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Press Release

AXIS Capital Reports Record Fourth Quarter Net Income of $281.0 Million and Record Full Year Net Income of $925.8 Million

Company Release - 2/5/2007 4:30 PM ET

PEMBROKE, Bermuda--(BUSINESS WIRE)--

AXIS Capital Holdings Limited ("AXIS Capital") (NYSE: AXS) today reported net income available to common shareholders of $925.8 million, or $5.63 per diluted common share for the year ended December 31, 2006, compared with net income of $90.1 million, or $0.57 per diluted common share, for the year ended December 31, 2005. Net income available to common shareholders for the fourth quarter of 2006 was $281.0 million, or $1.69 per diluted share, compared with net income of $233.5 million, or $1.47 per diluted share, for the corresponding period in 2005. Prior year results were significantly impacted by losses incurred from Hurricanes Katrina, Rita and Wilma ("KRW").

Operating income for 2006 was $949.8 million, or $5.78 per diluted share, compared with $105.2 million, or $0.67 per diluted common share for 2005. This same item excluding foreign exchange gains (losses), net of tax, for 2006 was $919.0 million, or $5.59 per diluted common share, compared with $157.6 million, or $1.00 per diluted common share, for 2005.

Operating income for the fourth quarter of 2006 was $284.3 million, or $1.71 per diluted share, compared with $243.6 million, or $1.54 per diluted common share, for the same period in 2005. This same item excluding foreign exchange gains (losses), net of tax, for the fourth quarter of 2006 was $277.7 million, or $1.67 per diluted common share, compared with $245.2 million, or $1.54 per diluted common share, for the same period in 2005.

Operating income and operating income excluding foreign exchange gains (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 year ended December 31, 2006 included the following:

    --  Gross premiums written increased by 6.3% to $3,609.0 million;

    --  Net premiums written increased by 12.4% to $2,989.2 million;

    --  Net premiums earned increased by 5.5% to $2,694.3 million;

    --  Combined ratio of 77.3% included strong accident year results
        and net favorable prior period reserve development of 8.0
        percentage points;

    --  Pre-tax net investment income increased by 58.6% to $407.1
        million;

    --  Return on average common shareholders' equity was 26.7%; and

    --  Diluted book value per common share increased by 25.2% to
        $24.02.

Commenting on the 2006 financial results, John Charman, Chief Executive Officer and President of AXIS Capital, stated: "I am pleased to announce record earnings for AXIS Capital for 2006 resulting in an increase in diluted book value per common share of 25%. All of us at AXIS are committed to producing market-leading profitability and we will continue to develop our high-quality diverse global underwriting portfolio through 2007. Absent major catastrophic events, we expect 2007 results to be very positive and to continue to produce meaningful book value growth in line with our overall performance since inception."

Operating Results

Gross premiums written for 2006 increased by $215.2 million, or 6.3%, from 2005 and were derived 57.4% from our insurance segment and 42.6% from our reinsurance segment compared to 55.2% and 44.8%, respectively, for 2005. The increase was largely due to additional premiums written in our insurance segment. Our combined ratio decreased to 77.3% in 2006 from 101.8% in 2005. The combined ratio in 2005 included net losses incurred from KRW of 39.9 percentage points. We experienced favorable prior period reserve development from short tail lines of business of 8.0 percentage points in 2006 compared to 15.0 percentage points in 2005.

In the fourth quarter of 2006, gross premiums written increased by 12.7% compared to the same period in 2005 and were derived 77.1% from our insurance segment and 22.9% from our reinsurance segment compared to 74.6% and 25.4%, respectively, for the same period in 2005. The increase was largely attributable to new political risk business written in our global insurance operations. Our combined ratio was 73.7% for the fourth quarter of 2006 compared to 73.2% in the same period of 2005. The combined ratio in the fourth quarter of 2005 included net losses incurred from Hurricane Wilma of 25.1 percentage points. We experienced favorable prior period reserve development from short tail lines of business of 5.0 percentage points in the fourth quarter of 2006 compared to 21.3 percentage points in the same period of 2005.

