AXIS CAPITAL HOLDINGS LIMITED

CONDENSED BALANCE SHEETS – PARENT COMPANY

DECEMBER 31, 2017 AND 2016



	2017			2016
	(in thousands)
Assets
Investments in subsidiaries	$	5,532,396		$	6,033,564
Promissory note receivable from subsidiary	—			368,252
Cash and cash equivalents	10,541			99
Other assets	9,480			9,913
Total assets	$	5,552,417		$	6,411,828

Liabilities
Intercompany payable	$	160,950		$	66,123
Dividends payable	49,907			58,791
Other liabilities	296			14,544
Total liabilities	211,153			139,458

Shareholders’ equity
Preferred shares	775,000			1,126,074
Common shares (shares issued 2017: 176,580; 2016: 176,580 shares outstanding 2017: 83,161; 2016: 86,441)	2,206			2,206
Additional paid-in capital	2,299,166			2,299,857
Accumulated other comprehensive (income) loss	92,382			(121,841		)
Retained earnings	5,979,666			6,527,627
Treasury shares, at cost (2017: 93,419; 2016: 90,139)	(3,807,156		)	(3,561,553		)
Total shareholders’ equity	5,341,264			6,272,370
Total liabilities and shareholders’ equity	$	5,552,417		$	6,411,828


(1)	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.

(2)

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.


(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 $350 million aggregate principal amount of 4.0% 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 derivative instrument obligations of certain of its 100% owned operating subsidiaries. At December 31, 2017, the notional value of guaranteed obligations utilized aggregated to $nil (2016: $64 million).


(5)	On April 15, 2017 the promissory note of $368 million advanced by AXIS Capital to AXIS Specialty Limited on November 7, 2016, matured. For the year ended December 31, 2017, interest earned at an annual rate of 1.132% and was recorded in net investment income.

SCHEDULE II

AXIS CAPITAL HOLDINGS LIMITED

CONDENSED STATEMENTS OF OPERATIONS – PARENT COMPANY

YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015



	2017			2016			2015
	(in thousands)
Revenues
Net investment income	$	2,116		$	656		$	1
Termination fee received	—			—			280,000
Total revenues	2,116			656			280,001

Expenses
General and administrative expenses	34,933			39,909			8,012
Total expenses	34,933			39,909			8,012

Income (loss) before equity in net income (loss) of subsidiaries	(32,817		)	(39,253		)	271,989
Equity in net income (loss) of subsidiaries	(336,152		)	552,621			369,642
Net income (loss)	(368,969		)	513,368			641,631
Preferred share dividends	46,810			46,597			40,069
Loss on repurchase of preferred shares	—			1,309			—
Net income (loss) available to common shareholders	$	(415,779	)	$	465,462		$	601,562

Comprehensive income (loss)	$	(154,746	)	$	579,992		$	498,740

SCHEDULE II

AXIS CAPITAL HOLDINGS LIMITED

CONDENSED STATEMENTS OF CASH FLOWS – PARENT COMPANY

YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015



	2017			2016			2015
	(in thousands)
Cash flows from operating activities:
Net income (loss)	$	(368,969	)	$	513,368		$	641,631
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Equity in net income (loss) of subsidiaries	336,152			(552,621		)	(369,642		)
Change in intercompany payable	94,827			33,286			(180,312		)
Dividends received from subsidiaries	400,000			550,000			420,000
Other items	4,988			17,807			(23,614		)
Net cash provided by operating activities	466,998			561,840			488,063

Cash flows from investing activities:
Promissory note receivable from subsidiary	—			(368,252		)	—
Capital returned by subsidiary	368,252			—			—
Net cash provided by (used in) investing activities	368,252			(368,252		)	—

Cash flows from financing activities:
Net proceeds from issuance of preferred shares	—			531,945			—
Repurchase of common shares - open market	(261,180		)	(495,426		)	(314,204		)
Taxes paid on withholding shares	(24,678		)	(14,329		)	(18,048		)
Dividends paid - common shares	(135,032		)	(132,323		)	(118,652		)
Repurchase of preferred shares	(351,074		)	(51,769		)	—
Dividends paid - preferred shares	(52,844		)	(39,909		)	(40,088		)
Proceeds from issuance of common shares	—			224			3,986
Net cash used in financing activities	(824,808		)	(201,587		)	(487,006		)

Increase (decrease) in cash and cash equivalents	10,442			(7,999		)	1,057
Cash and cash equivalents - beginning of year	99			8,098			7,041
Cash and cash equivalents - end of year	$	10,541		$	99		$	8,098