Axis Capital Holdings Ltd. has been assigned an initial A issuer default rating (IDR) by Fitch Ratings and an insurer financial strength (IFS) ratings of A+ for its operating subsidiaries. The rating outlook is stable.

The rating rationale includes Axis Capital's solid profitability, history of favourable reserve development, diversification across business lines and conservatively structured balance sheet.

Axis Capital's underwriting results, measured by a cumulative loss ratio, are better than its Bermuda peers, according to Fitch. In addition, profitability has historically benefited from favourable reserve development. However, Fitch believes maintaining a high level of favourable reserve development will be a challenge given the soft market conditions faced by primary re/insurer. The ratings agency said that a diverse premium base has enabled Axis Capital to compete effectively under a variety of market conditions and reduced its exposure to any one segment of the market. The company's premium base is evenly split between primary lines and reinsurance. Geographically the premium base is spread across the US, Bermuda and Europe.

Capitalisation at Axis Capital is strong, said Fitch, measured by growth in stockholders' equity, operating leverage and ability to absorb catastrophe losses. Axis Capital's stockholders' equity recovered beyond investment losses suffered during the financial crisis in 2008 and operating leverage ratio (net written premium/Gaap equity) of 0.5 times at year-end 2009 is conservative relative to peers.