2017 ANNUAL REPORT AXIS CAPITAL 2017 ANNUAL REPORT Axis AR 2017 022279 AXS AR17 Cover V1 03/13/18 Page 4 Axis AR 2017 022279 AXS AR17 Cover V1 03/13/18 Page 25

Relevance. Commitment. Leadership.

AXIS CAPITAL 2017 ANNUAL REPORT AXIS CAPITAL 2017 ANNUAL REPORT Axis AR 2017 022279 AXS_AR17_Cover_v1 03/13/18 page 4 Axis AR 2017 022279 AXS_AR17_Cover_v1 03/13/18 page 25

Financial Shareholder CEO Insurance Reinsurance Chairman’s Directors & Highlights Value Letter Letter Executives SHAREHOLDER INFORMATION

Annual Meeting Investor relations Transfer agent and registrar 02 03 04 12 16 20 24 Date: For copies of AXIS Capital’s Annual Report, The Transfer Agent for AXIS Capital May 2, 2018, at 8:30 a.m. AST Forms 10-K and 10-Q or other reports is Computershare. iled with or furnished to the Securities and Location: Exchange Commission: For shareholder inquiries, please AXIS House, 92 Pitts Bay Road contact Computershare: Pembroke HM 08, Bermuda Visit: The Investors section of By regular mail: Independent registered www.axiscapital.com P.O. Box 505000 public accounting firm Louisville, KY 40233-5000 Email: Deloitte Ltd. Investor Relations Department of AXIS By overnight delivery: Corner House Capital at [email protected] 462 South 4th Street, Suite 1600 20 Parliament Street Louisville, KY 40202 P.O. Box HM 1556 For other investor relations inquiries: Hamilton HM FX Call: Bermuda Write to: 1.800.522.6645 (within the U.S.) Director, Investor Relations 1.201.680.6578 (outside the U.S.) AXIS Capital Holdings Limited Hearing Impaired TDD: 1.800.952.9245 AXIS House, 92 Pitts Bay Road Pembroke HM 08, Bermuda Website: www.computershare.com Call: 1.441.405.2727

Email: [email protected]

Total Shareholder Return 221.6% 269.8% 260.6%

AXS S&P 500500 S&P 500500 P&CP&C COMPOSITECOMPOSITE $450 $400 $350 $300 $250 $200 $150 $100 $50 $0

12/31/11 6/28/13 6/30/14 6/30/15 6/30/16 12/31/03 12/31/04 12/29/06 12/31/07 12/31/08 12/31/09 12/31/10 06/29/1212/31/12 12/31/13 12/31/14 12/31/15 12/30/166/30/1712/31/17 06/30/03 06/30/04 06/30/0512/30/0506/30/06 06/29/07 06/30/08 06/30/09 06/30/10 06/30/11 AXISAXIS S&PS&P 500500 S&PS&P P&CP&C CompositeComposite

* Data computed from JuneJune 30, 2003 to DecemberDecember 31,31, 2017.2017. ** Shown S h o w n aboveabove isis aa graphgraph comparingcomparing thethe yearlyyearly percentagepercentage changechange inin thethe cumulativecumulative totaltotal shareholdershareholder returnreturn onon ourour commoncommon sharesshares (assuming(assuming reinvestmentreinvestment ofof dividends) fromfrom JulyJuly 1,1, 2003,2003, thethe datedate that ourour commoncommon sharesshares beganbegan tradingtrading onon thethe NewNew YorkYork StockStock Exchange,Exchange, throughthrough DecemberDecember 31,31, 2017,2017, asas comparedcompared toto thethe cumulative totaltotal returnreturn ofof thethe StandardStandard && Poor’sPoor’s 500500 StockStock IndexIndex andand thethe cumulativecumulative totaltotal returnreturn ofof thethe StandardStandard && Poor’sPoor’s PropertyProperty andand CasualtyCasualty Insurance Index.Index. ThisThis graphgraph assumesassumes anan investmentinvestment ofof $100$100 inin JulyJuly 2003.2003. TheThe company’scompany’s totaltotal returnreturn isis computedcomputed usingusing thethe initialinitial publicpublic offeringoffering priceprice ofof $22.00$22.00 perper share.share.

ANNUAL REPORT 25 Axis AR 2017 022279 306291L01_text 03/12/18 page 1 Axis AR 2017 022279 306291L01_text 03/14/18 page 2 Axis AR 2017 022279 306291L01_text 03/14/18 page 3

FINANCIAL HIGHLIGHTS

As of and for the year ended December 31 ($ in millions, except per share amounts)

Selected Statement of Operations Data: Gross premiums written $,. $, . $, . $, . $, . Net premiums written ,. ,. , . , . , . Net premiums earned ,. , . , . , . , . Net investment income . . . . . Net realized investment gains (losses) . ( . ) ( . ) . . Net income (loss) available attributable to (.) . . . . common shareholders (1) (2) (3) (4) (5) Non-GAAP operating income (loss) (2) (3) (4) (5) (6) (.) . . . .

Per Common Share Data: Earnings (loss) per common share — diluted (.) . . . . Non-GAAP operating income (loss) per common (.) . . . . share — diluted (7) Book value per common share (8) (9) . . . . . Diluted book value per common share (8) (9) . . . . . Dividends declared per common share . . . . .

Operating Ratios: (10) Net loss and loss expense ratio .% . % . % . % . % Expense ratio .% . % . % . % . % Combined ratio .% . % . % . % . %

Selected Balance Sheet Data: Total assets $,. $ , . $ , . $ , . $ , . Senior notes and notes payable ,. . . . . Preferred shares . , . . . . Common equity ,. , . , . , . , . Total shareholders’ equity attributable to AXIS Capital ,. , . , . , . , . Total capital (11) ,. , . ,. , . , . Return on average common shareholders equity (“ROACE”) –.% . % . % . % . % Non-GAAP operating ROACE (12) –.% . % . % . % . %

1 During 2017, the Company recognized amortization of value of business acquired of $50 million related to the acquisition of Novae. 2 During 2017, the Company recognized transaction and reorganization expenses of $27 million related to the acquisition and integration of Novae. This expense did not affect the Company’s non-GAAP operating income (loss), a non-GAAP financial measure. 3 During 2017, the Company recognized a tax expense of $42 million due to the revaluation of net deferred tax assets pursuant to the U.S. Tax Reform. This expense did not affect the Com- pany’s non-GAAP operating income (loss), a non-GAAP financial measure. 4 During 2015, the Company accepted a request from PartnerRe Ltd., a Bermuda exempted company (“PartnerRe”) to terminate the Agreement and Plan of Amalgamation (the “Amalga- mation Agreement”) with the Company. PartnerRe paid the Company a termination fee of $280 million. This expense did not affect the Company’s non-GAAP operating income (loss), a non-GAAP financial measure. 5 During 2015, the Company implemented a number of profitability enhancement initiatives, which resulted in recognition of transaction and reorganization expenses of $46 million and additional general and administrative expenses of $5 million. The transaction and reorganization expenses did not affect the Company’s non-GAAP operating income (loss), a non-GAAP financial measure. 6 Non-GAAP operating income (loss) represents after-tax operational results without consideration of after-tax net realized investment gains (losses), foreign exchange gains (losses), revaluation of net deferred tax asset, bargain purchase gain, transaction and reorganization expenses, loss on repurchase of preferred shares, and termination fee received. Non-GAAP operating income (loss) is a non-GAAP financial measure as defined in Regulation G. The reconciliation to the most comparable GAAP financial measure (net income (loss) available to common shareholders) is provided in Item 7 of Part II ‘Management’s Discussion and Analysis of Financial Condition and Results of Operations — Executive Summary, Results of Operations’ of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. 7 Non-GAAP operating income (loss) per common share - diluted is a non-GAAP financial measure as defined in Regulation G. The reconciliation to the most comparable GAAP financial measure (earnings (loss) per common share - diluted ) is provided in Item 7 of Part II ‘Management’s Discussion and Analysis of Financial Condition and Results of Operations — Executive Summary, Results of Operations’ of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. 8 Book value per common share and diluted book value per common share are based on total common shareholders’ equity divided by common shares and diluted common share equivalents outstanding, respectively. 9 Calculations and share amounts at December 31, 2015 include 1,358,380 additional shares delivered to the Company in January 2016 under the Company’s Accelerated Share Repurchase (“ASR”) agreement entered into on August 17, 2015. 10 Operating ratios are calculated by dividing the respective operating expenses by net premiums earned. 11 Total capital represents the sum of total shareholders’ equity attributable to AXIS Capital and senior notes. 12 Non-GAAP operating ROACE is calculated by dividing non-GAAP operating income (loss) for the year by the average shareholders’ equity determined by using the common shareholders’ equity balances at the beginning and end of the year. Non-GAAP Operating ROACE is a non-GAAP financial measure as defined in Regulation G. See Item 7 of Part II ‘Management’s Discussion and Analysis of Financial Condition and Results of Operations — Non-GAAP Financial Measures’ of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, for a detailed discussion of the measures used by AXIS to evaluate its financial performance.

