AXIS CAPITAL HOLDINGS LIMITED

CONDENSED BALANCE SHEETS – PARENT COMPANY

DECEMBER 31, 2014 AND 2013



	2014			2013
	(in thousands)
Assets
Investments in subsidiaries on equity basis	$	6,114,436		$	6,581,368
Cash and cash equivalents	7,041			4,414
Other assets	2,642			3,179
Total assets	$	6,124,119		$	6,588,961

Liabilities
Intercompany payable	$	213,149		$	204,877
Senior notes	—			499,906
Dividends payable	48,197			47,959
Other liabilities	41,652			18,257
Total liabilities	302,998			770,999

Shareholders’ equity
Preferred shares	627,843			627,843
Common shares (2014: 175,478; 2013: 174,134 shares issued and 2014: 99,426; 2013: 109,485 shares outstanding)	2,191			2,174
Additional paid-in capital	2,285,016			2,240,125
Accumulated other comprehensive income (loss)	(45,574		)	117,825
Retained earnings	5,715,504			5,062,706
Treasury shares, at cost (2014: 76,052; 2013: 64,649 shares)	(2,763,859		)	(2,232,711		)
Total shareholders’ equity	5,821,121			5,817,962
Total liabilities and shareholders’ equity	$	6,124,119		$	6,588,961

(1)

On November 15, 2004, AXIS Capital issued $500 million aggregate principal amount of 5.75% senior unsecured debt (“Senior Notes”) at an issue price of 99.785%, generating net proceeds of $496 million. Interest of the 5.75% Senior Notes is payable semi-annually in arrears on June 1 and December 1 of each year, beginning on June 1, 2005. AXIS Capital repaid the full $500 million of its outstanding 5.75% Senior Notes upon their scheduled maturity of December 1, 2014.


(2)	AXIS Capital has fully and unconditionally guaranteed all obligations of AXIS Specialty Finance LLC, a 100% owned finance subsidiary, related to the issuance of $500 million aggregate principal amount of 5.875% senior unsecured notes. AXIS Capital’s obligations under this guarantee are unsecured and senior and rank equally with all other senior obligations of AXIS Capital.

(3)

AXIS Capital has fully and unconditionally guaranteed all obligations of AXIS Specialty Finance PLC,, a 100% owned finance subsidiary, related to the issuance of $250 million aggregate principal amount of 2.65% and $250 million aggregate principal amount of 5.15% senior unsecured notes. AXIS Capital's obligations under this guarantee are unsecured and senior and rank equally with all other senior obligations of AXIS Capital.


(4)	AXIS Capital has fully and unconditionally guaranteed the obligations of AXIS Specialty Finance LLC, AXIS Specialty Finance PLC and AXIS Specialty Holdings Bermuda Limited related to the $250 million credit facility issued by a syndication of lenders. At December 31, 2014, debt outstanding under the credit facility was $nil.


(5)	AXIS Capital has fully and unconditionally guaranteed the derivative instrument obligations of certain of its 100% owned operating subsidiaries. At December 31, 2014, the fair value of guaranteed obligations utilized aggregated to $68 million (2013: $28 million).

SCHEDULE II

AXIS CAPITAL HOLDINGS LIMITED

CONDENSED STATEMENTS OF OPERATIONS – PARENT COMPANY

YEARS ENDED DECEMBER 31, 2014, 2013 AND 2012



	2014			2013			2012
	(in thousands)
Revenues
Net investment income	$	3		$	5		$	25
Total revenues	3			5			25

Expenses
General and administrative expenses	57,998			40,565			62,293
Interest expense and financing costs	26,749			29,201			29,201
Total expenses	84,747			69,766			91,494

Loss before equity in net earnings of subsidiaries	(84,744		)	(69,761		)	(91,469		)
Equity in net earnings of subsidiaries	895,489			797,226			638,710
Net income	810,745			727,465			547,241
Preferred share dividends	40,088			40,474			38,228
Loss on repurchase of preferred shares	—			3,081			14,009
Net income available to common shareholders	$	770,657		$	683,910		$	495,004

Comprehensive income	$	641,165		$	482,668		$	781,701

SCHEDULE II

AXIS CAPITAL HOLDINGS LIMITED

CONDENSED STATEMENTS OF CASH FLOWS – PARENT COMPANY

YEARS ENDED DECEMBER 31, 2014, 2013 AND 2012



	2014			2013			2012
	(in thousands)
Cash flows from operating activities:
Net income	$	810,745		$	727,465		$	547,241
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in net earnings of subsidiaries	(895,489		)	(797,226		)	(638,710		)
Change in intercompany payable	8,272			(38,375		)	(7,667		)
Dividends received from subsidiaries	724,000			566,000			525,000
Other items	53,865			34,803			56,425
Net cash provided by operating activities	701,393			492,667			482,289

Cash flows from investing activities:
Capital repaid from subsidiary	496,593			—			—
Net cash provided by investing activities	496,593			—			—

Cash flows from financing activities:
Redemption of senior notes	(500,000		)	—			—
Net proceeds from issuance of preferred shares	—			218,449			393,544
Repurchase of preferred shares	—			(100,000		)	(404,073		)
Repurchase of common shares	(543,202		)	(472,263		)	(317,687		)
Dividends paid - common shares	(117,619		)	(118,426		)	(120,487		)
Dividends paid - preferred shares	(40,088		)	(39,193		)	(38,228		)
Proceeds from issuance of common shares	5,550			20,339			5,120
Net cash used in financing activities	(1,195,359		)	(491,094		)	(481,811		)

Increase in cash and cash equivalents	2,627			1,573			478
Cash and cash equivalents - beginning of year	4,414			2,841			2,363
Cash and cash equivalents - end of year	$	7,041		$	4,414		$	2,841

Supplemental disclosures of cash flow information:
Interest paid	$	28,750		$	28,750		$	28,750