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Press Release

Axis Capital Announces 2005 Second Quarter Net Income of $172.8 Million

Company Release - 8/2/2005 5:23 PM ET

PEMBROKE, Bermuda--(BUSINESS WIRE)--Aug. 2, 2005--AXIS Capital Holdings Limited ("AXIS Capital") (NYSE: AXS) today reported net income for the quarter ended June 30, 2005 of $172.8 million, or $1.13 per diluted share, compared with $140.9 million, or $0.84 per diluted share, for the quarter ended June 30, 2004. Net income for the six months ended June 30, 2005 was $324.6 million, or $2.07 per diluted share, compared with $307.6 million, or $1.84 per diluted share, for the corresponding period in 2004. Financial results for the second quarter and first six months of 2005 benefited from increased underwriting profit and investment income.

Net income excluding net realized gains and losses on investments, net of tax, for the second quarter of 2005 was $170.9 million, or $1.12 per diluted share, compared with $144.7 million, or $0.87 per diluted share, for the quarter ended June 30, 2004. This same item excluding foreign exchange losses, net of tax, for the second quarter of 2005 was $197.4 million, or $1.29 per diluted share, compared with $151.0 million, or $0.91 per diluted share, for the quarter ended June 30, 2004.

Net income excluding net realized gains and losses on investments, net of tax, for the six months ended June 30, 2005 was $323.7 million, or $2.07 per diluted share, compared with $302.3 million, or $1.81 per diluted share, for the six months ended June 30, 2004. This same item excluding foreign exchange losses, net of tax, for the six months ended June 30, 2005 was $373.1 million, or $2.38 per diluted share, compared with $309.8 million, or $1.86 per diluted share, for the six months ended June 30, 2004.

Net income excluding net realized gains and losses on investments, net of tax, and net income excluding net realized gains and losses on investments and foreign exchange losses, net of tax, are non-GAAP financial measures. Reconciliations of these measures to net income are presented at the end of this release.

Operating highlights for the second quarter of 2005 are as follows:

    --  Gross premiums written increased by 21.9% to $767.3 million
        and net premiums written increased by 26.2% to $615.8 million;

    --  Combined ratio of 74.5%, which includes solid current accident
        year results and favorable reserve development of 11.9
        percentage points;

    --  Total pre-tax investment income, including net realized gains
        and losses, increased by 106.8% to $59.8 million primarily due
        to a combination of higher investment balances and higher
        investment yields;

    --  Cash flows from operations were $860.9 million for the six
        months, up 9.7% from the comparable period of 2004;

    --  Annualized return on average shareholders' equity of 22.6%
        achieved for the quarter and 20.3% achieved for the six
        months; and

    --  Total shareholders' equity of $3.2 billion and total
        capitalization of $3.7 billion as of June 30, 2005.

Commenting on the second quarter 2005 results, John Charman, Chief Executive Officer and President of AXIS Capital, stated: "The 22.6% return on equity generated during the quarter demonstrates our ongoing ability to produce real and attractive returns to our shareholders from the diversity of our global platform. We have worked diligently this quarter and found plentiful opportunity as was evidenced by AXIS Insurance's targeted entry into attractively rated specialty classes and AXIS Re's success in accessing new property reinsurance opportunities. However, our strong underwriting discipline has manifested itself in reduced writings in lines of business where senseless competition has driven pricing to unacceptable levels."

"At this time, I am pleased to report that we have concluded our exhaustive internal investigation led by external counsel. It has uncovered no evidence whatsoever indicating that we engaged in bid rigging, fictitious or inflated quotes or related matters or conditioning direct insurance on the placement of reinsurance. No evidence of any of these types of wrongdoing was found. This investigation was launched in the fourth quarter of 2004, following inquiries stemming from the industry-wide investigations of the insurance industry initiated by the New York Attorney General and other regulators."

"There continues to be a number of fundamental issues that the industry needs to address over the next couple of years. The powerful combination of Sarbanes-Oxley and the insurance industry investigations led by the New York Attorney General make the resolution of these issues a matter of when, not if. These issues have not deterred us from implementing our strategy of becoming one of the leading and most consistently profitable specialist global insurance and reinsurance businesses. We believe that AXIS will ultimately benefit from these industry changes leading to greater transparency and honesty, and, in the meantime, we grow stronger and become more focused and more determined every day."

