The operating companies of Bermuda-based Axis Capital Holdings Ltd. have had their financial strength rating affirmed at A by credit rating agency AM Best.

The insurer and reinsurer last week reported second-quarter net income of $159 million, down 31 percent from 2008.

Best said the ratings reflected "consistently strong operating performance, excellent risk-based capitalisation, robust risk management controls and its highly experienced management team".

Axis, formed in 2001 and led by chief executive officer John Charman and chairman Michael Butt, had achieved an average 82 percent combined ratio over its seven years and an average return on equity of 17 percent, Best said.

"Axis's excellent performance is directly attributable to its entrenched risk management controls and systems," Best commented.

"AM Best believes that Axis maintains vigorous risk management capabilities and continues to enhance an already effective enterprise risk management framework.

"Furthermore, AXIS retains a very strong level of risk-based capitalisation under AM Best's stress scenarios. AM Best expects AXIS to continue managing its capital base in a very conservative manner within acceptable ranges to support its current ratings."

Offsetting the positive factors was the company's exposure to large catastrophe losses and the cyclical changes occurring in the current market environment, the rating agency said.