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Axis Capital Holdings Ltd. 01 July 2008

Update Report – 1Q 08 Results

Valuation remains attractive despite competitive market conditions

NYSE BUY Direct access

Fundamental to the
research fullareport
indicates free
30% upside of NYSE
in the charge at stock over the next 6-12 months.
common
We have calculated the target price based on fundamental factors, using a weighted average of target
Common http://www.iirgroup.com/researchoracle/viewreport/show/20152
prices obtained using DCF and comparative valuation methodologies. We continue to take a 6-12
month investment horizon for the stock, as the reinsurance industry in which the company operates is
Stock highly cyclical and, therefore, trends can be captured more accurately with a shorter investment
Ticker: AXS horizon.
Target price: US$38.81
Current price: US$29.81 We reiterate the NYSE common stock a BUY, with a 6–12 month target price of US$38.81.

European BUY The European stock is expected to appreciate approximately 34% over the next 6–12 months as the
30% fundamental upside and 6 percentage points upside attributable to the anticipated appreciation
Stock1 of the US dollar against the euro over our investment horizon is partially offset by approximately 2
Ticker: AXV.F percentage points downside attributable to the anticipated reduction in the European stock premium2.
Target price: €25.59
Current price: €19.15 We upgrade the European stock from a HOLD to a BUY, with a 6–12 month target price of €25.59.

Supervisor: Somnath Banerjee

Analyst: Poonam Jindal
Editor: Heloise Capon
Global Research Director:
Satish Betadpur, CFA
Investment horizon - short term actionable trading strategies
This report addresses the needs of strategic investors with a long term investment horizon of 6-12 months. If this
report is provided to you by your broker under the Global Settlement, you may now also access (free of charge) the
short term trading outlook that we publish from time to time for this issuer, looking at the coming 5-30 days for
readers with a shorter trading horizon. These are available online only at www.researchoracle.com

Next news due:

2Q 08 results, 04-14 August Report summary
2008
Axis Capital Holdings Limited’s (Axis Capital) 1Q 08 adjusted3 total revenues and net profit were ahead
of our expectations. Overall weak performance in gross written premiums, which declined by 3.0% y-o-
y, was primarily attributable to the softening of premium rates across the property & casualty (P&C)
industry and intense competition. Weakness in financial markets during the quarter also adversely
affected the company’s net investment income, which declined 31.6% y-o-y in 1Q 08 due to lower
income from other investments, partially offset by healthy net investment income from fixed
investments, reflecting the impact of positive operating cash flows on the company’s average
investment balances. Axis Capital’s combined ratio increased from 80.8% in 1Q 07 to 81.2% in 1Q 08
due to a high level of large individual property risk losses and general & administrative expenses.
Going forward, we remain concerned that softening rates in P&C products across geographies will
continue to adversely impact the industry. Although we have revised our estimates downwards, partly
based on the current significant downturn experienced in the US; we believe that the negatives have
been factored in the current NYSE common stock price and the recent depreciation in the common
stock price has left the company undervalued.

Currency impact on European stock

By itself, the impact of the anticipated currency movements on the European stock (now €19.15),
without considering changes in the share price, is broadly positive and is expected to be2:

Over 6 months: €17.96

Over 12 months: €20.11

Page 1 Refer to page 5 for footnotes