A.M. Best Co. has affirmed the financial strength rating (FSR) of A (Excellent) and the issuer credit ratings (ICR) of “a+” of AXIS Specialty Limited (AXIS) and its operating affiliates. Concurrently, A.M. Best has affirmed the ICR of “bbb+” and all existing debt ratings of AXIS Capital Holdings Limited (both of Hamilton, Bermuda) [NYSE: AXS]. The outlook for all ratings is stable. (See below for a detailed list of the companies and ratings.)

The ratings of AXIS reflect its continued strong operating performance, excellent risk-based capitalization, solid risk management controls and its highly experienced management team. AXIS’ operating strategy is to maintain a diversified book of business, both geographically and by line of business, with a focus on broker sourced short- and medium-tail lines, principally specialty insurance lines including property, marine, aerospace and political risk, along with property catastrophe reinsurance coverage and other specialty reinsurance coverages. The company also has selectively expanded into professional lines and umbrella and excess liability coverages.

AXIS’ overall operating performance has been consistently strong with a six-year average combined ratio of 80.5% and a six-year average return on equity of 17.9%, both of which place the company among the leaders in its Bermuda peer group. AXIS’ excellent performance is directly attributable to its well established risk management controls and systems. Furthermore, AXIS continues to maintain a very strong level of risk-based capitalization under A.M. Best’s stress scenarios. A.M. Best expects AXIS to continue managing its capital base in a very conservative manner within acceptable ranges to support its current ratings.

AXIS’ positive attributes are partially offset by the current soft pricing environment and the challenges this market brings to the insurance/reinsurance industry.