Insurance Segment

For 2006, our insurance segment reported gross premiums written of $2,070.5 million and net premiums written of $1,460.4 million, up 10.4% and 25.1%, respectively from 2005. The growth was largely driven by significant improvement in pricing of catastrophe-exposed property and marine lines and also additional professional lines and political risk business. In addition, the percentage of premiums ceded decreased to 29.5% from 37.7% in 2005. Prior year ceded premiums included significant reinstatement premiums incurred following our utilization of reinsurance protections on KRW. Excluding the impact of these reinstatement premiums our net premiums written increased by 14.8%.

For the fourth quarter of 2006, our insurance segment reported gross premiums written of $550.7 million and net premiums written of $406.6 million, up 16.6% and 27.0%, respectively from the same period in 2005. The growth was largely driven by new political risk business in our global insurance operations.

Our insurance segment reported a combined ratio of 72.3% for 2006 compared to 93.2% for 2005. The prior year's combined ratio included net losses incurred from KRW of 33.8 percentage points. We experienced favorable prior period reserve development from short tail lines of business of 12.8 percentage points compared to 22.3 percentage points in 2005.

For the fourth quarter of 2006, our insurance segment reported a combined ratio of 71.4% compared to 71.9% in the same period of 2005. The combined ratio in the fourth quarter of 2005 included net losses incurred from Hurricane Wilma of 22.3 percentage points. In the fourth quarter of 2006, we experienced favorable reserve development of 4.7 percentage points compared to 30.4 percentage points in the fourth quarter of 2005.

Reinsurance Segment

Our reinsurance segment reported gross premiums written for 2006 of $1,538.6 million, up 1.3% from 2005, and $163.3 million for the fourth quarter of 2006, up 1.4% from the same period in 2005. The fourth quarter is not a significant renewal period for our reinsurance segment. Gross premiums written in 2005 included significant reinstatement premiums following KRW. Excluding these reinstatement premiums, gross premiums written in our reinsurance segment increased by 7.5% in 2006 as compared to 2005. The increase was driven by growth in our U.S casualty and professional liability reinsurance lines as well as new engineering business in Europe.

Our reinsurance segment reported a combined ratio of 77.6% for 2006 compared to 106.2% for 2005. The prior year's combined ratio included net losses incurred from KRW of 45.4 percentage points. We experienced favorable prior period reserve development from short tail lines of business of 3.5 percentage points in 2006 compared to 8.4 percentage points in 2005.

For the fourth quarter of 2006, our reinsurance segment reported a combined ratio of 71.4% compared to 69.5% in the same period of 2005. The combined ratio in the fourth quarter of 2005 included net losses incurred from Hurricane Wilma of 27.4 percentage points. We experienced favorable prior period reserve development from short tail lines of business of 5.3 percentage points in the fourth quarter of 2006 compared to 13.6 percentage points in the same period of 2005.

Investments

Pre-tax net investment income for the year ended December 31, 2006 was $407.1 million, an increase of 58.6%, or $150.4 million, from the year ended December 31, 2005. This increase principally reflects the impact of higher investment balances and average investment yields, and includes an additional $29.3 million in net investment income from our alternative investment portfolio ("other investments"). We experienced $25.7 million of net realized losses, compared to $16.9 million for the year ended December 31, 2005.

Pre-tax net investment income for the fourth quarter of 2006 was $123.1 million, an increase of 55.9%, or $44.1 million, from the same period in 2005. This increase principally reflects the impact of higher investment balances and average investment yields, and includes an additional $17.6 million in net investment income from our other investments. We experienced $3.3 million of net realized losses, compared to $10.9 million in the fourth quarter of 2005.

Capitalization / Shareholders' Equity

Total capitalization at December 31, 2006 was $4.9 billion, including $0.5 billion of long-term debt and $0.5 billion of preferred equity, compared to $4.0 billion at December 31, 2005.

