A.M. Best Affirms Rating of AXIS Specialty Limited and Affiliated Companies.

Business Editors

OLDWICK, N.J.--(BUSINESS WIRE)--April 23, 2004

A.M. Best Co. has affirmed the financial strength rating of A (Excellent) of AXIS Specialty Limited (AXIS) (Hamilton, Bermuda) and its affiliated companies. (See list below.) AXIS is the primary operating company of AXIS Capital Holdings Limited (NYSE: AXS). The outlook for all ratings is stable.

The rating reflects the company's superior risk-based capitalization, excellent operating performance, highly experienced management team and strong broker relationships. 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.

Since its inception, AXIS has successfully expanded its operating platform through the formation of affiliated companies in Ireland and the United States. 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.

Original capitalization of $1.7 billion in 2001 has grown to $2.8 billion at 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. In 2003, AXIS achieved a 22% 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.

Partially offsetting these strengths is potential market pressure on pricing, which could dampen expected returns and exposure to low frequency, high severity property catastrophe losses. A.M. Best will continue to closely monitor AXIS' operations and performance.

The financial strength rating of A (Excellent) has been affirmed with a stable outlook for AXIS Specialty Limited and the following affiliates:

-- AXIS Re Ltd

-- AXIS Specialty Europe Limited

-- AXIS Reinsurance Company

-- AXIS Specialty Insurance Company

-- AXIS Surplus Insurance Company

A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com.