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Press Release

AXIS Capital Reports Net Income of $147.0 Million for Third Quarter 2003

Company Release - 11/5/2003 5:55 PM ET

PEMBROKE, Bermuda--(BUSINESS WIRE)--Nov. 5, 2003--AXIS Capital Holdings Limited ("AXIS Capital") (NYSE: AXS) today reported net income for the quarter of $147.0 million, or $0.90 per diluted share, compared to $92.1 million, or $0.68 per diluted share, for the third quarter ended September 30, 2002, an increase of $54.9 million, or $0.22 per diluted share. Net income for the nine months ended September 30, 2003 rose 142% to $371.9 million, or $2.46 per diluted share, from $153.8 million, or $1.13 per diluted share, for the corresponding period in 2002.

Net income excluding net realized gains and losses on investments, net of tax for the third quarter of 2003 was $152.6 million, or $0.93 per diluted share, compared with $85.3 million, or $0.63 per diluted share, for the quarter ended September 30, 2002. Net income excluding net realized gains and losses on investments, net of tax for the nine months ended September 30, 2003 was $351.0 million, or $2.32 per diluted share, compared with $137.6 million, or $1.01 per diluted share, for the nine months ended September 30, 2002. Net income excluding net realized gains and losses on investments, net of tax is a non-GAAP financial measure. A reconciliation of this measure to net income is presented at the end of this release.

Shareholders' equity has grown to approximately $2.7 billion at September 30, 2003. Diluted book value per share was $16.72, an increase of $2.76, or 20%, from December 31, 2002. Shareholders' equity includes the net proceeds received from the Company's initial public offering completed in July. Diluted book value per share is a non-GAAP financial measure. A reconciliation of this measure to shareholders' equity is presented at the end of this release.

John Charman, President and CEO, commented, "We are delighted to show continuing significant high quality premium growth in all four of our underwriting segments despite the third quarter being a traditionally slow production period for many of our business lines. As the irreversible flight of quality to quality continues unabated, AXIS is appropriately recognized across all our business lines as security that is safe, capable, consistent and highly service-oriented. Hence, our global AXIS Capital franchise has been able to produce for our shareholders strong, real net income for the quarter."

Mr. Charman added, "We will commence expensing stock options under the transitional provisions of FAS 148 in the fourth quarter of 2003. This is consistent with our actions that have put us at the forefront of direct, effective corporate governance and transparent financial reporting since our inception."

Gross premiums written for the third quarter of 2003 were $633.9 million compared to $252.3 million for the third quarter 2002. Of these premiums written: $249.3 million were derived from global insurance compared to $179.1 million in the corresponding quarter of 2002; $114.6 million from global reinsurance compared to $73.2 million in the corresponding quarter of 2002; $188.0 million from U.S. insurance; and $82.0 million from U.S. reinsurance. The latter two segments began underwriting at the start of 2003; therefore, there are no comparatives for the periods in 2002. For the quarter ended September 30, 2003 compared to the quarter ended September 30, 2002, net premiums written rose to $534.4 million from $200.0 million and net premiums earned increased to $397.5 million from $167.7 million.

For the quarter ended September 30, 2003, net investment income was $19.3 million and realized losses were $5.7 million, compared with $21.5 million in net investment income and $6.9 million in realized gains, for the quarter ended September 30, 2002.

For the third quarter of 2003, the Company generated a combined ratio of 69.2%, a loss ratio of 46.3% and an expense ratio of 22.9% compared to 63.3%, 38.1% and 25.2%, respectively, for the third quarter of 2002.

Gross premiums written for the first nine months of 2003 were $1,794.0 million compared to $778.7 million for the first nine months of 2002. Of these premiums written: $700.6 million were derived from global insurance compared to $483.9 million in the corresponding period of 2002; $446.2 million from global reinsurance compared to $294.8 million in the corresponding period of 2002; $451.1 million from U.S. insurance; and $196.1 million from U.S. reinsurance. For the nine months ended September 30, 2003 compared to the nine months ended September 30, 2002, net premiums written increased to $1,524.3 million from $694.6 million and net premiums earned rose to $1,035.5 million from $317.8 million.

For the nine months ended September 30, 2003, net investment income was $46.6 million and realized gains were $21.2 million, compared with $55.3 million in net investment income and $16.3 million in realized gains, for the nine months ended September 30, 2002.

For the first nine months of 2003, the Company generated a combined ratio of 74.3%, a loss ratio of 50.8% and an expense ratio of 23.5% compared to 74.9%, 46.8% and 28.1%, respectively, for the first nine months in 2002.

AXIS Capital will host a conference call on Thursday, November 6, 2003 at 8:30 AM (Eastern) to discuss the third quarter financial results. This presentation will be available through an audio webcast accessible through the Investor Information section of the Company's website at www.axiscapital.com.