2 AXIS CAPITAL Axis AR 2017 022279 306291L01_text 03/12/18 page 2 Axis AR 2017 022279 306291L01_text 03/12/18 page 3

DELIVERING VALUE TO SHAREHOLDERS $16.1 B $24.8B $6.7B

CASH & INVESTMENTS TOTAL ASSETS TOTAL CAPITAL

Key facts and figures at December 31, 2017 AXIS’ rating of A+ from both Standard & Poor’s and A.M. ($ in billions) Best reflects our exceptional level of financial strength and our long-term track record of outstanding operating performance, placing AXIS among a select group of companies in our industry.

Shareholder Value Creation

$80.00$80

$70.00$70 Compound Annual Growth Rate = 11.2%

$60.00$60

$50.00$50

$40.00$40

$30.00 $30

$20.00 $20

$10.00 $10

$ $0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Accumulated Dividends Declared Total value creation is defined as growth in diluted book value per share* adjusted for dividends. Diluted BVPS *Diluted book value per share calculated using treasury stock method. 12/31/02 diluted BVPS is pro forma for AXIS Capital IPO.

ANNUAL REPORT 3 Axis AR 2017 022279 306291L01_text 03/12/18 page 4 Axis AR 2017 022279 306291L01_text 03/12/18 page 5

In 2017, we declared that AXIS would embrace change and that is precisely what we did.

ALBERT A. BENCHIMOL PRESIDENT AND CHIEF EXECUTIVE OFFICER

4 AXIS CAPITAL Axis AR 2017 022279 306291L01_text 03/14/18 page 4 Axis AR 2017 022279 306291L01_text 03/14/18 page 5

A LETTER FROM While the inancial impact of the year’s THE CEO challenges on our company was within A Year of Costly the range experienced by our Bermuda peer group, it does not fully explain my Catastrophes greatest disappointment of the year: the 23% drop in our stock price. First, the negatives: from a inancial per- spective, 2017 was deeply disappointing. While it was a subpar year for many Bermuda companies, we believe that Dificult market conditions and sus- our stock performance was further To Our Shareholders: tained pricing pressure have persisted exacerbated by questions relating to over several years, impacting our core our acquisition of Novae. Prior to the For AXIS, 2017 was a year of both ex-cat results. In the irst quarter, we acquisition, Novae management had progress and adversity. were impacted by the Ogden rate change begun to take actions to address its in the U.K., which increased our costs for underperformance as it entered 2017 On one hand, AXIS was effective U.K. motor business. The industry expe- and, in our due diligence, we conirmed in advancing its strategic goal of rienced higher U.S. attritional weather that we could reasonably expect to reap becoming a global leader in specialty losses in the irst half of the year, a the beneits of the repositioning that insurance and reinsurance. Signiicant record level of third-quarter catastrophe had been underway. Our experience new actions were taken, prior-year losses, and historic California wildires investments began to bear fruit, and in the fourth quarter; all of which led to as 2018 got under way, we launched an a net loss for the year. important initiative to accelerate our growth strategy and strengthen our We focused our efforts Of the approximately $120 billion in operating model to provide smarter, global insurance catastrophe losses in on repositioning AXIS to faster and more creative solutions to the year, our net retained losses were clients and partners. become an increasingly $835 million, or approximately 0.7% of global industry losses. This contributed relevant player in At the same time, along with so many 20 points to our full-year loss ratio (as other property and casualty (re)insur- targeted markets while compared to 6 points in 2016). By con- ers, we were impacted by some of the trast, catastrophe losses represented 40 charting a course for most expensive catastrophe events in points and 28 points, respectively, in the recent history and costly regulatory long-term profitability other mega-catastrophe years of 2005 changes. These took a serious toll on and 2011. and reducing the overall our year’s inancial results. volatility of our book. Our experience in 2017 was in line with our peer group of hybrid insurers and reinsurers, and demonstrated the beneits of our recent efforts to with Novae since we signed our trans- reduce the volatility of our results. We action, and after the close in October, intend to continue to shape our gross indicates that the beneits will exceed and net portfolios to further reduce our initial expectations. Expected the susceptibility of our portfolio to cost synergies are now estimated at catastrophe exposure. $60 million, as compared to our initial estimate of $50 million. In January 2018, We reported an operating loss of we concluded a reinsurance to close $265 million and a net loss of $416 mil- transaction that was underway during lion for the year and our book value per our negotiation of the acquisition. This share declined 7.5% to $53.88. Included transaction transfers to our reinsurer in our net loss were transaction and essentially all liabilities relating to 2015 reorganization expenses of $21 million and prior years, providing inality and and a $42 million charge to write down security with regard to the balance our deferred tax asset as a result of the sheet we acquired. And our combined change in the tax law in the U.S. at the underwriting teams are now transacting end of the year. in a market that is much stronger than we anticipated at the time of the acquisition. They are doing so as members of a

ANNUAL REPORT 5 Axis AR 2017 022279 306291L01_text 03/14/18 page 6 Axis AR 2017 022279 306291L01_text 03/14/18 page 7

company that has a much stronger market position. We are optimistic that as we proceed with The acquisition of Novae also complemented the integration of Novae, our results will demonstrate to all our stakeholders the value of this our position as a top-10 participant in a strategic acquisition. number of markets (listed above). We orig- inally expected the transaction to enhance While our inancial performance was disappointing, 2017 was an outstanding year for organi- our ROACE/earnings, and we conservatively zational development. based that expectation on assumptions that market conditions were not changing. Improving market conditions in 2018 render the transaction more inancially compelling Increased Relevance and Leadership than initially expected.

in Key Markets We are enthused about the opportunities we see developing in the London market, AXIS was founded in 2001, making its mark as a smart provider of capacity in what was then a given our new leadership position. One of hard market. The most proitable lines in the irst decade of our existence are arguably among our highest priorities for 2018 is to complete the most challenged now. In anticipation of this, over the past ive years, we have rebalanced the integration of Novae into AXIS, a process our portfolio and focused our efforts on repositioning AXIS to become an increasingly already well underway. (For more information relevant player in targeted markets while charting a course for long-term proitability on Novae, see our accompanying sidebar and reducing the overall volatility of our book. As the year came to a close, AXIS wrote in article, “The Novae Acquisition.”) excess of $6 billion in gross premiums and has increased its market position in a number of areas, including: Global expansion ontinues — Brussels, Amsterdam, Miami • Top-10 in U.S. Excess and Surplus Lines; and Dubai • Top-10 in the London Market and at Lloyd’s; • Top-10 Insurer of North American Professional Lines; and While Novae increased our London pres- • Top-15 Global P&C Reinsurer ence, we also expanded in other major markets. Our acquisition of Belgium-based Further, AXIS established global leadership in lines with strong growth potential, and we are Aviabel, announced late 2016 and completed now a top-5 player in cyber, renewable energy and marine. in 2017, augmented our general aviation insurance and reinsurance business. Through Our recently attained relevance is an important asset in countering the threats presented by its ofices in Brussels and Amsterdam, we excess capital and the disintermediation of the traditional insurance value chain. Our current gained a valuable footprint on the Continent, scale provides opportunities for eficiencies and the capacity to invest in promising initia- complementing our presence in Dublin and tives. I believe we are well positioned to leverage our market relevance to gain preferential London. We believe this helps insulate AXIS access to new business, increase our market leadership within the lines in which we choose to from adverse complications that may arise compete and reposition our portfolio for enhanced proitability. from future developments related to Brexit.

