M. Best expects AXIS to continue managing its capital base in a very
conservative manner within acceptable ranges to support its current
ratings.

AXIS' positive attributes are partially offset by the current soft
pricing environment and the challenges this market brings to the
insurance/reinsurance industry. However, this factor is greatly offset
by AXIS' strong presence in both primary and reinsurance markets,
multiple product lines and worldwide distribution system.

The FSR of A (Excellent) and ICRs of "a+" have been affirmed for
AXIS Specialty Limited and its following operating affiliates:

-- AXIS Re Limited

-- AXIS Reinsurance Company

-- AXIS Specialty Europe Limited

-- AXIS Specialty Insurance Company

-- AXIS Surplus Insurance Company

-- AXIS Insurance Company

The ICR of "bbb+" has been affirmed for AXIS Capital Holdings
Limited.

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

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

Founded in 1899, A.M. Best Company is a global full-service credit
rating organization dedicated to serving the financial and health care
service industries, including insurance companies, banks, hospitals
and health care system providers. For more information, visit
www.ambest.com.

A.M. Best Co.
Analysts:
Peter Dickey, 908-439-2200, ext. 5053
peter.dickey@ambest.com
or
Robert DeRose, 908-439-2200, ext. 5453
robert.derose@ambest.com
or
Public Relations:
Jim Peavy, 908-439-2200, ext. 5644
james.peavy@ambest.com
or
Rachelle Morrow, 908-439-2200, ext. 5378
rachelle.morrow@ambest.com

Copyright Business Wire 2008