Operating Results

As of January 2005, we are reporting two underwriting segments, insurance and reinsurance, and a corporate segment following the previously announced strategic reorganization of our operations into AXIS Insurance and AXIS Re. The insurance segment is further divided into global insurance and U.S. insurance.

Our total gross premiums increased 21.9% from the second quarter of 2004 and were derived 66.9% from our insurance segment and 33.1% from our reinsurance segment compared to 69.3% and 30.7%, respectively, for the second quarter of 2004. This increase was largely attributable to greater market penetration in existing lines of business. Our combined ratio decreased to 74.5% in the quarter from 75.2% in the second quarter of 2004 primarily due to favorable prior period reserve development. Also, we have begun to utilize our own loss experience in establishing our initial expected net loss and loss expense ratios for many short tail lines of business.

Our total gross premiums for the six months ended June 30, 2005 increased 17.5% from the same period of 2004 and were derived 47.9% from our insurance segment and 52.1% from our reinsurance segment compared to 52.9% and 47.1%, respectively, for the same period of 2004. This increase was largely attributable to our reinsurance segment where our Zurich office achieved greater market penetration in Continental Europe and where we capitalized on opportunities within our U.S. property reinsurance book. Our combined ratio increased to 76.4% in the six months ended June 30, 2005 from 73.9% in the same period of 2004 primarily due to a change in the mix of business.

Insurance Segment

Our insurance segment reported gross premiums in the quarter of $513.0 million, up 17.6% from the second quarter of 2004, and net premiums of $365.1 million, up 21.4% from the second quarter of 2004. The growth in our insurance segment was largely driven by growth in our U.S. insurance operation, which generated an increase in gross premiums of 29.8% and an increase in net premiums of 28.5%. This was derived from select expansion of our professional lines products and from greater market penetration in our umbrella liability book. Global insurance experienced moderate growth in gross premiums of 5.2%, mainly generated by the development of our London market-based professional lines book of business. We continue to experience competition in many lines of business in global insurance and, therefore, continue to decline business that does not meet our underwriting criteria.

Our insurance segment reported a combined ratio of 66.8% for the quarter compared to 78.8% for the second quarter of 2004. The insurance segment experienced favorable prior period reserve development from short-tail lines of $44.4 million in the second quarter compared to $24.4 million in the second quarter of 2004. Also, within this segment we have begun to reflect our own loss experience in establishing our initial expected net loss and loss expense ratios for many short tail lines of business.

Reinsurance Segment

Our reinsurance segment reported gross premiums in the quarter of $254.3 million, up 31.6% from the second quarter of 2004, and net premiums of $250.7 million, up 34.0% from the second quarter of 2004. Growth in this segment during the quarter was primarily driven by new opportunities within our U.S. property reinsurance and liability reinsurance lines of business.

Our reinsurance segment reported a combined ratio of 77.7% compared to 65.7% in the second quarter of 2004. Favorable prior period reserve development from short-tail lines of business was $29.6 million in the quarter compared to $18.7 million in the second quarter of 2004. The increase in the combined ratio was primarily generated by a change in the mix of business, with more business generated by reinsurance products other than property catastrophe.

Interest Expense

Interest expense for the quarter was $7.8 million compared to $0.2 million for the second quarter of 2004. Interest expense for the six months ended June 30, 2005 was $15.9 million compared to $0.2 million for the same period of 2004. Interest expense consists of interest due on outstanding debt, the amortization of debt offering expenses and offering discounts and fees relating to our credit facility. Our outstanding debt relates to $500.0 million of senior unsecured notes issued on November 15, 2004.

Investments

Total pre-tax investment income, which included $58.0 million in net investment income and $1.8 million in realized gains, grew 106.8% to $59.8 million in the quarter up from $28.9 million in the second quarter of 2004. The increase primarily reflected the positive impact of higher average yields on higher investment balances. These increased yields were generated by higher short term U.S. interest rates together with our increased allocation to other investments. Total pre-tax investment income for the six months ended June 30, 2005 of $111.2 million included $110.8 million in net investment income and $0.4 million in realized gains. This was an increase of 58.2% from $70.3 million in the same period of 2004.

Capitalization / Shareholders' Equity

Total capitalization at June 30, 2005 was $3.7 billion, including $499.0 million of long-term debt, which was comparable to December 31, 2004 levels following capital management initiatives undertaken in the first quarter of 2005. In February 2005, we repurchased 12,783,094 shares of common stock from certain of our initial investors at an average price of $27.38 per share for a total of $350 million.