Novae acquisition: accelerating our strategy to drive profitable growth In the U.S., we launched a Miami ofice to serve as a regional coverholder for Latin Of all our actions in 2017, the acquisition of Novae Group plc for $617 million in cash, American and Caribbean business written completed in October, was our most impactful step in accelerating AXIS’ strategy to drive under the umbrella of our Lloyd’s syndicates. proitable growth. Novae is a respected diversiied specialty insurer operating exclusively We also continued to grow in Dubai, expand- through Lloyd’s of London. Its addition gives AXIS greater leadership in specialty lines and ing the range of services we can provide to increased relevance in the important London market for international specialty risk. the local market and to emerging markets of the Middle East and North Africa. With a portfolio complementary to our own, the acquisition of Novae vaulted AXIS to a desir- able market position. We rose to a top-10 position at Lloyd’s, where we had just completed Today, from our more than 30 ofices our three-year introductory period and had launched our own managing agency to oversee throughout the world, including Bermuda, AXIS Syndicate 1686. This acquisition further conirmed our conidence in the Lloyd’s mar- New York, London, Zurich and Singapore, ket and our commitment to its future. AXIS has a presence in virtually all the major industry hubs where we believe it is vital to participate.

6 AXIS CAPITAL Axis AR 2017 022279 306291L01_text 03/14/18 page 6 Axis AR 2017 022279 306291L01_text 03/14/18 page 7

Rebalancing the portfolio

In tandem with these efforts, AXIS continued to rebalance our portfolio to optimize our resources and business mix. Our guiding principles are the relevance of our businesses in their markets, their current and anticipated proitability, and their potential for future growth. As such, we allocated more resources into such areas as cyber, renewable energy, wholesale excess & surplus lines, and our managing general agency units. Similarly, we exited onshore energy, where despite The Novae Acquisition — Greater our patience over several years, we did not envision suficient improvement in market Strength, Depth, Leadership conditions. We also exited coverages for weather and commodities, where we never achieved suficient proitability or scale.

Further expansion of strategic The Novae acquisition was a significant strategic advancement capital partnerships for AXIS — and a compelling financial transaction. With the acquisition, AXIS became both a $2 billion insurer in London’s During the year, we advanced our strategy international specialty market and a top-10 player at Lloyd’s, of harnessing available third-party capital, where Novae historically conducted the majority of its business. to help us grow our business and meet Moreover, the move accelerated AXIS’ strategy to drive profitable client needs by matching the right risk with growth, as we were already deeply committed to these markets the right capital. and had targeted them for further strategic expansion.

Our strategic capital partnerships With more than $1 billion in premium and a highly regarded continued to generate meaningful fee underwriting team, Novae’s complementary portfolio provided income, resulting in $36 million in 2017, AXIS valuable underwriting expertise and new classes of business, up from $22 million in 2016, while allow- including in areas where Novae enjoyed a competitive advantage. ing us to deliver enhanced capacity, It bolstered our standing in several of our existing lines, espe- innovation and tailored solutions to cially those we had earmarked for growth and investment. Today, our clients and brokers. This included through the integration of the two businesses, AXIS is a global Harrington Reinsurance Holdings Limited leader in cyber, renewable energy and marine, among others. (“Harrington”), the parent company of Harrington Re Ltd. (“Harrington Re”), an The acquisition increases our relevance with strategic brokers, independent reinsurance company jointly enabling us to drive more of our products through Novae’s pre- sponsored by AXIS and Blackstone existing distribution relationships. It will also boost the scale of Group L .P. (“Blackstone”). In its irst full Novae’s products by leveraging AXIS’ broad geographic platform year of operation, we ceded $195 million and our presence in key global hubs. Further, Novae’s underwriting to Harrington Re and received substan- team will now benefit from having the ability to write on AXIS tial fee income in return and Harrington paper, and more tools, support and resources to grow their business. accreted book value. As the year ended, AXIS had in excess of $1.8 billion of third- Through the acquisition, AXIS became a $6 billion (re)insurer. party capital at our disposal. Improving market conditions render the transaction more finan- cially compelling than initially expected.

As 2017 came to a close, AXIS is well along in the process of integration. Effective January 1, 2018, we commenced oversight and management of Novae’s syndicates, under management of AXIS Managing Agency Ltd. We have initiated plans to consolidate our Lloyd’s business into AXIS Syndicate 1686 by January 1, 2019.

Today, AXIS is a bigger, stronger player in both the London and international specialty markets, and is well positioned to drive further profitable growth in 2018.

ANNUAL REPORT 7 Axis AR 2017 022279 306291L01_text 03/14/18 page 8 Axis AR 2017 022279 306291L01_text 03/14/18 page 9

Looking Ahead — Embracing Change in a Transformed Landscape

Strengthening our operating model and scaling up our data and analytics capabilities

To capitalize on sweeping business, economic and technological changes transforming the (re)insurance marketplace, AXIS is implementing a large-scale effort to strengthen its operating model, making the Company “future-ready” and further positioning it for long-term proitable growth.

Our job is to be there to help our customers when they suffer adversity.

This includes accelerating efforts to expand the Company’s data and analytics capabilities while enhancing its client offerings and further increasing AXIS’ overall agility.

Speciically, this included the launch of an enterprise-wide Global Underwriting and Analytics unit (GUA) that will partner with AXIS’ underwriting, claims and actuarial teams within our business segments. GUA will arm these professionals with greater insights, resources and tools to deliver even more value and services. This move also includes the further expansion of our Data & Analytics Center of Excellence as a global resource for the entire company and our clients (see sidebar article, “Growing a Data & Analytics Center of Excellence”).

Among the operational enhancements, AXIS realigned its Accident & Health (A&H) business, merging the units into our core insurance and reinsurance segments. The move will enable the business to deliver synergies in combination with our property & casualty insurance and reinsurance businesses, helping A&H teams leverage relationships across our businesses. Additionally, we anticipate our P&C reinsurance teams will take advantage of the geographic expansion and client relationships achieved by our A&H teams. We expect A&H will continue to grow proitably and be an important contributor to AXIS.

Similarly, we introduced an integrated functional model for both our IT and Finance departments that will help better leverage expertise across our organization. Through these changes, we are improving the itness of our company and making AXIS more agile, eficient and better able to adapt to and capitalize on change as the market continues to evolve.

Facing external challenges

The changing regulatory and political environment, marked by such developments as Brexit, new U.S. tax laws and competing international jurisdictional demands, present ongoing challenges to navigate.

