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AXIS CAPITAL

Risk Management International Insurance Society July 10, 2007. AXIS CAPITAL. David B. Greenfield Chief Financial Officer. AXIS Capital and Risk Management Risk-Based Capital and Solvency II External Influences on Capital Adequacy. Introduction. AXIS at a Glance.

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AXIS CAPITAL

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  1. Risk Management International Insurance Society July 10, 2007 AXIS CAPITAL David B. GreenfieldChief Financial Officer

  2. AXIS Capital and Risk Management Risk-Based Capital and Solvency II External Influences on Capital Adequacy Introduction

  3. AXIS at a Glance • Approximately $6 billion market capitalization (June 1, 2007) • $4.1 billion common equity and $5.1 billion total capital • 690 employees in Bermuda, Europe, U.S. and Australasia • Ratings of A (S&P - positive), A2 (Moody’s - stable) and A (AM Best - stable) • $3.6 billion in gross premiums written (GWP) in 2006 • 6th largest by 2006 GPW and 5th by total capital in Bermuda Gross Premiums Written 2002 - 2006 GPW by Segment2006 GPW = $3,609 M ($ in millions) $3,609 $3,394 ’02-‘06 GPWCAGR = 34% $3,012 $2,274 AXIS Re 43% $1,108 AXIS Insurance 57% AXIS Insurance AXIS Re

  4. Success at AXIS People Diversified Revenue & Earnings Stream CORESTRENGTHS Strong Risk Management Culture Well-capitalized Operating Structure High-Quality Balance Sheet

  5. Risk Management Structure

  6. The Pillars of AXIS Risk Management Business leaders ensure appropriate limits, policies, procedures, and measures in place (with input from Risk Management Committee) Audit function independently tests and verifies controls are in place and functioning properly Business units responsible for identifying, assessing, taking and mitigating risk

  7. Underwriting Risk Management and Operating Approach Disciplined Risk Selection Peer Review Process Self Audit Process Adjustment of Strategies

  8. Investment Risk Management and Operating Approach Board Oversight Risk Budget Investment Constraints Asset Allocation Manager Selection Benchmarks Monitoring

  9. External Impact to Risk, Financial and Capital Management Financial Management CapitalMarkets Solvency/Economic Capital, RatingAgencies and Regulators

  10. Risk-Based Capital vs. Solvency II Note: (1) Risk-based capital as developed by the US National Association of Insurance Commsioners

  11. Capital Adequacy Regulators

  12. Standard & Poor’s Capital Model in Context Industry Risk Operating Performance Management and Corporate Strategy Liquidity Capitalization ERM Competitive position Capital model Investments

  13. Summary • Strong risk management program is an important ingredient to business success • Risk management culture must be embedded throughout the Company • Risk management is an iterative and evolutionary process

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