Pembroke, Bermuda, February 8, 2010 - AXIS Capital Holdings Limited (“AXIS Capital”) (NYSE: AXS) today reported net income for the fourth quarter of 2009 of $282 million, or $1.87 per diluted common share, compared with net income of $131 million, or $0.88 per diluted common share, for the corresponding period in 2008. Net income for the full year of 2009 was $461 million, or $3.07 per diluted share, compared with $351 million, or $2.26 per diluted share, for the prior year.

Operating income for the fourth quarter of 2009 was $276 million, or $1.83 per diluted share, compared with $163 million, or $1.09 per diluted common share, for the fourth quarter of 2008. Operating income for the full year of 2009 was $766 million, or $5.10 per diluted share, compared with $436 million, or $2.81 per diluted common share for 2008.

Fourth Quarter and Full Year Highlights*
• Gross premiums written increased 9% in the quarter to $574 million and increased 6% to $3.6 billion for the year;
• Net premiums earned increased 8% in the quarter to $714 million and increased 4% to $2.8 billion for the year;
• Total underwriting income for the quarter of $216 million, unchanged from the prior year quarter. For the full year, total underwriting income increased 71% to $525 million;
• Combined ratio of 77.5% for the quarter and 79.3% for the full year;
• Net favorable prior year reserve development in the quarter of $120 million, benefiting the combined ratio by 16.8 points;
• Net investment income in the quarter of $118 million compared to net investment losses of $26 million in the prior year quarter. Net investment income for the year increased 88% to $464 million;
• The total return on our cash and investments portfolio was 1.1% for the quarter and 8.5% for the full year;
• Operating income for the quarter of $276 million represented an annualized operating return on average common equity** of 22.3% and operating income for the full year of $766 million represented an annualized operating return on average common equity of 17.1%;
• Shareholders’ equity of $5.5 billion, an increase of 2% from September 30, 2009 and 23% from December 31, 2008;
• Diluted book value per common share of $33.65, an increase of 7% from September 30, 2009 and 31% from December 31, 2008;
• Share repurchases of $170 million in the quarter and for the year;
• Quarterly common dividend increased 5% to $0.21 per common share.

Commenting on the 2009 financial results, John Charman, Chief Executive Officer and President of AXIS Capital, stated: “I am delighted to report excellent fourth quarter results. Against the backdrop of extremely challenging competitive conditions as well as increased loss activity from lines impacted by the global financial crisis, we have delivered record quarterly operating earnings per share strongly supported by our highest level of underwriting profit. For the year, we delivered an operating return on average common equity of 17.1% and a 31% increase in diluted book value per share from very good property and casualty underwriting results and strong performance from our investment portfolio.”

Segment Highlights

Insurance Segment

Our insurance segment reported underwriting income for the quarter of $86 million, down 11% from the fourth quarter of 2008. The current quarter underwriting result reflected a combined ratio of 81.6% compared with 60.2% in the prior year quarter. The segment’s current accident year loss ratio for the quarter increased 18.8 points to 76.9%, driven by an increase in our credit and political risk loss ratio inclusive of a reserving provision for our policy related to the Blue City project. Net favorable prior period reserve development was $73 million, or 23.9 points, this quarter compared with $60 million, or 20.5 points, in the fourth quarter of 2008. The current quarter’s underwriting result includes other insurance related income of $28 million relating to the cancellation and settlement of an insurance derivative contract with longevity risk. For the full year, our insurance segment reported underwriting income of $84 million compared with $187 million in the prior year.

Our insurance segment reported gross premiums written in the quarter of $471 million, up 5% from the fourth quarter of 2008. The growth largely emanated from property and marines lines of business and reflects new business, pricing improvement on marine lines of business relative to the fourth quarter of 2008 and a change in certain renewal dates. For the full year, gross premiums written decreased 4% to $1,776 million. Ceded premiums were 45% of gross premiums written in the current quarter, and 42% for the full year, compared with 42% and 38%, respectively for the prior year periods. The increase in ceded premium ratios primarily reflect a shift in business mix this year towards business with higher levels of ceded premiums.

Reinsurance Segment

Our reinsurance segment reported underwriting income for the quarter of $130 million, up 9% from the fourth quarter of 2008. The increase in underwriting income was driven by a 12% growth in net premiums earned relative to the prior year quarter. The segment’s combined ratio of 68.3% was largely unchanged from the fourth quarter of 2008. The segment’s current year loss ratio for the quarter decreased 5.8 points to 56.8%, driven by a lower level of loss activity on property and credit and bond reinsurance business relative to the prior year quarter. Net favorable prior period reserve development was $47 million, or 11.6 points, this quarter compared with $65 million, or 17.8 points, in the fourth quarter of 2008. For the full year, our reinsurance segment reported underwriting income of $440 million compared with $119 million for the prior year.

