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

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A.M. Best has affirmed the financial strength rating (FSR) of A+ (Superior) and the issuer credit ratings (ICR) of “aa-” of AXIS Specialty Limited (AXIS) and its operating affiliates. Concurrently, A.M. Best has affirmed the ICR of “a-” and the existing debt ratings of AXIS’ parent, AXIS Capital Holdings Limited (ACHL) (both domiciled in Hamilton, Bermuda) [NYSE: AXS]. The outlook for all ratings is stable. (See below for a detailed list of the companies and ratings.)

The ratings reflect AXIS’ superior risk-adjusted capitalization, long-term track record of strong operating performance through varied market conditions and robust enterprise risk management controls. Historically, AXIS’ book of business focused on short to medium-tail lines and concentrates on specialty risks which can be complex to underwrite, reserve and risk manage. AXIS’ operating strategy has emphasized underwriting profitability with balanced risk taking. Given the organization’s risk profile, enterprise risk management controls are imperative to appropriately identify, quantify and mitigate risks prior to becoming problematic issues. A.M. Best believes that AXIS is well suited to execute its business plan. The organization remains nimble and given the current soft casualty market conditions, remains well positioned with a diversified book of business and an expanding worldwide infrastructure.

AXIS’ historically strong operating performance places it among the top of its Bermuda 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 casualty market environment, which has challenging underwriting conditions. Other rating factors that could lead to a downgrade 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 its risk-adjusted capital. Alternatively, factors that could lead to an upgrade of the company’s ratings include continued long-term favorable operating profitability coupled with maintaining strong risk-adjusted capital levels.

The FSRs of A+ (Superior) and ICRs of “aa-” for AXIS Specialty Limited and its following operating affiliates have been affirmed:

  • AXIS Re SE
  • AXIS Reinsurance Company
  • AXIS Specialty Europe SE
  • AXIS Surplus Insurance Company
  • AXIS Insurance Company

The following debt ratings have been affirmed:

AXIS Capital Holdings Limited-

— “a-” on $500 million 5.75% senior unsecured notes, due 2014

— “bbb” on $250 million 7.50% non-cumulative preferred shares, Series B

— “bbb” on $400 million 6.875% non-cumulative preferred shares, Series C

— “bbb” on $200 million 5.5% non-cumulative preferred shares, Series D

AXIS Specialty Finance LLC (guaranteed by AXIS Capital Holdings Limited)-

— “a-” 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-

— “a-” on senior unsecured debt

— “bbb+” on subordinated debt

— “bbb” on preferred stock

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. Best’s Credit Rating Methodology can be found at

Key insurance criteria reports utilized:

o Catastrophe Analysis in A.M. Best Ratings

o Rating Members of Insurance Groups

o Risk Management and the Rating Process for Insurance Companies

o Understanding BCAR for Property/Casualty Insurers

o Understanding Universal BCAR – A.M. Best’s Capital Adequacy Ratio for Insurers

o Analyzing Insurance Holding Company Liquidity

o Insurance Holding Company and Debt Ratings

A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source. For more information, visit

Copyright (c) 2014 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

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