At December 31, 2006, diluted book value per common share was $24.02 and book value per common share was $26.09, compared to $19.19 and $20.24 respectively, at December 31, 2005. Diluted book value per share is a non-GAAP financial measure. A reconciliation of this measure to book value per share is presented at the end of this release.

Conference Call

We will host a conference call on Tuesday February 6th, 2007 at 8:00 AM (Eastern) to discuss the fourth quarter, year end financial results and related matters. The teleconference can be accessed by dialing (866) 314-5050 (U.S callers) or (617) 213-8051 (international callers) and entering pass code 18187561 approximately ten minutes in advance of the call. A live, listen-only webcast of the call will be available via the Investor Information section of our website at www.axiscapital.com.

In addition, a financial supplement relating to our financial results for the quarter ended December 31, 2006 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, 2006 of $4.4 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
               CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                   As at December 31, 2006 and 2005
               (Expressed in thousands of U.S. dollars)

                                                2006         2005
                                             ------------ ------------
Assets
Investments:
   Fixed maturity investments available for
    sale, at fair value                       $6,532,723   $6,012,425
   Other investments, at fair value            1,130,664      409,504
                                             ------------ ------------
Total investments                              7,663,387    6,421,929
Cash and cash equivalents                      1,989,287    1,280,990
Accrued interest receivable                       76,967       59,784
Insurance and reinsurance balances receivable  1,125,822    1,026,975
Reinsurance recoverable balances               1,293,660    1,455,248
Reinsurance recoverable on paid losses            65,494       62,862
Deferred acquisition costs                       251,799      196,388
Prepaid reinsurance premiums                     241,821      281,579
Goodwill and intangible assets                    29,041       37,013
Securities lending collateral                    794,149      998,349
Other assets                                     133,860      104,859
                                             ------------ ------------
 Total Assets                                $13,665,287  $11,925,976
                                             ============ ============
Liabilities
Reserve for losses and loss expenses          $5,015,113   $4,743,338
Unearned premiums                              2,015,556    1,760,467
Insurance and reinsurance balances payable       294,374      314,232
Securities lending payable                       791,744      995,287
Liability under repurchase agreement             400,000            -
Net payable for investments purchased             62,185           76
Other liabilities                                174,524      101,179
Debt                                             499,144      499,046
                                             ------------ ------------
 Total Liabilities                            $9,252,640   $8,413,625
                                             ------------ ------------
Shareholders' Equity
Series A preferred shares                           $125         $125
Series B preferred shares                             31           31
Common shares                                      1,875        1,861
Additional paid-in capital                     2,429,250    2,386,200
Accumulated other comprehensive loss             (44,638)     (77,798)
Retained earnings                              2,026,004    1,201,932
                                             ------------ ------------
 Total Shareholders' Equity                    4,412,647    3,512,351
                                             ------------ ------------
 Total Liabilities & Shareholders' Equity    $13,665,287  $11,925,976
                                             ============ ============
                    AXIS CAPITAL HOLDINGS LIMITED
          CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
     For the quarters and years ended December 31, 2006 and 2005
 (Expressed in thousands of U.S. dollars, except share and per share
                               amounts)


                         Quarter ended              Year ended
                         December 31,              December 31,
                   ------------------------- -------------------------
                      2006         2005         2006         2005
                   ------------ ------------ ------------ ------------
Revenues
 Gross premiums
  written             $714,006     $633,322   $3,609,036   $3,393,885
 Premiums ceded       (143,800)    (169,917)    (619,857)    (734,896)
 Change in unearned
  premiums             118,591      223,461     (294,909)    (105,306)
                   ------------ ------------ ------------ ------------
 Net premiums
  earned               688,797      686,866    2,694,270    2,553,683