Book value per common share at June 30, 2005 was $22.51 compared to $21.20 per common share at December 31, 2004. Diluted book value per share at June 30, 2005 increased 5.2% to $20.89 compared with $19.85 per share at December 31, 2004. 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.

Insurance Industry Investigation and Conclusion of Internal Investigation

As previously disclosed, our U.S. holding company has received subpoenas from the Office of the Attorney General of the State of New York seeking information regarding incentive commission agreements, fictitious and inflated quotes and related matters and conditioning direct insurance on the placement of reinsurance. In addition, our U.S. insurance companies have received subpoenas and requests for information from various state insurance regulators regarding these same matters. These inquiries are part of industry-wide investigations in these jurisdictions and we understand that officials from other jurisdictions in which we do business have also initiated investigations into similar matters. Accordingly, we may in the future receive additional subpoenas and requests for information. We are cooperating fully with the Attorney General of the State of New York and the other state regulators in their investigations and intend to cooperate fully with any future investigations.

In connection with these inquiries, we have conducted an internal investigation, led by outside counsel, to determine whether we have engaged in any of the improper business practices that are the focus of the inquiries. This investigation is complete and uncovered no evidence indicating that we engaged in bid rigging, fictitious or inflated quotes or related matters or conditioning direct insurance on the placement of reinsurance. Consistent with long-standing and wide-spread industry practice, we have in the past entered into incentive commission arrangements with brokers; however, we have not entered into any of these arrangements with respect to 2005.

Two purported shareholders class action lawsuits have been filed against us and some of our executive officers relating to the practices being investigated by the Attorney General of the State of New York and other state regulators. On April 13, 2005, these lawsuits were consolidated into one lawsuit. On May 13, 2005, the plaintiffs filed an amended, consolidated complaint and added as defendants the managing underwriters and one of the selling shareholders in our secondary offering completed in March 2004. As we have previously stated, we believe that the lawsuit is completely without merit and intend to vigorously defend against it.

Conference Call

We will host a conference call on Wednesday August 3, 2005 at 8:30 AM (Eastern) to discuss the second quarter financial results and related matters. This presentation will be available through an audio webcast accessible through the Investor Information section of our website at www.axiscapital.com.

In addition, a financial supplement relating to our financial results for the second quarter and six months 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 June 30, 2005 in excess of $3.1 billion and locations in Bermuda, the United States, Europe and Singapore. 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. AXIS Capital has been assigned a senior unsecured debt rating of Baa1 (stable) by Moody's Investors Service and BBB+ (stable) by Standard & Poor's. For more information about AXIS Capital, visit our website at www.axiscapital.com.

                    AXIS CAPITAL HOLDINGS LIMITED

                UNAUDITED CONSOLIDATED BALANCE SHEETS
              As at June 30, 2005 and December 31, 2004
 (Expressed in thousands of U.S. dollars, except share and per share
                               amounts)

                                              June 30,    December 31,
                                                 2005         2004
Assets
Cash and cash equivalents                    $   793,304  $   632,329
Investments at fair market value               5,298,519    5,128,345
 (Amortized cost 2005: $5,295,717;
   2004: $5,114,997)
Other investments                                441,650      271,344
Accrued interest receivable                       54,571       47,487
Securities lending collateral                    998,196      865,311
Insurance and reinsurance premium
 balances receivable                           1,230,321      914,562
Deferred acquisition costs                       263,491      211,082
Prepaid reinsurance premiums                     269,625      271,187
Reinsurance recoverable                          648,025      596,299
Intangible assets                                 29,947       31,734
Other assets                                      89,307       68,605
                                              -----------  -----------
       Total Assets                          $10,116,956  $ 9,038,285
                                              ===========  ===========

Liabilities
Reserve for losses and loss expenses         $ 2,929,699  $ 2,404,560
Unearned premiums                              2,071,073    1,644,771
Insurance and reinsurance balances payable       251,753      247,940
Accounts payable and accrued expenses             91,982       89,804
Securities lending payable                       994,346      864,354
Net payable for investments purchased            112,515       49,854
Debt                                             498,992      498,938
                                              -----------  -----------
       Total Liabilities                       6,950,360    5,800,221
                                              -----------  -----------