8 AXIS CAPITAL Axis AR 2017 022279 306291L01_text 03/14/18 page 8 Axis AR 2017 022279 306291L01_text 03/14/18 page 9

We face a competitive market, too, but support local causes. In 2017, we hosted Above all, I wish to express my gratitude one that may be turning more accom- our irst-ever Global Day of Giving Rally, to Joe Henry, who retired at year-end. modative. I anticipate this irming will be which enjoyed participation among Joe was an exceptionally strong Chief gradual, at best, and unfold over the long more than 600 employees worldwide, Financial Oficer, a leader of our com- term. But I believe that AXIS is well posi- resulting in 46 community-giving pany, a trusted adviser and a friend. At tioned to meet these challenges and to activations within a two-month span the same time, I welcome Pete Vogt as take advantage of these opportunities. (see sidebar article, “Giving Back to Our our new CFO. Pete has been promoted Communities”). As a company with a following roles as COO of our Insurance Above all, I am optimistic that, as an strong sense of purpose, enacting posi- business, as well as previously serving as industry, the world is still greatly in need tive change will continue to be a priority CFO and COO of A&H. Pete is a highly of our product. As we have successfully in 2018 and for years to come. accomplished and respected leader demonstrated this past year, our job is within AXIS and, our organization will to be there to help our customers when Investing in new talent beneit from his dual understanding they suffer adversity. We are inding and growing a high- of both inance and operations. I look increasing opportunities to provide pro- forward to working closely with him in performance culture tection as the world engages in robust the years ahead. economic activity, grows in complexity At AXIS, a key area of focus has been and as new perils emerge. Our challenge I must also thank our Chairman to build a workplace environment that is to give good value to our customers Michael Butt, our Board of Directors, makes our company attractive for the for the product we sell, so they perceive and our shareholders for their contin- best talent and that is conducive to the beneit in buying insurance, while at ued support. growing a high-performance culture. the same time we must provide an In 2017, we scaled up this effort and adequate return to our shareholders. Finally, I also want to thank all our AXIS expanded our talent management offer- employees — both those who have newly ings. This will continue in 2018, as we are joined our company and those who introducing new professional develop- have been with us for many years — for ment programs to help us invest in our their tremendous work and contribution Societal Impact most important resource, our people. during a dificult, yet transformative year. Despite the challenges we faced, and Enacting While it is typically our priority to grow AXIS has made signiicant progress in from within, through targeted recruit- advancing its leadership position, and a Positive Change ment and through acquisition, we have tremendous future stands before us. continued to expand the breadth and In 2017, we continued to further realize depth of talent across the organization. the potential of our business to deliver Sincerely, This focus on attracting and growing a positive societal impact and create top talent extends to our executive com- positive change in the communities mittee. Notably, this year we are formally where we do business. In (re)insurance, welcoming Steve Arora as the new CEO we offer a service that has the potential of our Reinsurance business. Steve is to signiicantly beneit society. We give Albert A. Benchimol an accomplished and widely respected our customers conidence to pursue President and Chief Executive Of icer executive who stands at the forefront of their goals and help them when they an emerging generation of senior lead- face a challenging period. (Re)insurance ers in our profession. I must also thank serves as a safety net for the free market. Jan Ekberg for his strong and steady The solutions that we provide help drive oversight of our Reinsurance business progress, grow emerging markets, and, during the interim period in 2017. in many ways, strengthen the fabric Jan has resumed his role as President of society. and Chief Underwriting Oficer of AXIS Re Europe. As a values-driven organization, AXIS strives to take the core of what we do — I must also extend my appreciation to enable the pursuit of opportunities and Chris DiSipio, the longtime CEO of our help people when they are down — and A&H business. During Chris’ tenure at bring it to our broader communities. AXIS, he guided the growth of AXIS This behavior manifests through the A&H from a start-up into a proitable tangible initiatives we lead to give back. $500 million business. With the realign- An example is our signature Day of ment of A&H, Chris decided to begin a Giving initiative, where our employees new chapter in his career, and we wish come together as teams and volunteer to him the best in his future endeavors.

ANNUAL REPORT 9 Axis AR 2017 022279 306291L01_text 03/12/18 page 10 Axis AR 2017 022279 306291L01_text 03/12/18 page 11

Growing a Data & Analytics Center of Excellence

Across the insurance industry, the data Additionally, AXIS invested in bringing in revolution is in full motion, and AXIS has new talent with deep expertise in data been scaling up its efforts to grow a & analytics. A key addition was Meghan Data & Analytics Center of Excellence. Anzelc, Ph.D., a trained physicist and The Center’s mandate includes helping to data scientist who joined AXIS in May facilitate more informed decision-making to build and implement a strategy and and free our professionals to focus on roadmap to expand the data & analytics higher-value client services, all while capabilities for the insurance segment. enhancing our ability to deliver disciplined underwriting and offer even more value Dr. Anzelc is now the Chief Analytics to our clients and partners in distribution. Officer for the Company and is an integral part of developing AXIS’ new In 2017, AXIS upped its game, further Global Underwriting and Analytics unit developing its strategy and dedicating (GUA), which is being led by Group Chief more resources to help strengthen the Underwriting Officer Eric Gesick. GUA Company’s data & analytics capabili- is partnering with AXIS’ underwrit- ties, which included introducing a new, ing, claims and actuarial teams in the collaborative approach to evaluate Insurance and Reinsurance segments, specific business needs. Additionally, the and will arm them with greater insights, Company invested in new test pilot pro- resources and tools to deliver even more grams designed to further increase the value and services to clients and part- Company’s agility and responsiveness. ners. As it continues to grow, GUA will further advance the Company’s philos- The team also leveraged AXIS’ rela- ophy of coupling human ingenuity with tionship with the University of Illinois powerful tools and insights. Urbana-Champaign (see sidebar article, “Future of Insurance Symposium and Hackathon”) to garner change management insights and best practices for a number of data and analytics initiatives.

10 AXIS CAPITAL Axis AR 2017 022279 306291L01_text 03/14/18 page 10 Axis AR 2017 022279 306291L01_text 03/14/18 page 11

FINANCIAL During 2017, we continued to deliver Our investment portfolio yielded a REVIEW operational expense eficiencies, and total return of 4.0% including foreign have invested those savings back into exchange movements, or 3.5% exclud- the Company to fund various initiatives. ing foreign exchange movements, in Once again, we outsourced tasks where line with our industry peers. Our ixed they could enhance productivity. More income portfolio, which represents broadly, our general and administrative approximately 85% of our investment expense ratio dropped to 14.0% from portfolio, remained highly rated at AA-. 16.2%, principally fueled by a reduction Duration of 3.2 years is well matched in compensation expenses relecting the to our liabilities and will enable us to poor operating performance for 2017. take advantage of the modestly rising Highlights interest rate environment. In terms of Our acquisition of Novae for $617 mil- our alternative investments portfolio, of Financial lion closed during the fourth quarter. which represents approximately 6% of We identiied intangible assets including our portfolio, we continued our shift Performance value of business acquired (“VOBA”) from hedge funds toward private equity and other inite lived and indeinite lived and real estate investments with the Challenging industry conditions con- intangible assets associated with this expectation of generating better risk tinued in 2017, which was also marked acquisition. We subsequently completed adjusted returns. by an elevated level of catastrophe and a reinsurance-to-close transaction weather-related losses. Excluding the which covers the net reserve for losses We strengthened our balance sheet impact of catastrophe and weather- and loss expenses associated with all with a successful offering of $350 mil- related losses, the picture improved business underwritten by Novae in 2015 lion of 4.0% Senior Notes due in 2027, considerably. AXIS’ Insurance business and prior years. This transaction sig- in advance of the 2019 expiration of had a solid year, as many initiatives put in niicantly reduced our reserve risk and $250 million of 2.65% Senior Notes. place in previous years yielded positive generated positive economic value that This additional capital, with a 10-year results. For AXIS’ Reinsurance business, was relected in Novae’s balance sheet period at attractive rates, lowers our we were unable to offset relentless price at the acquisition date. On January 29, overall cost of capital and enabled declines, and results, though positive, 2018, the Company furnished a Current AXIS to pay down Novae debt. During suffered in comparison to the prior year. Report on Form 8-K with the U.S. the year, we also redeemed all of our Securities and Exchange Commission, outstanding 6.875% Series C Preferred For the year, net loss attributable to com- including details of fair value adjust- Shares, for approximately $351 million, mon shareholders was $415.8 million, or ments to Novae assets acquired and with funds raised during 2016 at favor- $4.94 per diluted common share, com- liabilities assumed at the acquisition able rates. pared to net income of $465.5 million, or date. In addition, the Company $5.08 per share. Fee income from strate- furnished supplemental inancial infor- We raised our dividend, maintaining gic capital partners rose to $36 million, mation presenting unaudited historical our history of increasing dividends compared to $22 million in 2016. Diluted inancial information for Novae for the every year. We repurchased 3.9 mil- book value per share declined by 7.5% nine months ended September 30, 2017, lion outstanding common shares, for to $53.88, primarily due to the elevated and the quarterly periods therein. $261 million, under our Board autho- level of catastrophe and weather-related rized share repurchase program, but losses. Adjusted for dividends, diluted The effect of tax reform in the U.S. at suspended buybacks following the book value declined by 5%. the end of 2017 resulted in an expense announcement to acquire Novae. Similar of $42 million related to the revalua- to other periods following signiicant Gross written premiums rose by 12%, tion of our deferred tax asset, but on a industry catastrophes, we are focused including gross written premiums attrib- go-forward basis we do not expect the on restoring our capital to levels held utable to our acquisitions of Aviabel impact of tax reform to be material to prior to the 2017 catastrophes. and Novae. Net premiums written rose our business. by 7%, relecting the expansion of our partnership arrangements with third- Continued sound party capital providers, including capital management traditional reinsurers, AXIS Ventures and Harrington Re. Our combined ratio Despite the year’s losses, AXIS remains for the year was 113.1%, primarily due in sound inancial condition, with a to the elevated level of catastrophe and strong balance sheet, and today we have weather-related losses. Adjusting for more sources of capital available to us the impact of catastrophe and weather- than ever in our history. related losses, our combined ratio for the year was 92.7%.