 Net investment
  income               123,082       78,938      407,100      256,712
 Net realized
  investment losses     (3,274)     (10,915)     (25,702)     (16,912)
 Other insurance
  related income
  (loss)                 1,027          198        2,893       (5,085)
                   ------------ ------------ ------------ ------------
    Total revenues     809,632      755,087    3,078,561    2,788,398
                   ------------ ------------ ------------ ------------

Expenses
 Net losses and
  loss expenses        329,257      348,716    1,425,855    2,051,129
 Acquisition costs      91,808       96,175      386,959      337,383
 General and
  administrative
  expenses              86,858       57,507      268,396      212,842
 Foreign exchange
  losses (gains)        (7,078)       1,719      (32,505)      54,090
 Interest expense        8,315        8,191       32,954       32,447
                   ------------ ------------ ------------ ------------
    Total expenses     509,160      512,308    2,081,659    2,687,891
                   ------------ ------------ ------------ ------------

Income before
 income taxes          300,472      242,779      996,902      100,507
 Income tax expense    (10,302)      (4,908)     (33,842)      (6,067)
                   ------------ ------------ ------------ ------------
Net income             290,170      237,871      963,060       94,440
Preferred share
 dividends              (9,212)      (4,379)     (37,295)      (4,379)
                   ------------ ------------ ------------ ------------

Net income
 available to
 common
 shareholders         $280,958     $233,492     $925,765      $90,061
                   ============ ============ ============ ============

Weighted average
 common shares and
  common share
   equivalents -
   basic           150,006,396  144,750,783  149,744,615  143,225,774

Weighted average
 common shares and
 common share
  equivalents -
  diluted          165,986,272  159,123,364  164,394,048  157,523,952
                   ============ ============ ============ ============

Net income per
 share - basic           $1.87        $1.61        $6.18        $0.63
                   ============ ============ ============ ============
                                          1                         1
Net income per
 share - diluted         $1.69        $1.47        $5.63        $0.57
                   ============ ============ ============ ============

Key Ratios
Loss ratio                47.8%        50.8%        52.9%        80.3%
Expense ratio             25.9%        22.4%        24.4%        21.5%
                   ------------ ------------ ------------ ------------
Combined ratio            73.7%        73.2%        77.3%       101.8%
                   ============ ============ ============ ============
               AXIS CAPITAL HOLDINGS LIMITED
          CONSOLIDATED SEGMENTAL DATA (UNAUDITED)
              Quarter ended December 31, 2006
                      ($ in thousands)

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

Gross premiums
 written           $257,868  $292,828  $550,696    $163,310  $714,006
Net premiums
 written            245,849   160,756   406,605     163,601   570,206
Net premiums earned 191,397   140,378   331,775     357,022   688,797
Other insurance
 related income           -       284       284         743     1,027
Net losses and loss
 expenses           (84,432)  (66,017) (150,449)   (178,808) (329,257)
Acquisition costs   (24,167)  (10,829)  (34,996)    (56,812)  (91,808)
General and
 administrative
 expenses           (16,384)  (35,463)  (51,847)    (19,281)  (71,128)
                   --------- --------- --------- ----------- ---------
Underwriting income $66,414   $28,353   $94,767    $102,864   197,631
                   ========= ========= ========= ===========
Corporate:
Corporate expenses                                            (15,730)
Net investment
 income                                                       123,082
Net realized
 investment losses                                             (3,274)
Foreign exchange
 gains                                                          7,078
Interest expense                                               (8,315)
                                                             ---------
Income before
 income taxes                                                $300,472
                                                             =========

Net loss and loss
 expense ratio         44.1%     47.0%     45.3%       50.1%     47.8%
Acquisition cost
 ratio                 12.6%      7.7%     10.5%       15.9%     13.3%
General and
 administrative
 expense ratio          8.6%     25.3%     15.6%        5.4%     12.6%
                   --------- --------- --------- ----------- ---------
Combined ratio         65.3%     80.0%     71.4%       71.4%     73.7%
                   ========= ========= ========= =========== =========
                    AXIS CAPITAL HOLDINGS LIMITED
               CONSOLIDATED SEGMENTAL DATA (UNAUDITED)
                   Quarter ended December 31, 2005
                           ($ in thousands)

