Best Assigns Indicative Ratings to Axis Debt Issues

A.M. Best Co. announced that it has assigned indicative debt ratings of “bbb” to unsecured senior debt; “bbb-” to subordinated debt and “bb+” to the preferred stock of AXIS Capital Holdings Limited’s recently filed $750 million universal shelf offering. Best has also assigned indicative debt ratings of “bb+” to the preferred securities of AXIS Capital Trust I, AXIS Capital Trust II and AXIS Capital Trust III, noting that “each will be fully and unconditionally guaranteed by AXIS.” The outlook for all ratings is stable.

“This shelf offering allows AXIS to periodically sell debt securities, common stock, preferred stock and other securities with net proceeds to be used for general corporate purposes. A.M. Best anticipates that proceeds from the offering will be used opportunistically to support future operational strategies,” said Best.

The rating agency also said it “views favorably AXIS’ debt servicing capabilities with cash flows supported by solid operations in the United States, Bermuda and Europe. Operating results for the six months ended June 30, 2004, have produced a combined ratio well below 100 percent. Furthermore, AXIS has maintained excellent risk-adjusted capitalization, strong liquidity and a high quality investment portfolio.”

Best noted, however, that “these strengths are partially offset by potential market pressure on pricing, which could dampen expected returns and exposure to low frequency, high severity property catastrophe losses. Furthermore, AXIS’ short operating history has not fully tested management’s underwriting expertise.”