ANNUAL REPORT 11 Axis AR 2017 022279 306291L01_text 03/12/18 page 12 Axis AR 2017 022279 306291L01_text 03/12/18 page 13

Insurance

We continued to improve the efficiency of our platforms to respond to evolving industry needs and to improve our underwriters’ productivity.

12 AXIS CAPITAL Axis AR 2017 022279 306291L01_text 03/14/18 page 12 Axis AR 2017 022279 306291L01_text 03/14/18 page 13

Our Insurance business was guided by Among other successes, our Insurance four main strategic principles: continuing business recorded gratifying growth in our primary casualty business and in our to optimize our portfolio; increasing our casualty excess and surplus lines, which expertise and insight in specialty risks; performed well following our prior-year enhancing our strategic relationships with decision to exit the retail end of that business and reallocate resources to our most important distribution and business wholesale distribution. We saw good partners; and continuing to improve the growth in our U.S. program business, efficiency of our operating platforms. We which serves smaller and mid-size businesses largely through managing general made good progress on all four fronts. agents. This balances nicely against our core of larger account business.

We experienced momentum in renewable energy, where AXIS’ recognized expertise continued to attract brokers and clients seeking our insights and solutions. We had a strong year in our capital risk solutions business and in the rapidly growing ield of cyber risk. Although large catastrophes impacted and other U.S. weather events, com- the year’s results, AXIS’ insurance pared to $121 million, or 6.8 points, of Through our acquisition of Novae, we business registered excellent per- catastrophe and weather-related losses found an ideal opportunity to acceler- formance in several other individual reported during 2016. ate our strategic ambition to grow in businesses and advanced major international specialty lines. Completed initiatives while achieving signiicant in October, the acquisition makes AXIS ongoing operational improvements a $2 billion player in London, a top-10 as it progressed toward its long-term Guiding player at Lloyd’s, and an established goal of becoming a global leader in leader in the London specialty market. specialty insurance. Strategic

In 2017, gross premiums written Principles increased to $3.1 billion, an increase of 15% compared to $2.7 billion in Throughout the year, our Insurance 2016. The 2017 gross premiums business was guided by four main stra- written include the partial-year results tegic principles: continuing to optimize from the acquisitions of Aviabel in our portfolio; increasing our expertise April and Novae in October. Net and insight in specialty risks; enhancing premiums earned increased by our strategic relationships with our most 19% compared to 2016. Excluding important distribution and business the impact of the increase in net partners; and continuing to improve premiums earned associated with the eficiency of our operating plat- our acquisition of Novae, net premi- forms. We made good progress on all ums earned increased by 9%. The four fronts. insurance segment reported an underwriting loss of $228 million in 2017, Optimizing our portfolio compared to underwriting income of $38 million in 2016. The decrease in In optimizing our portfolio, AXIS priori- underwriting income was principally tized resources to target markets where driven by pre-tax catastrophe and we see the greatest growth potential and weather-related losses reported in rebalanced the portfolio based on the 2017 of $412 million, or 19.6 points, return on risk-adjusted capital for each primarily attributable to Hurricanes line of business, which weighs proits Harvey, Irma and Maria, the two against volatility. We emphasized lines earthquakes in Mexico, the wildires where we have built signiicant relevance in Northern and Southern California, and scale or expect to be able to do so.

ANNUAL REPORT 13 Axis AR 2017 022279 306291L01_text 03/12/18 page 14 Axis AR 2017 022279 306291L01_text 03/12/18 page 15

Aviabel, our other noteworthy acquisition in 2017, gave AXIS strength in the aviation market and an operational platform on the European continent, expanding our geographic footprint into the Benelux region. Additionally, our newly launched ofice in Miami, which enables us to better capture Lloyd’s-related business in the Latin American market, got off to a positive start and saw a good low of submissions.

As part of our strategy to concentrate our resources and play to our strengths, we exited or reduced our emphasis on businesses that did not promise an adequate return. Along with U.S. retail property and casualty lines, AXIS exited the onshore energy business and shed certain underperforming catastrophe accounts.

Increasing expertise and insight Enhancing strategic relationships

To improve our accuracy and decision-making in underwriting, “Fewer and deeper” remained our mantra in building and strengthen- actuarial, claims and other key functions across the value chain, we ing relationships with our most productive and strategic distribution intensiied our commitment to grow our data & analytics capabilities. partners. We continued to work closely with the Big Three retail Our aim is to better capture and utilize our own internally generated brokers, and a strategy to develop closer relationships with wholesale data, as well as to acquire the most useful data available from a wide brokers yielded impressive gains, particularly in the U.S. range of external sources. We also launched a program to identify and build relationships with We recruited a respected data scientist to outline a comprehensive some of the early career, rising star brokers, which generated incre- data and analytics strategy for AXIS, and created a Data & Analytics mental business. Center of Excellence (see sidebar article “Growing a Data & Analytics Center of Excellence”) to coordinate and leverage advances across Improving operating efficiency the organization. We continued to improve the eficiency of our platforms to respond AXIS’ Insurance business also continued its track record of attract- to evolving industry needs and, in particular, to improve our ing top-caliber talent to enhance our capabilities in areas such as underwriters’ productivity, giving them more time to interact with property and casualty, professional lines, renewable energy, and customers and distributors. programs. The acquisition of Novae brought us valuable additional expertise in new and established AXIS specialties, including those we As scheduled, we completed the third year of our ive-year, $50 mil- had targeted for growth and investment. lion Future Insurance Platform (FIP) rollout, a phased program to unify our operations onto a common system. Steadily expanding it to additional product lines, we expect to bring the policy administra- tion suite to our U.S. excess casualty, CMS, inancial institutions and professional irms lines, and introduce the new underwriting desktop to international operations during 2018. ‘Fewer and deeper’ We also introduced our Global Property Pricing Platform (G3P) proj- remained our ect, which brings our U.S. and international property underwriters onto a common platform for pricing and risk evaluation. We expect mantra in building to complete installation during 2018. and intensifying Additionally, we are customizing products to perform predictive relationships with modeling around submissions and policy issuance, and building technology and capabilities to facilitate eficient distribution to small our most productive commercial business.

and strategic Despite facing the challenges that came from a historic catastrophe distribution partners. season, we are very optimistic. We have honed our portfolio to areas we wish to focus on and have become more balanced and disciplined. With a slowly improving pricing environment, our outlook for the PETER W. WILSON, CHIEF EXECUTIVE OFFICER, AXIS INSURANCE future is bright.

14 AXIS CAPITAL Axis AR 2017 022279 306291L01_text 03/14/18 page 14 Axis AR 2017 022279 306291L01_text 03/14/18 page 15

Leadership In Emerging Risks: Renewable Energy and Cyber

In our complex, evolving world, one truth remains SolarPower Europe, Europe’s solar power trade group. constant: new risks continually emerge. AXIS has AXIS also teamed up with the Renewables Consulting gained a leadership position in two of the most Group, a premier advisory firm, to co-author Energy prominent emerging risks — renewable energy and Storage: Opportunities and Challenges, for organiza- cyber — and continues to advance its product offering tions wishing to invest in the $19 billion global energy and expertise in these markets. storage market.