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

Gross premiums
 written            $189,647  $282,556  $472,203   $161,119  $633,322
Net premiums
 written             168,455   151,673   320,128    143,277   463,405
Net premiums earned  185,081   131,538   316,619    370,247   686,866
Other insurance
 related income            -       198       198          -       198
Net losses and loss
 expenses            (40,709) (117,264) (157,973)  (190,743) (348,716)
Acquisition costs    (25,078)  (16,075)  (41,153)   (55,022)  (96,175)
General and
 administrative
 expenses             (8,271)  (20,105)  (28,376)   (11,592)  (39,968)
                    --------- --------- --------- ---------- ---------
Underwriting income
 (loss)             $111,023  $(21,708)  $89,315   $112,890   202,205
                    ========= ========= ========= ==========
Corporate:
Corporate expenses                                            (17,539)
Net investment
 income                                                        78,938
Net realized
 investment losses                                            (10,915)
Foreign exchange
 losses                                                        (1,719)
Interest expense                                               (8,191)
                                                             ---------
Income before income
 taxes                                                       $242,779
                                                             =========

Net loss and loss
 expense ratio          22.0%     89.1%     49.9%      51.5%     50.8%
Acquisition cost
 ratio                  13.5%     12.2%     13.0%      14.9%     14.0%
General and
 administrative
 expense ratio           4.5%     15.3%      9.0%       3.1%      8.4%
                    --------- --------- --------- ---------- ---------
Combined ratio          40.0%    116.6%     71.9%      69.5%     73.2%
                    ========= ========= ========= ========== =========
                    AXIS CAPITAL HOLDINGS LIMITED
               CONSOLIDATED SEGMENTAL DATA (UNAUDITED)
                     Year ended December 31, 2006
                           ($ in thousands)

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

Gross
 premiums
 written     $958,251  $1,112,216  $2,070,467  $1,538,569  $3,609,036
Net premiums
 written      850,533     609,866   1,460,399   1,528,780   2,989,179
Net premiums
 earned       746,393     559,367   1,305,760   1,388,510   2,694,270
Other
 insurance
 related
 income             -       1,758       1,758       1,135       2,893
Net losses
 and loss
 expenses    (331,778)   (304,906)   (636,684)   (789,171) (1,425,855)
Acquisition
 costs       (102,673)    (49,329)   (152,002)   (234,957)   (386,959)
General and
 adminis-
 trative
 expenses     (49,058)   (106,858)   (155,916)    (53,658)   (209,574)
             --------- ----------- ----------- ----------- -----------
Underwriting
 income      $262,884    $100,032    $362,916    $311,859     674,775
             ========= =========== =========== ===========
Corporate:
Corporate
 expenses                                                     (58,822)
Net
 investment
 income                                                       407,100
Net realized
 investment
 losses                                                       (25,702)
Foreign
 exchange
 gains                                                         32,505
Interest
 expense                                                      (32,954)
                                                           -----------
Income before
 income taxes                                                $996,902
                                                           ===========

Net loss and
 loss expense
 ratio           44.5%       54.5%       48.8%       56.8%       52.9%
Acquisition
 cost ratio      13.8%        8.8%       11.6%       16.9%       14.4%
General and
 adminis-
 trative
 expense
 ratio            6.6%       19.1%       11.9%        3.9%       10.0%
             --------- ----------- ----------- ----------- -----------
Combined
 ratio           64.9%       82.4%       72.3%       77.6%       77.3%
             ========= =========== =========== =========== ===========
                    AXIS CAPITAL HOLDINGS LIMITED
               CONSOLIDATED SEGMENTAL DATA (UNAUDITED)
                     Year ended December 31, 2005
                           ($ in thousands)

