S&P Affirms AXIS Ratings; Comments on Katrina/Rita Impact

Standard & Poor’s Ratings Services announced that it has affirmed its “BBB+” counterparty credit and senior debt ratings and “BBB” subordinated debt rating on Bermuda-based AXIS Capital Holdings Ltd. S&P also affirmed its “A” counterparty credit and financial strength ratings on AXIS Specialty Ltd. and AXIS Re Ltd. and its “A” financial strength rating on the remaining AXIS Capital subsidiaries. The outlook on all the ratings is stable.

In addition S&P assigned its “BBB-” preferred stock rating on AXIS Capital following the company’s announcement of a $150 million preferred stock issuance.

“The ratings are based on the group’s (collectively referred to as AXIS) seasoned management, very strong capital adequacy, good risk management, and very strong balance sheet. Partially offset by its short track record and high-risk coverages,” stated S&P credit analyst Laline Carvalho.

S&P noted that it had “expected the group to continue to generate very strong average operating returns, with an ROR of 20 percent-22 percent in 2005 and 2006; however, after incorporating potential losses from Hurricanes Katrina and Rita earnings are expected to decline significantly, but are still expected to be profitable at year-end 2005.

“Volatility is inherent in AXIS’s results in any given period due to any potential large losses,” said the bulletin. “Capital adequacy at the operating level is expected to remain in the very strong range in 2005. Debt/total capital is not expected to exceed 15 percent in the medium term. Interest coverage on the debt is expected to be very strong in the long-term. If potential loss estimates from Hurricanes Katrina and Rita significantly increase, Standard & Poor’s would review the rating.”