Shareholders' Equity
Share capital
  (Authorized 800,000,000 common shares,
   par value $0.0125; issued and
   outstanding 2005: 140,668,032;
   2004: 152,764,917)                              1,758        1,910
Additional paid-in capital                     1,680,148    2,017,144
Accumulated other comprehensive (loss) income       (255)      12,915
Retained earnings                              1,484,945    1,206,095
                                              -----------  -----------
       Total Shareholders' Equity              3,166,596    3,238,064
                                              -----------  -----------

                                              -----------  -----------
       Total Liabilities & Shareholders'
        Equity                               $10,116,956  $ 9,038,285
                                              ===========  ===========


                    AXIS CAPITAL HOLDINGS LIMITED

           UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
     For the Quarters and Six Months ended June 30, 2005 and 2004
 (Expressed in thousands of U.S. dollars, except share and per share
                               amounts)

                        Quarters ended           Six Months ended
                     June 30,     June 30,     June 30,     June 30,
                       2005         2004         2005         2004
Revenues           (see Note 1) (see Note 1) (see Note 1) (see Note 1)
  Gross premiums
   written            $767,293     $629,319   $1,965,992   $1,673,442
  Premiums ceded      (151,497)    (141,442)    (288,125)    (286,375)
  Change in
   unearned
   premiums              8,617       (1,474)    (427,864)    (429,416)
                   ------------ ------------ ------------ ------------
  Net premiums
   earned              624,413      486,403    1,250,003      957,651

  Net investment
   income               58,001       33,345      110,759       64,604
  Net realized
   gains (losses)        1,831       (4,411)         438        5,686
  Other insurance
   related (loss)
   income               (5,451)         156       (5,519)         444
                   ------------ ------------ ------------ ------------
   Total revenues      678,794      515,493    1,355,681    1,028,385
                   ------------ ------------ ------------ ------------

Expenses
  Net losses and
   loss expenses       322,853      257,850      667,143      500,450
  Acquisition costs     85,471       65,491      176,772      122,454
  General and
   administrative
   expenses             56,796       42,442      111,098       84,292
  Foreign exchange
   losses               27,226        6,413       50,644        7,558
  Interest expense       7,818          181       15,897          219
                   ------------ ------------ ------------ ------------
   Total expenses      500,164      372,377    1,021,554      714,973
                   ------------ ------------ ------------ ------------

Income before
 income taxes          178,630      143,116      334,127      313,412
  Income tax
   expense              (5,785)      (2,260)      (9,483)      (5,770)
                   ------------ ------------ ------------ ------------
Net Income            $172,845     $140,856     $324,644     $307,642
                   ============ ============ ============ ============

Weighted average
 common shares and
 common share
 equivalents -
 basic             140,566,523  152,487,082  143,584,354  152,484,015
                   ============ ============ ============ ============

Weighted average
 common shares and
 common share
 equivalents -
 diluted           153,637,750  166,842,606  157,013,504  166,785,604
                   ============ ============ ============ ============

Net income per
 share - basic           $1.23        $0.92        $2.26        $2.02
                   ============ ============ ============ ============

Net income per
 share - diluted         $1.13        $0.84        $2.07        $1.84
                   ============ ============ ============ ============

Insurance Ratios
Loss ratio                51.7%        53.0%        53.4%        52.3%
Expense ratio             22.8%        22.2%        23.0%        21.6%
                   ------------ ------------ ------------ ------------
Combined ratio            74.5%        75.2%        76.4%        73.9%
                   ============ ============ ============ ============

Note 1: Interest expense has been reclassified from general
administrative expenses for 2004 to conform to current year
classifications. Interest expense consists of interest due on
outstanding debt, the amortization of debt offering expenses and
offering discounts and fees relating to our credit facility.


                     AXIS CAPITAL HOLDINGS LIMITED

                 UNAUDITED CONSOLIDATED SEGMENTAL DATA
                      Quarter ended June 30, 2005

                                           Global    U.S.      Total
                                         Insurance Insurance Insurance
                                        ---------- --------- ---------

Revenues:
Gross premiums written                  $ 227,512 $ 285,470 $ 512,982
Net premiums written                      214,005   151,098   365,103
Net premiums earned                       204,717   108,321   313,038
Other insurance related (loss) income      (5,627)      326    (5,301)
Expenses:
Net losses and loss expenses              (78,039)  (70,658) (148,697)
Acquisition costs                         (26,455)   (3,695)  (30,150)
General and administrative expenses        (9,632)  (20,777)  (30,409)
                                         --------- --------- ---------
Underwriting income (a)                    84,964    13,517    98,481