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

Gross
 premiums
 written     $861,098  $1,013,919  $1,875,017  $1,518,868  $3,393,885
Net premiums
 written      649,703     518,064   1,167,767   1,491,222   2,658,989
Net premiums
 earned       748,015     453,534   1,201,549   1,352,134   2,553,683
Other
 insurance
 related
 (loss)
 income        (5,865)        780      (5,085)          -      (5,085)
Net losses
 and loss
 expenses    (492,667)   (390,140)   (882,807) (1,168,322) (2,051,129)
Acquisition
 costs        (97,908)    (21,092)   (119,000)   (218,383)   (337,383)
General and
 adminis-
 trative
 expenses     (36,794)    (80,909)   (117,703)    (48,410)   (166,113)
             --------- ----------- ----------- ----------- -----------
Underwriting
 income
 (loss)      $114,781    $(37,827)    $76,954    $(82,981)     (6,027)
             ========= =========== =========== ===========
Corporate:
Corporate
 expenses                                                     (46,729)
Net
 investment
 income                                                       256,712
Net realized
 investment
 losses                                                       (16,912)
Foreign
 exchange
 losses                                                       (54,090)
Interest
 expense                                                      (32,447)
                                                           -----------
Income
 before
 income
 taxes                                                       $100,507
                                                           ===========

Net loss and
 loss
 expense
 ratio           65.9%       86.0%       73.5%       86.4%       80.3%
Acquisition
 cost ratio      13.1%        4.7%        9.9%       16.2%       13.2%
General and
 adminis-
 trative
 expense
 ratio            4.9%       17.8%        9.8%        3.6%        8.3%
             --------- ----------- ----------- ----------- -----------
Combined
 ratio           83.9%      108.5%       93.2%      106.2%      101.8%
             ========= =========== =========== =========== ===========

Cautionary Note Regarding Forward-Looking Statements

This release contains forward-looking statements within the meaning of the U.S. federal securities laws. Forward-looking statements contained in this release include our expectations regarding market conditions and information regarding our estimates of losses related to natural disasters. 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) the failure of any of the loss limitation methods we employ, (5) the 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) the loss of business provided to us by our major brokers, (10) changes in governmental regulations, (11) increased competition, (12) general economic conditions and (13) the other factors set forth in our most recent report on Form 10-K, Form 10-Q and other documents on file with the Securities and Exchange Commission. 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 "operating income" which represents net income available to common shareholders, before the after tax impact of net realized gains and losses on investments, "operating income, excluding the after tax impact of foreign exchange gains/losses" and "diluted book value per common 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
                           OPERATING INCOME
     For the Quarters and Years ended December 31, 2006 and 2005
  (Expressed in thousands of U.S. dollars, except per share amounts)


                         Quarter ended              Year ended
                         December 31,              December 31,
                   ------------------------- -------------------------
                      2006         2005         2006         2005
                   ------------ ------------ ------------ ------------

Net income
 available to
 common
 shareholders         $280,958     $233,492      925,765      $90,061

Adjustment for net
 realized
 investment losses       3,274       10,915       25,702       16,912

Adjustment for
 associated tax
 impact                     99         (775)      (1,625)      (1,813)
of net realized
 losses on
 investments

                   ------------ ------------ ------------ ------------
Operating income      $284,331     $243,632     $949,842     $105,160
                   ============ ============ ============ ============

Net income per
 share - diluted         $1.69        $1.47        $5.63        $0.57
                   ============ ============ ============ ============

Adjustment for net
 realized
 investment losses        0.02         0.07         0.16         0.11
Adjustment for
 associated tax
 impact
of net realized
 losses on
 investments                 -            -        (0.01)       (0.01)


                   ------------ ------------ ------------ ------------
Operating income
 per share -
 diluted                 $1.71        $1.54        $5.78        $0.67
                   ============ ============ ============ ============