In addition, a financial supplement relating to the Company's financial results for the third quarter 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 of approximately $2.7 billion and locations in Bermuda, the United States and Europe. Its operating subsidiaries have been assigned a rating of "A" ("Excellent") by A.M. Best and a rating of "A" ("Strong") by Standard & Poor's. For more information about AXIS Capital, visit the Company's website at www.axiscapital.com.

Cautionary Note Regarding Forward-Looking Statements

This release may include forward-looking statements within the meaning of the U.S. federal securities laws. These statements involve risks, uncertainties and assumptions. Actual events or results may differ materially from the Company's expectations. Important factors that could cause actual events or results to be materially different from the Company's expectations include (1) the occurrence of natural and man-made disasters, (2) actual claims exceeding our loss reserves, (3), failure of any of the loss limitation methods we employ, (4) effects of emerging claims and coverage issues, (5) a decline in our ratings with Standard & Poor's and A.M. Best, (6) loss of business provided to us by our major brokers, (7) general economic conditions, (8) increased competition on the basis of pricing, capacity, coverage terms or other factors, and (9) changes in governmental regulations. The Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

                     AXIS CAPITAL HOLDINGS LIMITED

                      CONSOLIDATED BALANCE SHEETS
  (Expressed in thousands of U.S. dollars, except share and per share
                               amounts)

                                                Sept. 30,    Dec. 31,
                                                   2003        2002
                                                (Unaudited)
Assets
Cash and cash equivalents                      $   790,604 $  729,296
Investments at fair market value                 3,277,783  1,702,990
 (Amortized cost 2003:$3,234,190;
   2002:$1,677,506)
Accrued interest receivable                         21,612     16,502
Insurance and reinsurance premium balances
 receivable                                        690,907    375,508
Deferred acquisition costs                         152,842     77,166
Prepaid reinsurance premiums                       162,486     49,673
Reinsurance recoverable                            100,152      1,703
Intangible assets                                   27,204     14,079
Other assets                                        29,930     19,204
                                                ----------- ----------
  Total Assets                                 $ 5,253,520 $2,986,121
                                                =========== ==========

Liabilities
Reserve for losses and loss expenses           $   785,041 $  215,934
Unearned premiums                                1,153,296    555,962
Insurance and reinsurance balances payable         174,832    142,696
Accounts payable and accrued expenses               60,043     24,119
Net payable for investments purchased              399,506     86,377
                                                ----------- ----------
  Total Liabilities                              2,572,718  1,025,088
                                                ----------- ----------

Shareholders' Equity
Share capital
 (Authorized 800,000,000 common shares, par
    value $0.0125;
  issued and outstanding 2003;154,357,909:
   2002; 138,168,520)                                1,929      1,727
Additional paid-in capital                       2,015,236  1,686,599
Deferred compensation                              (15,605)   (20,576)
Accumulated other comprehensive income              39,589     25,484
Retained earnings                                  639,653    267,799
                                                ----------- ----------
  Total Shareholders' Equity                     2,680,802  1,961,033
                                                ----------- ----------

  Total Liabilities & Shareholders' Equity     $ 5,253,520 $2,986,121
                                                =========== ==========
Book value per common share                    $     17.37 $    14.19
                                                =========== ==========
                     AXIS CAPITAL HOLDINGS LIMITED

            UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
  For the quarters and nine months ended September 30, 2003 and 2002
  (Expressed in thousands of U.S. dollars, except share and per share
                               amounts)

                          Quarters ended           Nine months ended
                             Sept. 30,                 Sept. 30,
                         2003         2002         2003         2002
Revenues
 Gross premiums
  written         $    633,942 $    252,260 $  1,793,979 $    778,660
 Premiums ceded        (99,567)     (52,289)    (269,636)     (84,100)
 Change in
  unearned
  premiums            (136,909)     (32,268)    (488,858)    (376,784)
                   ------------ ------------ ------------ ------------
 Net premiums
  earned               397,466      167,703    1,035,485      317,776

 Net investment
  income                19,342       21,476       46,598       55,313
 Net realized
  gains                 (5,713)       6,868       21,190       16,332
 Other insurance
  related income         8,548            -       19,756            -
                   ------------ ------------ ------------ ------------
   Total revenues      419,643      196,047    1,123,029      389,421
                   ------------ ------------ ------------ ------------

Expenses
 Net losses and
  loss expenses        184,180       63,841      526,135      148,628
 Acquisition costs      65,770       31,025      174,750       59,925
 General and
  administrative
  expenses              25,174       11,274       68,471       29,327
 Foreign exchange
  gains                 (4,574)      (2,487)     (19,316)      (2,596)
                   ------------ ------------ ------------ ------------
   Total expenses      270,550      103,653      750,040      235,284
                   ------------ ------------ ------------ ------------

Income before
 income taxes          149,093       92,394      372,989      154,137
 Income tax
  expense                2,111          271        1,135          289
                   ------------ ------------ ------------ ------------
Net Income        $    146,982 $     92,123 $    371,854 $    153,848
                   ============ ============ ============ ============