Corporate expenses
Net investment income
Realized gains on investments
Foreign exchange losses
Interest expense
Income before income taxes

Net loss and loss expense ratio              38.1%     65.2%     47.5%
Acquisition cost ratio                       12.9%      3.4%      9.6%
General and administrative expense ratio      4.7%     19.2%      9.7%
                                         --------- --------- ---------
Combined ratio                               55.7%     87.8%     66.8%
                                         ========= ========= =========


                                        Reinsurance Corporate  Total
                                        ----------- --------- --------

Revenues:
Gross premiums written                 $  254,311  $      - $ 767,293
Net premiums written                      250,693         -   615,796
Net premiums earned                       311,375         -   624,413
Other insurance related (loss) income        (150)        -    (5,451)
Expenses:
Net losses and loss expenses             (174,156)        -  (322,853)
Acquisition costs                         (55,321)        -   (85,471)
General and administrative expenses       (12,330)        -   (42,739)
                                         ---------- -------- ---------
Underwriting income (a)                    69,418         -   167,899

Corporate expenses                                  (14,057)  (14,057)
Net investment income                                58,001    58,001
Realized gains on investments                         1,831     1,831
Foreign exchange losses                             (27,226)  (27,226)
Interest expense                                     (7,818)   (7,818)
                                                             ---------
Income before income taxes                                   $178,630
                                                             =========

Net loss and loss expense ratio              55.9%              51.7%
Acquisition cost ratio                       17.8%              13.7%

General and administrative expense ratio      4.0%      2.2%     9.1%
                                         ---------- -------- ---------
Combined ratio                               77.7%              74.5%
                                         ==========          =========

(a) The Company utilizes underwriting income as a measure of
underwriting profitability as it evaluates profitability solely on
underwriting related revenues and costs. Items not considered to be
part of underwriting include corporate expenses, investment income,
realized losses and gains on the sale of investments, foreign exchange
and interest expense. These items are evaluated separately from our
underwriting results. Underwriting income takes into account net
premiums earned and other insurance related income as revenue and net
losses and loss expenses, acquisition costs and underwriting related
general and administrative expenses as expenses. Underwriting income
is the difference between the revenue and expense items.


                     AXIS CAPITAL HOLDINGS LIMITED

                 UNAUDITED CONSOLIDATED SEGMENTAL DATA
                      Quarter ended June 30, 2004

                                           Global     U.S.     Total
                                         Insurance Insurance Insurance
                                        ---------- --------- ---------

Revenues:
Gross premiums written                  $ 216,188 $ 219,915 $ 436,103
Net premiums written                      183,240   117,605   300,845
Net premiums earned                       196,568    83,667   280,235
Other insurance related income (loss)        (399)        -      (399)
Expenses:
Net losses and loss expenses             (117,616)  (47,124) (164,740)
Acquisition costs                         (30,422)   (2,363)  (32,785)
General and administrative expenses        (7,265)  (16,112)  (23,377)
                                         --------- --------- ---------
Underwriting income(a)                     40,866    18,068    58,934

Corporate expenses
Net investment income
Realized losses on investments
Foreign exchange losses
Interest expense
Income before income taxes

Net loss and loss expense ratio              59.8%     56.3%     58.8%
Acquisition cost ratio                       15.5%      2.8%     11.7%

General and administrative expense ratio      3.7%     19.3%      8.3%
                                         --------- --------- ---------
Combined ratio                               79.0%     78.4%     78.8%
                                         ========= ========= =========


                                        Reinsurance Corporate  Total
                                        ----------- --------- --------

Revenues:
Gross premiums written                 $  193,216        -  $ 629,319
Net premiums written                      187,032        -   487,877
Net premiums earned                       206,168        -   486,403
Other insurance related income (loss)         555        -       156
Expenses:
Net losses and loss expenses              (93,110)       -  (257,850)
Acquisition costs                         (32,706)       -   (65,491)
General and administrative expenses        (9,426)       -   (32,803)
                                         ---------- -------- ---------
Underwriting income(a)                     71,481        -   130,415

Corporate expenses                                  (9,639)   (9,639)
Net investment income                               33,345    33,345
Realized losses on investments                      (4,411)   (4,411)
Foreign exchange losses                             (6,413)   (6,413)
Interest expense                                      (181)     (181)
                                                             ---------
Income before income taxes                                  $ 143,116
                                                             =========

Net loss and loss expense ratio              45.2%               53.0%
Acquisition cost ratio                       15.9%               13.5%