Weighted average
 common shares and
common share
 equivalents -
 diluted           165,986,272  159,123,364  164,394,048  157,523,952
                   ============ ============ ============ ============
                    AXIS CAPITAL HOLDINGS LIMITED
              NON-GAAP FINANCIAL MEASURE RECONCILIATION
OPERATING INCOME EXCLUDING FOREIGN EXCHANGE (GAINS) LOSSES, NET OF TAX
     For the Quarters and Years ended December 31, 2006 and 2005
  (Expressed in thousands of U.S. dollars, except per share amounts)


                         Quarter ended              Year ended
                         December 31,              December 31,
                   ------------------------- -------------------------
                      2006         2005         2006         2005
                   ------------ ------------ ------------ ------------

Net income
 available to
 common
 shareholders         $280,958     $233,492      925,765      $90,061

Adjustment for net
 realized
 investment losses       3,274       10,915       25,702       16,912
Adjustment for
 foreign exchange
 losses (gains)         (7,078)       1,719      (32,505)      54,090
Adjustment for
 associated tax
 impact                    534         (891)          (6)      (3,454)

Operating income
 excluding foreign
 exchange
                   ------------ ------------ ------------ ------------
 gains, net of tax    $277,688     $245,235     $918,956     $157,609
                   ============ ============ ============ ============

Net income per
 share - diluted         $1.69        $1.47        $5.63        $0.57
                   ============ ============ ============ ============

Adjustment for net
 realized
 investment losses        0.02         0.07         0.16         0.11
Adjustment for
 foreign exchange
 losses (gains)          (0.04)        0.01        (0.20)        0.34
Adjustment for
 associated tax
 impact                      -        (0.01)           -        (0.02)

Operating income
 excluding foreign
 exchange
                   ------------ ------------ ------------ ------------
 (losses) gains,
  net of tax, per
  share - diluted        $1.67        $1.54        $5.59        $1.00
                   ============ ============ ============ ============


Weighted average
 common shares and
 common share
  equivalents -
  diluted          165,986,272  159,123,364  164,394,048  157,523,952
                   ============ ============ ============ ============
                    AXIS CAPITAL HOLDINGS LIMITED
              NON-GAAP FINANCIAL MEASURE RECONCILIATION
                     DILUTED BOOK VALUE PER SHARE
                   As at December 31, 2006 and 2005
 (Expressed in thousands of U.S. dollars, except share and per share
                               amounts)

                                                2006         2005
                                             ------------ ------------

Total shareholders' equity                    $4,412,647   $3,512,351
Less: Preferred equity                          (500,000)    (500,000)
                                             ------------ ------------
Common shareholders' equity                   $3,912,647   $3,012,351

Common shares outstanding                    149,982,139  148,830,691

                                             ------------ ------------
Book value per common share                       $26.09       $20.24
                                             ============ ============

Diluted book value on an "as if converted
 basis"

Common shareholders' equity                   $3,912,647   $3,012,351
add in:
 proceeds on exercise of options                  94,811      117,808
 proceeds on exercise of warrants                244,363      244,812

                                             ------------ ------------
Adjusted shareholders' equity                  4,251,821    3,374,971
                                             ------------ ------------

As if converted diluted shares outstanding
Common shares outstanding                    149,982,139  148,830,691
add in:
 vested phantom stock units                       45,805       38,068
 vesting of restricted stock                   2,228,500    1,172,550
 exercise of options                           5,146,984    6,174,464
 exercise of warrants                         19,644,253   19,650,509

                                             ------------ ------------
Diluted common shares outstanding            177,047,681  175,866,282
                                             ------------ ------------

Diluted book value per common share               $24.02       $19.19
                                             ============ ============

Source: AXIS Capital Holdings Limited

Contact: Investor Contacts AXIS Capital Holdings Limited Linda Ventresca, 441-405-2727 info@axiscapital.com or Media Contacts Kekst and Company Joseph Kuo, 212-521-4800