AXIS CAPITAL HOLDINGS LIMITED

CONDENSED BALANCE SHEETS – PARENT COMPANY

DECEMBER 31, 2013 AND 2012



	2013			2012
	(in thousands)
Assets
Investments in subsidiaries on equity basis	$	6,581,368		$	6,571,607
Cash and cash equivalents	4,414			2,841
Other assets	3,179			2,706
Total assets	$	6,588,961		$	6,577,154

Liabilities
Intercompany payable	$	204,877		$	243,252
Senior notes	499,906			499,798
Dividends payable	47,959			37,370
Other liabilities	18,257			16,973
Total liabilities	770,999			797,393

Shareholders’ equity
Preferred shares	627,843			502,843
Common shares (2013: 174,134; 2012: 171,867 shares issued and 2013: 109,485; 2012: 117,920 shares outstanding)	2,174			2,146
Additional paid-in capital	2,240,125			2,179,034
Accumulated other comprehensive income	117,825			362,622
Retained earnings	5,062,706			4,497,789
Treasury shares, at cost (2013: 64,649; 2012: 53,947 shares)	(2,232,711		)	(1,764,673		)
Total shareholders’ equity	5,817,962			5,779,761
Total liabilities and shareholders’ equity	$	6,588,961		$	6,577,154

(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. Unless previously redeemed, the 5.75% Senior Notes will mature on December 1, 2014.


(2)	AXIS Capital has fully and unconditionally guaranteed all obligations of AXIS Specialty Finance, 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 the derivative instrument obligations of certain of its 100% owned operating subsidiaries. At December 31, 2013, the fair value of guaranteed obligations utilized aggregated to $28 million (2012: $nil).

SCHEDULE II

AXIS CAPITAL HOLDINGS LIMITED

CONDENSED STATEMENTS OF OPERATIONS – PARENT COMPANY

YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011



	2013			2012			2011
	(in thousands)
Revenues
Net investment income	$	5		$	25		$	1
Total revenues	5			25			1

Expenses
General and administrative expenses	40,565			62,293			36,248
Interest expense and financing costs	29,201			29,201			29,201
Total expenses	69,766			91,494			65,449

Loss before equity in net earnings of subsidiaries	(69,761		)	(91,469		)	(65,448		)
Equity in net earnings of subsidiaries	797,226			638,710			111,753
Net income	727,465			547,241			46,305
Preferred share dividends	40,474			38,228			36,875
Loss on repurchase of preferred shares	3,081			14,009			—
Net income available to common shareholders	$	683,910		$	495,004		$	9,430

Comprehensive income (loss)	$	482,668		$	781,701		$	(2,354	)

SCHEDULE II

AXIS CAPITAL HOLDINGS LIMITED

CONDENSED STATEMENTS OF CASH FLOWS – PARENT COMPANY

YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011



	2013			2012			2011
	(in thousands)
Cash flows from operating activities:
Net income	$	727,465		$	547,241		$	46,305
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in net earnings of subsidiaries	(797,226		)	(638,710		)	(111,753		)
Change in intercompany payable	(38,375		)	(7,667		)	(44,503		)
Dividends received from subsidiaries	566,000			525,000			255,000
Other items	34,803			56,425			21,298
Net cash provided by operating activities	492,667			482,289			166,347

Cash flows from investing activities:
Capital repaid from subsidiary	—			—			130,000
Net cash from investing activities	—			—			130,000

Cash flows from financing activities:
Net proceeds from issuance of preferred shares	218,449			393,544			—
Repurchase of preferred shares	(100,000		)	(404,073		)	—
Repurchase of common shares	(472,263		)	(317,687		)	(65,885		)
Dividends paid - common shares	(118,426		)	(120,487		)	(206,455		)
Dividends paid - preferred shares	(39,193		)	(38,228		)	(36,875		)
Proceeds from issuance of common shares	20,339			5,120			6,735
Net cash used in financing activities	(491,094		)	(481,811		)	(302,480		)

Increase (decrease) in cash and cash equivalents	1,573			478			(6,133		)
Cash and cash equivalents - beginning of period	2,841			2,363			8,496
Cash and cash equivalents - end of period	$	4,414		$	2,841		$	2,363

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