General and administrative expense ratio      4.6%     1.9%      8.7%
                                         ---------- -------- ---------
Combined ratio                               65.7%               75.2%
                                         ==========          =========

(a) The Company utilizes underwriting income as a measure of
underwriting profitability as it evaluates profitability solely on
underwriting related revenues and costs. Items not considered to be
part of underwriting include corporate expenses, investment income,
realized losses and gains on the sale of investments, foreign exchange
and interest expense. These items are evaluated separately from our
underwriting results. Underwriting income takes into account net
premiums earned and other insurance related income as revenue and net
losses and loss expenses, acquisition costs and underwriting related
general and administrative expenses as expenses. Underwriting income
is the difference between the revenue and expense items.

                     AXIS CAPITAL HOLDINGS LIMITED

                 UNAUDITED CONSOLIDATED SEGMENTAL DATA
                    Six Months ended June 30, 2005

                                           Global     U.S.     Total
                                         Insurance Insurance Insurance
                                        ---------- --------- ---------

Revenues:
Gross premiums written                  $ 479,835$ 462,396  $ 942,231
Net premiums written                      417,435  242,330    659,765
Net premiums earned                       421,575  214,822    636,397
Other insurance related (loss) income      (5,865)     346     (5,519)
Expenses:
Net losses and loss expenses             (143,934)(142,376)  (286,310)
Acquisition costs                         (59,537)  (6,739)   (66,276)
General and administrative expenses       (19,484) (41,088)   (60,572)
                                         --------- --------- ---------
Underwriting income (a)                   192,755   24,965    217,720

Corporate expenses
Net investment income
Realized gains on investments
Foreign exchange losses
Interest expense
Income before income taxes

Net loss and loss expense ratio              34.1%    66.3%      45.0%
Acquisition cost ratio                       14.1%     3.1%      10.4%
General and administrative expense ratio      4.6%    19.1%       9.5%
                                         --------- --------- ---------
Combined ratio                               52.8%    88.5%      64.9%
                                         ========= ========= =========


                                      Reinsurance  Corporate   Total
                                      -----------  --------- ---------

Revenues:
Gross premiums written                 $1,023,761        - $1,965,992
Net premiums written                    1,018,102        -  1,677,867
Net premiums earned                       613,606        -  1,250,003
Other insurance related (loss) income           -        -     (5,519)
Expenses:
Net losses and loss expenses             (380,833)       -   (667,143)
Acquisition costs                        (110,496)       -   (176,772)

General and administrative expenses       (24,631)       -    (85,203)
                                        ---------- -------- ----------
Underwriting income (a)                    97,646        -    315,366

Corporate expenses                                 (25,895)   (25,895)
Net investment income                              110,759    110,759
Realized gains on investments                          438        438
Foreign exchange losses                            (50,644)   (50,644)
Interest expense                                   (15,897)   (15,897)
                                                            ----------
Income before income taxes                                 $  334,127
                                                            ==========

Net loss and loss expense ratio              62.1%               53.4%
Acquisition cost ratio                       18.0%               14.1%
General and administrative expense
 ratio                                        4.0%     2.1%       8.9%
                                        ---------- -------- ----------
Combined ratio                               84.1%               76.4%
                                        ==========          ==========


(a) The Company utilizes underwriting income as a measure of
underwriting profitability as it evaluates profitability solely on
underwriting related revenues and costs. Items not considered to be
part of underwriting include corporate expenses, investment income,
realized losses and gains on the sale of investments, foreign exchange
and interest expense. These items are evaluated separately from our
underwriting results. Underwriting income takes into account net
premiums earned and other insurance related income as revenue and net
losses and loss expenses, acquisition costs and underwriting related
general and administrative expenses as expenses. Underwriting income
is the difference between the revenue and expense items.


