CONTACTS:
FOR IMMEDIATE RELEASE
OLDWICK, N.J. - AUGUST 10, 2009 12:00 AM (EDT)
A.M. Best Co. has affirmed the financial strength rating (FSR) of A (Excellent) and 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 (ACHL) (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 consistently strong operating performance, excellent risk-based capitalization, robust risk management controls and its highly experienced management team. AXIS' operating strategy is dedicated to maintaining 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 strong with a seven-year average combined ratio of 82% and a seven-year average return on equity of 17%, both of which assist in sustaining the company's position among the leaders of its Bermuda peer group.
AXIS' excellent performance is directly attributable to its entrenched risk management controls and systems. A.M. Best believes that AXIS maintains vigorous risk management capabilities and continues to enhance an already effective enterprise risk management framework.
Furthermore, AXIS retains 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.
Both financial leverage and interest coverage are at acceptable levels relative to ACHL's ratings. A.M. Best expects ACHL to maintain total debt-to-capital measures in the mid teens in the near term.
Somewhat offsetting these positive rating factors are AXIS' exposure to large catastrophe losses as well as the cyclical changes occurring in the current market environment. Furthermore, AXIS experienced a significant level of realized and unrealized investment losses in 2008, primarily attributable to the disruption of global markets. Management has responded by repositioning its investment portfolio to address an expected increase in interest rates.
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
For Best's Credit Ratings, an overview of the rating process and rating methodologies, please visit Best's Ratings & Analysis.
The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at Best's Credit Rating Methodology.
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.