AXIS Capital's operating income for the third quarter of 2009 is expected to include an increase of approximately $136 million in the fair value liability of an indemnity derivative contract that is exposed to longevity risk. The increase in fair value liability, which is expected to be reported within "Other Insurance Related Loss," is the result of unfavorable longevity experience in the life settlements portfolio underlying this contract. There is considerable uncertainty with respect to the measurement of fair value for this contract at this time. Settlement under the terms of this contract is not due to be made until 2017 and the net derivative liability of $229 million recorded at September 30, 2009 would represent nearly a full loss to the contract. Further, the Company is reviewing its legal rights and obligations and has reserved its rights under the contract.

The Company expects diluted book value per common share to increase approximately 10% for the third quarter of 2009 to approximately $31.50 per common share. The Company estimates its total capitalization at September 30, 2009 will be approximately $5.9 billion, including $5.4 billion of shareholders' equity and $0.5 billion of long-term debt, compared to total capitalization of $5.0 billion at December 31, 2008.

The Company's estimated net realized losses for the quarter is expected to include approximately $260 million in other-than-temporary impairment (OTTI) losses from medium-term note investments in its fixed maturity portfolio for which the Company no longer expects full recovery. The recognition of these OTTI losses does not indicate that sales will occur, that sales are imminent or that sales are planned. Any recovery of value in future periods would accrete to shareholders' equity. These OTTI losses have no impact on diluted book value per common share at September 30, 2009 or operating income for the quarter.

As previously announced, the Company is hosting a conference call on Tuesday, November 3, 2009 at 8:00 AM (Eastern Standard Time) to discuss the third quarter 2009 financial results and related matters in more detail. The teleconference can be accessed by dialing (866) 843-0890 (U.S. callers) or (412) 317-9250 (international callers) and entering the pass-code 5501909 approximately ten minutes in advance of the call.