Renewable energy. In markets as diverse as China, Cyber risk. Cyber risk has been recently pushed to Australia, North America, Europe, India and Japan, prominence by hackers and cyber thieves threatening renewable energy continues to gain momentum, businesses, governments and infrastructure. AXIS driven by the demand for sustainable, low-carbon has developed considerable expertise in this rapidly electricity and by rapid technological innova- evolving area, and aided by our acquisition of Novae, tion. Within this burgeoning environment, AXIS’ has built extensive market share. Renewable Energy team provides clients in-depth understanding of the risks companies face across the AXIS’ Global Cyber team recently extended its offer- renewables landscape, particularly in the areas of ing to include protection against damage to physical solar and wind power and energy storage. assets and infrastructure when a cyber attack occurs. AXIS works with clients to assess the scope of their AXIS’ Renewable Energy unit serves clients on a cyber risks so they can mitigate both “silent”, non-af- global basis, and this past year added seasoned firmative cyber risks, as well as more traditional underwriting talent in San Francisco and London, cyberattacks on a firm’s digital assets. AXIS also expanding our footprint in two of the most impor- sponsors world-leading research with the University tant renewable energy hubs. The AXIS Renewable of Oxford, ensuring the Company stays at the fore- Energy team’s ability to develop custom and flexible front of thought leadership in the cyber risk arena. coverages for large-scale energy projects has helped it secure business relationships with many prominent As the world continues to change, AXIS’ combination renewable energy companies around the world. of scale and expertise will enable it to seize profitable opportunities to provide expertise and coverage for AXIS has also expanded its market leadership clients’ emerging risks throughout the global spe- through a series of strategic partnerships. In 2017, cialty (re)insurance marketplace. AXIS became the official insurance partner of

ANNUAL REPORT 15 Axis AR 2017 022279 306291L01_text 03/12/18 page 16 Axis AR 2017 022279 306291L01_text 03/12/18 page 17

Reinsurance

We furthered partner relationships, invested in our operations and expanded our geographic footprint.

16 AXIS CAPITAL Axis AR 2017 022279 306291L01_text 03/14/18 page 16 Axis AR 2017 022279 306291L01_text 03/14/18 page 17

As has been our strategy, AXIS continued Continued growth of our to maintain a diverse reinsurance portfolio strategic capital partnerships

while at the same time building relevance At AXIS, our strategic capital partner- in our key specialty areas. This provided us ships strategy centers around matching with the nimbleness to respond to market the right risks with the right capital. In 2017, we continued to harness third- developments, expand our products and party capital through these strategic services while, at the same time, managing partnerships, enabling us to provide down volatility in our book. enhanced capacity, innovation and tailored solutions to our clients and brokers.

A highlight of 2017 was the completion of the irst full year of business for Harrington Re, a reinsurance company launched by AXIS with Blackstone Group in 2016, specializing in multiline medium- and long-tail risks. During the year, AXIS ceded $195 million to Harrington Re and received substantial fee income in return, and Harrington accreted book value. We have continued to work with Harrington to identify and create more opportunities to deliver value to our clients. Large catastrophes and by a series of large catastrophe events, including Hurricanes Harvey, Irma and other losses Investing in technology Maria, as well as two major earthquakes and systems In 2017, the (re)insurance industry in Mexico, and then two wildires in was challenged by a series of catastro- California in the fourth quarter. In 2017, we further invested in growing phe events. Against this backdrop, the sophistication of our technology Reinsurance business remained These losses, although signiicant, fell and systems to strengthen our under- dedicated to furthering strong client within our expectations for such major writing, portfolio management and relationships, providing breadth of events. Moreover, our ongoing strategy sales practices. products, and demonstrating our to reduce volatility in our portfolio, value to clients and communities, especially through judicious retroces- This included increasing our techno- all while advancing a wide range of sional coverage, proved effective as we logical capabilities to empower our key initiatives. reduced our losses against our market share. underwriters with stronger tools and analytics to help inform modeling, At AXIS, a core differentiator has risk selection and capital allocation. long been to provide superior claims Positive results in newer Additionally, we further invested in our service to our clients and partners. specialties, playing to sales and marketing capabilities, which During a challenging year of major our strengths included growing our customer relation catastrophe losses, we continued to management resources. prioritize client service while deliver- As part of our strategy to play to our ing fast claims payment in connection strengths, we allocated resources to with the catastrophe events in order promising lines, including mortgage to serve the people suffering from and marine, while scaling down our these tragedies. presence in less proitable sectors, and this included exiting our weather and The year began with an unexpected commodities business. decrease in the Ogden discount rate, set by the U.K. government, which As the year came to a close, there were added signiicant costs throughout some signs of pricing corrections in the the year to our motor reinsurance market, and we are optimistic that this contracts. These losses were followed will continue.

ANNUAL REPORT 17 Axis AR 2017 022279 306291L01_text 03/12/18 page 18 Axis AR 2017 022279 306291L01_text 03/12/18 page 19

This effort is being further scaled up in 2018 through the launch This was illustrated by our continued geographic expan- of AXIS’ Global Underwriting and Analytics unit, which will sion, with a focus on providing more services and options to provide greater insights, resources and tools to all of AXIS’ our clients. underwriting, claims and actuarial teams, advancing the Company’s philosophy of coupling human ingenuity with pow- The acquisition of Novae provided AXIS with a reinsurance erful tools and insights (see sidebar article, “Growing a Data & team in London, accelerating our planned growth strategy in the Analytics Center of Excellence”). market. As a result, AXIS will see new opportunities that low into London and the Lloyd’s market, which previously would not have Improved industry relationships and been accessible. This complements our main reinsurance hubs geographic expansion in Zurich, New York, Bermuda and Singapore.

An organization that prides itself on client-centricity, AXIS con- In 2018, under the leadership of our new CEO, Steve Arora, tinued to invest in growing our relationships with our reinsurance AXIS’ Reinsurance team looks forward to tapping into the ben- clients and partners while actively seeking opportunities to eits of increased relevance in key markets, stronger tech nology deliver more value. and systems, an expanded geographic footprint, and the pros- pects of improved market conditions.

AXIS’ Accident & Health Business — New Milestones, New Opportunities

AXIS’ Accident & Health business (A&H) had its most proitable business in limited beneits as individuals sought affordable year and achieved new milestones while building a leading fran- healthcare options. Additionally, we seized an opportunity chise in the global market for accident and health insurance and in specialty reinsurance as insurers and healthcare providers reinsurance. Gross premiums written rose 18% and surpassed found themselves exposed to more risk, and looked to us for the half-billion-dollar mark, to $509 million, excluding Novae. coverage for unexpected liabilities or claim volatility. Once again, A&H demonstrated adept positioning in a competitive marketplace that otherwise grew only in the low single digits. Internationally, we provided reinsurance for companies seeking to bolster their capital under the rules of Solvency II, In the U.S., A&H showed its skills in meeting customer demand especially on the Continent. We also launched a life reinsur- within a changing regulatory landscape. We wrote more ance effort focused primarily on the needs of our European

In early 2018, AXIS announced a major realignment of A&H. This business is currently included in our insurance segment. As a result of the realignment, A&H will be merged into AXIS’ core Insurance and Reinsurance segments.