Our reinsurance segment reported gross premiums written of $103 million and $1,812 million in the quarter and full year 2009, respectively, compared to $78 million and $1,548 million in the corresponding periods of 2008. Premium growth in the quarter was driven by new property business together with premium adjustments relating to prior year business.

Investments

Net investment income for the quarter was $118 million compared to $26 million in net investment losses in the prior year quarter. For the full year, net investment income increased 88% to $464 million. For both of these periods, the strong investment performance was primarily due to improved investment market conditions for our alternative investment portfolio (“other investments”). Income from our other investments was $25 million this quarter, an increase of $163 million relative to the same period last year. The return on our other investments was 4.5% and 15.8% this quarter and for the full year, respectively, reflecting a strong performance from our holdings in hedge and credit funds.

For the quarter, net realized investment gains were $6 million compared to $33 million net realized investment losses in the prior year quarter. Net realized investment losses were $312 million for the full year, an increase of $226 million compared to 2008. This increase was primarily due to other-than-temporary impairment (“OTTI”) losses on our medium-term note investments, recorded during the third quarter.

Due to the recovery in the global financial markets, the asset valuations in our investment portfolio improved significantly in 2009. At December 31, 2009, the total net unrealized gains on the available for sale investment portfolio were $99 million, an improvement of $504 million after considering the impact of realized losses recognized in earnings. The improvement in asset valuations was primarily due to unprecedented credit spread tightening on corporate debt and structured credit securities, as well as the strong performance of hedge and credit funds allocation.

Supplementary information relating to our investment portfolio at December 31, 2009 is available in the Investor Information section of our website.

Capitalization / Shareholders’ Equity

Total capitalization at December 31, 2009 was $6.0 billion, including $0.5 billion of long-term debt and $0.5 billion of preferred equity, compared to $5.0 billion at December 31, 2008. At December 31, 2009, diluted book value per common share, on a treasury stock basis, was $33.65 and book value per common share was $37.84, compared to $25.79 and $29.08 respectively, as of December 31, 2008

During the quarter, the Board approved a new share repurchase plan with the authorization to repurchase up to an additional $500 million of our common shares, expiring on December 31, 2011. In addition, the Board approved an extension of our existing share repurchase plan originally authorized in December 2007. During the quarter, we repurchased 5.9 million shares of common stock at an average price of $28.99 per share, for a total cost of $170 million. Subsequent to December 31, 2009, we repurchased a further 4.4 million shares of common stock at an average price of $28.38 per share, for a total cost of $125 million. As of February 5, 2010, we have approximately $417 million of remaining authorization for common share repurchases.

Conference Call

We will host a conference call on Tuesday February 9, 2010 at 8:00 AM (Eastern) to discuss the fourth quarter financial results and related matters. The teleconference can be accessed by dialing (866) 843-0890 (U.S. callers) or (412) 317-9250 (international callers) and entering the pass-code
4-5-3-1-8-9-3 approximately ten minutes in advance of the call. A live, listen-only webcast of the call will also be available via the Investor Information section of the Company´s website at www.axiscapital.com.

In addition, a financial supplement relating to our financial results for the quarter ended December 31, 2009 is available in the Investor Information section of our website.

AXIS Capital is a Bermuda-based global provider of specialty lines insurance and treaty reinsurance with shareholders’ equity at December 31, 2009 of $5.5 billion and locations in Bermuda, the United States, Europe, Singapore, Canada and Australia. Its operating subsidiaries have been assigned a rating of “A+” (“Strong”) by Standard & Poor’s and “A” (“Excellent”) by A.M. Best. AXIS Capital has been assigned a senior unsecured debt rating of A- (stable) by Standard & Poor’s and Baa1 (stable) by Moody’s Investors Service. For more information about AXIS Capital, visit our website at www.axiscapital.com.

*. All comparisons are with the same periods last year unless stated otherwise.
Calculated using operating income divided by average common shareholders’ equity for the period. The presentation of operating income available to common shareholder is a “non-GAAP financial measure” as defined in Regulation G. The reconciliation of such measure to net income available to common shareholders (the most directly comparable GAAP financial measure) in accordance with Regulation G is included on page 12 of this release. A discussion of the presentation of operating income begins on page 13 of this release.
**. All comparisons are with the same periods last year unless stated otherwise.
Calculated using operating income divided by average common shareholders’ equity for the period. The presentation of operating income available to common shareholder is a “non-GAAP financial measure” as defined in Regulation G. The reconciliation of such measure to net income available to common shareholders (the most directly comparable GAAP financial measure) in accordance with Regulation G is included on page 12 of this release. A discussion of the presentation of operating income begins on page 13 of this release.