                     AXIS CAPITAL HOLDINGS LIMITED

                 UNAUDITED CONSOLIDATED SEGMENTAL DATA
                    Six Months ended June 30, 2004


                                           Global     U.S.     Total
                                         Insurance Insurance Insurance
                                        ---------- --------- ---------

Revenues:
Gross premiums written                  $ 516,596$ 368,257  $ 884,853
Net premiums written                      415,779  198,429    614,208
Net premiums earned                       396,284  157,571    553,855
Other insurance related (loss) income        (219)       -       (219)
Expenses:
Net losses and loss expenses             (216,143) (96,740)  (312,883)
Acquisition costs                         (56,463)  (2,537)   (59,000)
General and administrative expenses       (15,455) (31,705)   (47,160)
                                         --------- --------- ---------
Underwriting income (a)                   108,004   26,589    134,593

Corporate expenses
Net investment income
Realized gains on investments
Foreign exchange losses
Interest expense
Income before income taxes

Net loss and loss expense ratio              54.5%    61.4%      56.5%
Acquisition cost ratio                       14.2%     1.6%      10.6%
General and administrative expense ratio      3.9%    20.1%       8.5%
                                         --------- --------- ---------
Combined ratio                               72.6%    83.1%      75.6%
                                         ========= ========= =========


                                       Reinsurance Corporate   Total
                                       ----------- --------- ---------

Revenues:
Gross premiums written                 $  788,589        - $1,673,442
Net premiums written                      772,859        -  1,387,067
Net premiums earned                       403,796        -    957,651
Other insurance related (loss) income         663        -        444
Expenses:
Net losses and loss expenses             (187,567)       -   (500,450)
Acquisition costs                         (63,454)       -   (122,454)
General and administrative expenses       (18,528)       -    (65,688)
                                        ---------- -------- ----------
Underwriting income (a)                   134,910        -    269,503

Corporate expenses                                 (18,604)   (18,604)
Net investment income                               64,604     64,604
Realized gains on investments                        5,686      5,686
Foreign exchange losses                             (7,558)    (7,558)
Interest expense                                      (219)      (219)
                                                            ----------
Income before income taxes                                 $  313,412
                                                            ==========

Net loss and loss expense ratio              46.5%               52.3%
Acquisition cost ratio                       15.7%               12.8%
General and administrative expense
 ratio                                        4.6%     1.9%       8.8%
                                        ---------- -------- ----------
Combined ratio                               66.8%               73.9%
                                        ==========          ==========

(a) The Company utilizes underwriting income as a measure of
underwriting profitability as it evaluates profitability solely on
underwriting related revenues and costs. Items not considered to be
part of underwriting include corporate expenses, investment income,
realized losses and gains on the sale of investments, foreign exchange
and interest expense. These items are evaluated separately from our
underwriting results. Underwriting income takes into account net
premiums earned and other insurance related income as revenue and net
losses and loss expenses, acquisition costs and underwriting related
general and administrative expenses as expenses. Underwriting income
is the difference between the revenue and expense items.

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 our expectations. Important factors that could cause actual events or results to be materially different from our expectations include (1) our limited operating history, (2) the occurrence of natural and man-made disasters, (3) actual claims exceeding our loss reserves, (4), failure of any of the loss limitation methods we employ, (5) effects of emerging claims and coverage issues, (6) the failure of our cedants to adequately evaluate risks, (7) the loss of one or more key executives (8) a decline in our ratings with rating agencies, (9) loss of business provided to us by our major brokers, (10) changes in governmental regulations, (11) increased competition and (12) general economic conditions. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Measures

In addition to the GAAP financial measures included within this release, we have presented "net income excluding net realized gains and losses on investments, net of tax", "net income excluding net realized gains and losses on investments and foreign exchange, net of tax" and "diluted book value per share," which are non-GAAP financial measures. We have included the first and second measures as we believe that security analysts, rating agencies and investors believe that realized gains and losses and foreign exchange, where an actively managed foreign exchange program is not in place, are largely opportunistic and are a function of economic and interest rate conditions. As a result, we believe that they evaluate earnings before realized gains and losses and foreign exchange, adjusted for tax, to make performance comparisons with our industry peers. We have included the third measure because it takes into account the effect of dilutive securities and, therefore, we believe 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 Six Months ended June 30, 2005 and 2004
  (Expressed in thousands of U.S. dollars, except per share amounts)


                          Quarters ended           Six Months ended
                      June 30,     June 30,     June 30,     June 30,
                        2005         2004         2005         2004

Net income            $172,845     $140,856     $324,644     $307,642

Adjustment for net
 realized losses
 (gains) on
 investments            (1,831)       4,411         (438)      (5,686)
Adjustment for
 associated tax
 impact of net
 realized (losses)
 gains on
 investments               (65)        (595)        (521)         358

Net income
 excluding
 realized (losses)
 gains on
 investments,      ------------ ------------ ------------ ------------
 net of tax           $170,949     $144,672     $323,685     $302,314
                   ============ ============ ============ ============