18 AXIS CAPITAL Axis AR 2017 022279 306291L01_text 03/14/18 page 18 Axis AR 2017 022279 306291L01_text 03/14/18 page 19

“Future of Insurance” Symposium and Hackathon: Industry Expertise Meets Student Ingenuity

The AXIS Research Center (ARC) resides on the cam- hours — that could help underwriters assess the pus of the University of Illinois at Urbana-Champaign, potential impact of catastrophic events. The contest which offers one of the top U.S. business school pro- attracted budding computer scientists and engineers grams for insurance and corporate risk management. as well as actuarial and risk management students. They arrived with drones and virtual reality headgear, In April 2017, the two organizations teamed up to along with computer programming and risk model- host their first-ever “Future of Insurance” Symposium ing technologies. This contest demonstrated career and student Hackathon. opportunities that exist in the (re)insurance industry for the students. For AXIS, the Hackathon highlighted The symposium, a “mini-conference,” brought the potential benefits and wide varieties of tools that together leading insurance experts from industry are possible with current and emerging technologies. and academia for a day-long marathon of panels and presentations to an audience including AXIS clients, The “Future of Insurance” Symposium and Hackathon industry thought leaders and academics. Panels are examples of the access to the talent and resources explored some of the most pressing topics regarding available to AXIS through its presence at the University. the future of insurance- such as the changing economy, new trends in InsurTech, challenges posed by ARC is an innovative collaboration between academia emerging risks, and overcoming the industry’s loom- and industry. The University provides experiential ing talent shortage. learning opportunities to students through intern- ships, classroom case studies and curriculum design. The student Hackathon, a separately held, all-day AXIS engages interns, faculty and student consult- affair, challenged teams of students to create new ing organizations to augment available problem catastrophe risk visualization tools — in just eight solving resources.

and Middle Eastern customers. In Dubai, where we recently It will also enable A&H teams to better leverage customer opened an ofice to serve emerging markets across the Middle and partner relationships across the Company, better tap into East and North Africa, we acquired a Class 4 license to expand existing client networks, and help ensure seamless delivery our activities to a wider range of services, a further step of A&H and more traditional P&C (re)insurance products to towards becoming a full-service local provider. AXIS’ international clients.

In early 2018, as part of an effort to strengthen its operating This change will empower the business to become more model and make our company more agile and “future ready,” eficient and effectively leverage the existing distribution AXIS announced a major realignment of A&H, merging it into channels within the organization. The Company expects the Company’s Insurance and Reinsurance segments. This will these lines to continue to grow proitability and be help A&H deliver more synergies in combination with AXIS’ an important contributor in advancing our long-term property and casualty insurance and reinsurance businesses. strategic goals.

ANNUAL REPORT 19 Axis AR 2017 022279 306291L01_text 03/14/18 page 20 Axis AR 2017 022279 306291L01_text 03/14/18 page 21

A LETTER FROM THE CHAIRMAN

AXIS is poised to capitalize upon the investments it made in 2017 and will further grow its leadership position, generating profits and delivering significant value to our shareholders.

To Our Shareholders:

2017 was a dificult and demanding year, for our industry in general and for AXIS. We began the year fully expecting dificult conditions, for we had witnessed a long period of year-by-year margin erosion in most lines of business, which attacked the underlying proitability of the industry as a whole. We received no assistance from interest rates either, which remained at historically low levels.

As the year developed, we were further severely tested by catastrophe events, a concern that had been relatively quiet during recent years. The insured cost of the year’s catastrophes was well in excess of $120 billion, and the economic cost was probably three to ive times greater. This serves to emphasize the gap in protection between what is covered and what society at large must bear on its own — which, in turn, represents a considerable opportunity.

Our industry has shown great resilience in the face of these recent tests; its solvency is strong and its risk management signiicantly improved, enabling us to better understand and regulate the risks to which we are exposed. This was certainly the case with AXIS.

In addition, the speed at which capital has been willingly reinvested into the industry clearly shows the important role we play in enabling society to replace and reconstruct its assets in the wake of disaster, and to adjust to challenges such as climate change, cyber threats and other evolving risks.

Just as it has shown its value to its clients, however, the industry now needs to reestablish a proper return for its investors, and reward them for the risks it carries.

At AXIS, despite this year’s discouraging inancial returns, there has been a great deal of good news and positive momentum building just below the surface.

20 AXIS CAPITAL Axis AR 2017 022279 306291L01_text 03/14/18 page 20 Axis AR 2017 022279 306291L01_text 03/14/18 page 21

The improvements management has been making in the Company’s risk pro- ile, and our organizational changes, have made AXIS signi icantly more secure and less volatile. Management’s deter- mination to invest in lines of business The improvements management where we have relevance and leadership positions, as seen in our acquisitions of has been making in the Company’s Novae and Aviabel, have reinforced our progress toward reducing volatility and risk profile, and our organizational driving pro itable growth. changes, have made AXIS I am also delighted that, through Novae, we have taken a major step forward by significantly more secure signi icantly investing in the Lloyd’s market. I believe Lloyd’s will remain a global and less volatile. center of underwriting expertise for specialist lines, as it has been for so long MICHAEL A. BUTT, CHAIRMAN OF THE BOARD in the past, and that these capabilities will continue to be appreciated in today’s increasingly complex world. integration of Novae into our business, Pete Vogt on his promotion to CFO. and achieving the objectives and savings Pete brings a strong record of success I am disappointed, of course, that our identi ied in that regard. This is a period as a leader within AXIS, and I expect the share price declined so steeply following for acute focus on execution by our irm will bene it from his knowledge of the third and fourth quarters’ catastro- management team. both inance and operations. phes. I am optimistic that the Company’s strong record of rebuilding its book value I hope the events of 2017 will prove to Finally, on behalf of the entire Board, through earnings following major events, be a suf icient tipping point so that the I want to thank Joe Henry and and the constructive steps we have taken industry may reestablish more satisfac- Chris DiSipio, who are both departing to grow the Company, will offset this tory underwriting margins. Nevertheless, the Company’s Executive Committee. overreaction and ultimately be re lected it remains our view that improvement Chris has been a catalyst in growing in our share price. will likely be a gradual evolution — as our A&H business, and I wish him well as opposed to the rapid changes we have he begins a new professional chapter. I The regulatory environment remains chal- sometimes seen in the past — as industry must also express my deep appreciation lenging internationally, with increasing cycles have undergone a smoothing out to Joe, who retired at year-end from his localized demands. In the U.S., unex- in recent years. position as Chief Financial Of icer. Joe pected developments due to the Tax Cuts brought tremendous professionalism and Jobs Act of 2017 will require us to I am con ident in the essential role our and exceptional achievement to the keep more of our U.S. business onshore, industry plays in the global economy, and Company’s inancial functions. He was a but that will be offset by lower local tax if growth continues to gain in strength as great asset to AXIS and a valued adviser rates. In the U.K., there exists continuing forecasts indicate, it will be bene icial for to all our directors. uncertainty around the Brexit negotia- our industry as well as taking advantage tions, but we are comfortable with AXIS’ of the opportunity of closing the protec- I also wish to thank our shareholders for current structures; we will adjust as nec- tion gap. their continued support. The year ahead essary, which may add some costs, but we holds great promise for AXIS. I believe do not view it as a threat to our business. I would like to express my gratitude the Company is poised to capitalize to two of our directors who retired upon the investments it made in 2017 In Bermuda, the reins of government from the Board during the year, Jane and will further grow its leadership posi- changed hands during the year, but the Boisseau and Alice Young. Their con- tion, generating pro its and delivering new government appears to remain com- tributions and thoughtful insights were signi icant value to our shareholders. mitted to the insurance and reinsurance greatly appreciated. industry’s success. We look forward to Sincerely, continuing our good relations with the I also welcome Steve Arora as the Bermuda authorities and working with new Chief Executive Of icer of the them on a cooperative basis. Reinsurance business at AXIS. Steve is an accomplished and respected For the year ahead, I look forward to the executive, and his decision to join AXIS satisfactory implementation of the orga- demonstrates yet again our ability to nizational changes that management has attract talent of the highest caliber. Michael A. Butt initiated, including completion of the I am also very pleased to congratulate Chairman of the Board

ANNUAL REPORT 21 Axis AR 2017 022279 306291L01_text 03/12/18 page 22 Axis AR 2017 022279 306291L01_text 03/12/18 page 23

Giving Back to Our Communities: the AXIS Global Day of Giving Rally

At AXIS, we believe it is crucial to give back to The activities ran the gamut. In Zurich, AXIS the communities where we live and conduct volunteers conquered a muddy obstacle course business. Beyond solely providing financial to raise funds for breast cancer awareness. protection, we believe it is also vital to actively AXIS London volunteers supported a commu- engage on a personal level. nity project to make a local playground more safe for disabled children and their families. In In 2017 we inaugurated the first AXIS Global Alpharetta, our teams helped build houses with Day of Giving Rally, challenging our employees Habitat for Humanity, and a group from our to donate time and energy to participate in New York office joined with Women Build 2017 volunteer efforts as a team. This initiative was for Habitat for Humanity to help build a home built upon an existing program within AXIS for a New York City family. that provided our employees with one paid day off annually to participate in a philanthropic Separately, as a lead sponsor of the Bermuda event in their local community. Ag Show in 2017, AXIS again showed its support for our headquarters community. We The results were tremendous and heartwarm- launched the “AXIS Kids Free on Friday” pro- ing. AXIS employees across the globe came gram so that all schoolchildren in Bermuda together to support a broad range of causes, could attend the show and discover the vast from providing care to low income senior cit- cultural arts that are unique to the island. izens to stocking shelves at food pantries to volunteering their skills for charitable organiza- As a corporation with a strong sense of purpose, tions. In total, more than 600 AXIS employees, AXIS is proud to be a positive force for change in across nearly 20 offices around the globe, the communities where we live and do business. participated in 46 philanthropic events.