Weighted average
 common shares and
 common share
  equivalents -
  basic            151,453,213  135,281,608  141,499,081  135,252,904
                   ============ ============ ============ ============

Weighted average
 common shares and
common share
 equivalents -
 diluted           163,232,232  136,246,838  151,322,233  136,082,749
                   ============ ============ ============ ============

Net income per
 share - basic    $       0.97 $       0.68 $       2.63 $       1.14
                   ============ ============ ============ ============

Net income per
 share - diluted  $       0.90 $       0.68 $       2.46 $       1.13
                   ============ ============ ============ ============

Insurance Ratios
Loss ratio                46.3%        38.1%        50.8%        46.8%
Expense ratio             22.9%        25.2%        23.5%        28.1%
                   ------------ ------------ ------------ ------------
Combined ratio            69.2%        63.3%        74.3%        74.9%
                   ============ ============ ============ ============

Non-GAAP Financial Measures

In addition to the GAAP financial measures included within this release, the Company has presented "net income excluding net realized gains and losses on investments, net of tax" and "diluted book value per share," which are non-GAAP financial measures. The Company has included the first measure as it believes that security analysts, rating agencies and investors believe that realized gains and losses are largely opportunistic and are a function of economic and interest rate conditions. As a result, the Company believes that they evaluate earnings before realized gains and losses, adjusted for tax to make performance comparisons with the Company's industry peers. The Company has included the second measure because it takes into account the effect of dilutive securities and, therefore, the Company believes that this is a better measure of calculating shareholder returns than book value per share.

                     AXIS CAPITAL HOLDINGS LIMITED

               NON-GAAP FINANCIAL MEASURE RECONCILIATION
           NET INCOME EXCLUDING REALIZED GAINS AND LOSSES ON
                        INVESTMENTS, NET OF TAX
  For the quarters and nine months ended September 30, 2003 and 2002
  (Expressed in thousands of U.S. dollars, except per share amounts)

                                Quarters ended       Nine months ended
                                   Sept. 30,             Sept. 30,
                                2003     2002         2003     2002

Net income                     146,982  92,123       371,854   153,848

Adjustment for net realized
 gains on
  investments                    5,713 (6,868)      (21,190)  (16,332)
Adjustment for associated tax
 impact
of net realized gains on
 investments                      (53)      66           350        66

Net income excluding realized
 gains on
                              -------- -------      -------- ---------
investments, net of tax       $152,642 $85,321      $351,014 $ 137,582
                              ======== =======      ======== =========

Net income per share -
 diluted                      $   0.90 $  0.68      $   2.46 $    1.13
                              ======== =======      ======== =========

Adjustment for net realized
 gains on                         0.03  (0.05)        (0.14)    (0.12)
  investments
Adjustment for associated tax
 impact
of net realized gains on
 investments                    (0.00)    0.00          0.00      0.00

Net income excluding realized
 gains on
 investments, net of tax per  -------- -------      -------- ---------
 diluted share                $   0.93 $  0.63          2.32 $    1.01
                              ======== =======      ======== =========



                     AXIS CAPITAL HOLDINGS LIMITED

               NON-GAAP FINANCIAL MEASURE RECONCILIATION
                     DILUTED BOOK VALUE PER SHARE
            As at September 30, 2003 and December 31, 2002
     (Expressed in thousands of U.S. dollars, except share and per
                            share amounts)

                                             Sept. 30,     Dec. 31,
                                                2003         2002

Shareholders' equity                           2,680,802    1,961,033

Shares outstanding                           154,357,909  138,168,520

                                            ------------ ------------
Book value per share                        $      17.37 $      14.19
                                            ============ ============

Diluted book value on an "as if converted
 basis"

Shareholders' equity                           2,680,802    1,961,033
add in:
 proceeds on exercise of options                  60,476       58,323
 proceeds on exercise of warrants                244,811      243,166

                                            ------------ ------------
Adjusted shareholders' equity                  2,986,089    2,262,522
                                            ------------ ------------

As if converted diluted shares outstanding
Shares outstanding                           154,357,909  138,168,520
add in:
 exercise of options                           4,611,512    4,475,512
 exercise of warrants                         19,584,904   19,453,304

                                            ------------ ------------
Diluted shares outstanding                   178,554,325  162,097,336
                                            ------------ ------------

                                            ------------ ------------
Diluted book value per share                $      16.72 $      13.96
                                            ============ ============

    CONTACT: Investor Contacts
             AXIS Capital Holdings Limited

             Andrew Cook or Linda Ventresca, 441-297-9513
             info@axiscapital.com
             or
             Media Contacts
             Kekst and Company
             Laura LeClair Accettella or Caroline Gentile
             212-521-4859

    SOURCE: AXIS Capital Holdings Limited