Net income per
 share - diluted         $1.13        $0.84        $2.07        $1.84
                   ============ ============ ============ ============

Adjustment for net
 realized (losses)
 gains on
 investments             (0.01)        0.03            -        (0.03)

Adjustment for
 associated tax
 impact of net
 realized (losses)
 gains on
 investments                 -            -            -            -

Net income excluding
 realized (losses)
 gains on
 investments, net
 of tax per        ------------ ------------ ------------ ------------
 diluted share           $1.12        $0.87        $2.07        $1.81
                   ============ ============ ============ ============


Weighted average
 common shares and
 common share
 equivalents -
 diluted           153,637,750  166,842,606  157,013,504  166,785,604
                   ============ ============ ============ ============

                    AXIS CAPITAL HOLDINGS LIMITED

              NON-GAAP FINANCIAL MEASURE RECONCILIATION
    NET INCOME EXCLUDING REALIZED GAINS AND LOSSES ON INVESTMENTS
               AND FOREIGN EXCHANGE LOSSES, NET OF TAX
     For the Quarters and Six Months ended June 30, 2005 and 2004
  (Expressed in thousands of U.S. dollars, except per share amounts)


                        Quarters ended           Six Months ended
                    June 30,     June 30,     June 30,     June 30,
                       2005         2004         2005         2004

Net income            $172,845     $140,856      324,644     $307,642

Adjustment for net
 realized losses
 (gains) on
 investments            (1,831)       4,411         (438)      (5,686)
Adjustment for
 foreign exchange
 losses                 27,226        6,413       50,644        7,558
Adjustment for
 associated tax
 impact                   (812)        (636)      (1,725)         308

Net income excluding
 realized (losses)
 gains on
 investments and
 foreign exchange
 losses, net of    ------------ ------------ ------------ ------------
 tax                  $197,428     $151,044     $373,125     $309,822
                   ============ ============ ============ ============

Net income per
 share - diluted         $1.13        $0.84        $2.07        $1.84
                   ============ ============ ============ ============

Adjustment for net
 realized losses
 (gains) on
 investments             (0.01)        0.03            -        (0.03)
Adjustment for
 foreign exchange
 losses                   0.18         0.04         0.32         0.05
Adjustment for
 associated tax
 impact                  (0.01)           -        (0.01)           -

Net income excluding
 realized (losses)
 gains on
 investments and
 foreign exchange
 losses, net of
 tax per diluted   ------------ ------------ ------------ ------------
 share                   $1.29        $0.91        $2.38        $1.86
                   ============ ============ ============ ============


Weighted average
 common shares and
 common share
 equivalents -
 diluted           153,637,750  166,842,606  157,013,504  166,785,604
                   ============ ============ ============ ============

                    AXIS CAPITAL HOLDINGS LIMITED

              NON-GAAP FINANCIAL MEASURE RECONCILIATION
                     DILUTED BOOK VALUE PER SHARE
              As at June 30, 2005 and December 31, 2004
 (Expressed in thousands of U.S. dollars, except share and per share
                               amounts)

                                             June 30,    December 31,
                                               2005           2004

Shareholders' equity                       $  3,166,596  $  3,238,064

Shares outstanding                          140,668,032   152,764,917

                                            ------------  ------------
Book value per share                       $      22.51  $      21.20
                                            ============  ============

Diluted book value on an "as if
 converted basis"

Shareholders' equity                       $  3,166,596  $  3,238,064
add in:
  proceeds on exercise of options               125,094        94,724
  proceeds on exercise of warrants              244,812       244,812

                                            ------------  ------------
Adjusted shareholders' equity                 3,536,502     3,577,600
                                            ------------  ------------

As if converted diluted shares
 outstanding
Shares outstanding                          140,668,032   152,764,917
add in:
  vesting of restricted stock                 2,288,218     2,182,700
  exercise of options                         6,686,681     5,694,181
  exercise of warrants                       19,633,839    19,619,152

                                            ------------  ------------
Diluted shares outstanding                  169,276,770   180,260,950
                                            ------------  ------------

                                            ------------  ------------
Diluted book value per share               $      20.89  $      19.85
                                            ============  ============

    CONTACT: AXIS Capital Holdings Limited

             Investor Contacts:
             Andrew Cook / Linda Ventresca, 441-297-9513
             info@axiscapital.com
             or
             Kekst and Company
             Media Contact:
             Laura Accettella, 212-521-4859

    SOURCE: AXIS Capital Holdings Limited