22 AXIS CAPITAL Axis AR 2017 022279 306291L01_text 03/14/18 page 22 Axis AR 2017 022279 306291L01_text 03/14/18 page 23

GLOBAL PRESENCE 4 Continents 34 Offices 1,647 Employees

BERMUDA Paris Berkeley Heights Minneapolis 28 Rue Cambacérès Connell Corporate Park 5201 Eden Avenue Corporate Headquarters 75008 Paris 300 Connell Drive Suite 300 92 Pitts Bay Road France Suite 8000 Minneapolis, MN 55436 AXIS House 33.1.42.66.55.84 Berkeley Heights, 1.888.720.3773 Pembroke HM 08 NJ 07922 Bermuda Zurich 1.908.508.4300 Napa 1.441.496.2600 Alfred Escher-Strasse 50 550 Gateway Drive Fax 1.441.405.2600 8002 Zurich Boston Suite 101 www.axiscapital.com Switzerland 75-101 Federal Street Napa, CA 94558 41.44.567.00.00 Suite 1900 1.707.226.0603 Boston, MA 02110 EUROPE 1.617.531.7503 New York SOUTH AMERICA 1211 Ave. of the Americas Barcelona BRAZIL Chicago 24th Floor Door A, Ofice 622 111 South Wacker Drive New York, NY 10036 Avda. Diagonal 640, 6th Floor São Paulo Suite 3500 1.212.500.7600 08017 Barcelona Alameda Santos, Chicago, IL 60606 Spain n° 2326 — conjunto 95–97 1.312.977.0700 Phoenix 34.93.228.78.70 CEP 01418–200 7310 N. 16th Street São Paulo, Brazil Cleveland Suite 100 Belgium 55.11.3957.3000 6100 Oak Tree Boulevard Phoenix, AZ 85020 Avenue Louise 54 Suite 200 1.602.216.0006 1050 Brussels Independence, OH 44131 32.2.349.12.11 CANADA 1.312.917.5533 Princeton 1 University Square Drive Dublin Quebec Greenville Suite 200 Mount Herbert Court Quebec Montreal 1200 Woodruff Rd Princeton, NJ 08540 34 Upper Mount Street 200 McGill Greenville, SC 29607 1.609.375.9200 Dublin 2 College Avenue 1.864.640.1116 Ireland 6th Floor San Francisco 353.1.632.5900 Montréal, QC H3A 1G1 Hartford 450 Sansome Street Canada One State Street Suite 1600 London 1.514.906.8810 Suite 1700 San Francisco, CA 94111 60 Great Tower Street Hartford, CT 06103 1.415.262.6841/6842 Plantation Place South Toronto 1.860.707.1700 1st Floor 70 York Street Seattle / Tacoma London, EC3R 5AZ Suite 1010 Houston 1201 Paciic Avenue 44.207.256.3250 Toronto, ON M5J 1S9 One Riverway 6th Floor 1.416.361.7200 Suite 1700 Tacoma, WA 98402 London Houston, TX 77056 1.253.212.7574 71 Fenchurch Street 1.832.214.0902 Third Floor UNITED ARAB EMIRATES University of London, EC3M 48S Kansas City Illinois Urbana-Champaign 44.207.877.3800 Dubai 1201 Walnut 1800 South Oak Street Gate Village Building 4 Suite 1800 Suite 204A London Level 3 Kansas City, MO 64106 Champaign, IL 61820 21 Lombard Street Ofice 42 1.816.471.6118 1.312.345.0795 London, EC3V 9AH Dubai International Financial Centre 44.207.050.9000 Dubai, UAE Los Angeles 971.4.401.9236 725 S. Figueroa Street ASIA Madrid Suite 3800 Paseo de la Castellana 141 Los Angeles, CA 90017 Singapore Planta 8, Ediìcio Cuzco IV UNITED STATES 1.213.452.4700 80 Rafles Place 28046 Madrid #29-20 UOB Plaza 2 Spain Alpharetta Miami Singapore 048624 34.91.572.65.23 11680 Great Oaks Way 1111 Brickell Avenue 65.6579.0630 Suite 500 Suite 1820 Alpharetta, GA 30022 Miami, FL 33131 1.678.746.9000 1.212.940.3338

ANNUAL REPORT 23 Axis AR 2017 022279 306291L01_text 03/12/18 page 24

AXIS DIRECTORS AND EXECUTIVE OFFICERS Directors

Albert A. Benchimol Christopher V. Greetham Thomas C. Ramey President and Chief Executive Of icer, Former Chief Investment Of icer, Former Chairman and President, AXIS Capital XL Capital Ltd. Liberty International, • Executive Committee • Audit Committee Liberty Mutual Group • Risk Committee • Compensation Committee • Audit Committee, • Finance Committee Chairman and Financial Expert Michael A. Butt • Risk Committee, Chairman • Compensation Committee Chairman of the Board, AXIS Capital • Corporate Governance and • Executive Committee Maurice A. Keane Nominating Committee Former Group CEO, The Bank of Ireland Charles A. Davis • Audit Committee Henry B. Smith Chief Executive Of icer, • Compensation Committee Former CEO, W.P. Stewart & Co., Ltd. Stone Point Capital LLC • Corporate Governance and and Bank of Bermuda Limited • Executive Committee Nominating Committee • Audit Committee • Finance Committee, Chairman • Compensation Committee, • Risk Committee Cheryl-Ann Lister Chairman Former Chairperson and CEO, • Corporate Governance and Robert L. Friedman Bermuda Monetary Authority Nominating Committee Senior Advisor and Former • Corporate Governance and • Executive Committee, Chairman Senior Managing Director, Nominating Committee, Blackstone Group LP Chairperson Wilhelm Zeller • Finance Committee • Risk Committee Former Chairman of the Executive • Risk Committee Board, Hannover Re • Finance Committee • Risk Committee

Executive officers

Albert A. Benchimol Steve Arora Peter W. Wilson President and Chief Executive Of icer Chief Executive Of icer Chief Executive Of icer AXIS Reinsurance AXIS Insurance Peter J. Vogt Chief Financial Of icer

24 AXIS CAPITAL Axis AR 2017 022279 AXS_AR17_Cover_v1 03/13/18 page 4 Axis AR 2017 022279 AXS_AR17_Cover_v1 03/13/18 page 25

Financial Shareholder CEO Insurance Reinsurance Chairman’s Directors & Highlights Value Letter Letter Executives SHAREHOLDER INFORMATION

Email: [email protected]

Total Shareholder Return 221.6% 269.8% 260.6%

AXS S&P 500500 S&P 500500 P&CP&C COMPOSITECOMPOSITE $450 $400 $350 $300 $250 $200 $150 $100 $50 $0

ANNUAL REPORT 25 Relevance. Commitment. Leadership.

AXIS CAPITAL 2017 ANNUAL REPORT AXIS CAPITAL 2017 ANNUAL REPORT