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Axis Capital Holdings Ltd – IPO: ‘S-1/A’ on 6/10/03

On:  Tuesday, 6/10/03, at 2:00pm ET   ·   Accession #:  1047469-3-20910   ·   File #:  333-103620

Previous ‘S-1’:  ‘S-1/A’ on 5/19/03   ·   Next:  ‘S-1’ on 3/26/04   ·   Latest:  ‘S-1/A’ on 4/6/04   ·   17 References:   By:  AXIS Capital Holdings Ltd. – ‘10-K’ on 2/27/24 for 12/31/23 By:  AXIS Capital Holdings Ltd. – ‘10-Q’ on 11/2/23 for 9/30/23 By:  AXIS Capital Holdings Ltd. – ‘10-Q’ on 8/1/23 for 6/30/23 By:  AXIS Capital Holdings Ltd. – ‘S-8’ on 5/10/23 By:  AXIS Capital Holdings Ltd. – ‘10-Q’ on 4/26/23 for 3/31/23 By:  AXIS Capital Holdings Ltd. – ‘10-K’ on 2/27/23 for 12/31/22 By:  AXIS Capital Holdings Ltd. – ‘S-3ASR’ on 11/9/22 By:  AXIS Capital Holdings Ltd. – ‘10-Q’ on 10/26/22 for 9/30/22 By:  AXIS Capital Holdings Ltd. – ‘10-Q’ on 7/27/22 for 6/30/22 By:  AXIS Capital Holdings Ltd. – ‘10-Q’ on 4/27/22 for 3/31/22 By:  AXIS Capital Holdings Ltd. – ‘10-K’ on 2/25/22 for 12/31/21 By:  AXIS Capital Holdings Ltd. – ‘10-Q’ on 10/27/21 for 9/30/21 By:  AXIS Capital Holdings Ltd. – ‘10-Q’ on 7/27/21 for 6/30/21 By:  AXIS Capital Holdings Ltd. – ‘S-8’ on 5/11/21 By:  AXIS Capital Holdings Ltd. – ‘10-Q’ on 4/28/21 for 3/31/21 By:  AXIS Capital Holdings Ltd. – ‘10-K’ on 2/26/21 for 12/31/20 By:  AXIS Capital Holdings Ltd. – ‘10-Q’ on 10/28/20 for 9/30/20 

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 6/10/03  Axis Capital Holdings Ltd         S-1/A                 17:2.2M                                   Merrill Corp/New/FA

Document/Exhibit                   Description                      Pages   Size 

 1: S-1/A       Pre-Effective Amendment to Registration Statement   HTML   1.51M 
                          (General Form)                                         
 2: EX-1.1      Underwriting Agreement                                31    138K 
 3: EX-3.2      Articles of Incorporation/Organization or By-Laws     34    157K 
 4: EX-4.1      Instrument Defining the Rights of Security Holders     2     14K 
 5: EX-4.2      Instrument Defining the Rights of Security Holders    20     71K 
 6: EX-10.1     Material Contract                                     34    144K 
15: EX-10.10    Material Contract                                     11     42K 
 7: EX-10.2     Material Contract                                     27     93K 
 8: EX-10.3     Material Contract                                     30    112K 
 9: EX-10.4     Material Contract                                     29    100K 
10: EX-10.5     Material Contract                                     12     59K 
11: EX-10.6     Material Contract                                      9     45K 
12: EX-10.7     Material Contract                                      4     23K 
13: EX-10.8     Material Contract                                      5     24K 
14: EX-10.9     Material Contract                                     11     42K 
16: EX-23.1     Consent of Experts or Counsel                       HTML     11K 
17: EX-99.1     Miscellaneous Exhibit                                  3     19K 

As filed with the Securities and Exchange Commission on June 10, 2003.

Registration No. 333-103620

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Amendment No. 3
to
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

AXIS CAPITAL HOLDINGS LIMITED
(Exact name of Registrant as specified in its charter)

106 Pitts Bay Road
Pembroke HM 08, Bermuda
Telephone: (441) 296-2600
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)

CT Corporation System
111 Eighth Avenue, 13th Floor
New York, New York 10011
(Name, address, including zip code, and telephone number,
including area code, of agent for service)

Copies to:

Kevin G. McLean, Esq.
Senior Vice President, General Counsel and Secretary
AXIS Specialty U.S. Holdings, Inc.
c/o AXIS Capital Holdings Limited
106 Pitts Bay Road
Pembroke HM 08, Bermuda
Telephone: (441) 296-2600
Facsimile: (441) 296-3140

Approximate date of commencement of the proposed sale of the securities to the public:
As soon as practicable after the Registration Statement becomes effective.

        If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. o

        If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

        If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

        If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

        If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. o

CALCULATION OF REGISTRATION FEE

(1)

Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457 under the Securities Act of 1933, as amended.

(2)

Includes shares subject to the underwriters' over-allotment option.

(3)

$41,865.75 previously paid.

        The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

PROSPECTUS (Subject to Completion)

Issued June 10, 2003

21,500,000 Shares

AXIS Capital Holdings Limited

Common Shares

AXIS Capital Holdings Limited is offering 13,400,000 common shares and the selling shareholders are offering an additional 8,100,000 common shares in an underwritten offering. AXIS Capital Holdings Limited will not receive any of the proceeds from the sale of common shares by the selling shareholders. We anticipate that the initial public offering price of the common shares will be between $19.50 and $21.50 per share. This is our initial public offering and no public market exists for our common shares.

We have applied to list our common shares on the New York Stock Exchange under the symbol "AXS."

Investing in our common shares involves risks. See "Risk Factors" beginning on page 9.

PRICE $        A SHARE

AXIS Capital Holdings Limited and the selling shareholders have granted the underwriters the right to purchase up to an additional 3,225,000 common shares to cover over-allotments.

The Securities and Exchange Commission, state securities regulators, the Registrar of Companies in Bermuda and the Bermuda Monetary Authority have not approved or disapproved of these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The underwriters expect to deliver the common shares to purchasers on                  , 2003.

                        , 2003

Table of Contents

        Until                        , 2003, which is the 25th day after the date of this prospectus, all dealers that buy, sell or trade our common shares, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

        You should rely only on the information contained in this prospectus. We have not, and the underwriters have not, authorized any other person to provide you with information that is different from that contained in this prospectus. We are offering to sell and seeking offers to buy these securities only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of common shares.

i

        Common shares may be offered or sold in Bermuda only in compliance with the provisions of the Investment Business Act of 1998 of Bermuda which regulates the sale of securities in Bermuda. In addition, the Bermuda Monetary Authority (the "BMA") must approve all issuances and transfers of shares of a Bermuda exempted company. The BMA has issued its permission for the issue and free transferability of the common shares being offered pursuant to this prospectus, as long as the common shares are listed on the New York Stock Exchange, to and among persons who are non-residents of Bermuda for exchange controls purposes. In addition, we will deliver to and file a copy of this prospectus with the Registrar of Companies in Bermuda in accordance with Bermuda law. The BMA and the Registrar of Companies accept no responsibility for the financial soundness of any proposal or for the correctness of any of the statements made or opinions expressed in this prospectus.

        Neither we nor the selling shareholders have authorized any offer of the common shares being offered pursuant to this prospectus to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulation 1995, as amended (the "Regulations"). Common shares may not lawfully be offered or sold to persons in the United Kingdom except in circumstances which do not result in an offer to the public in the United Kingdom within the meaning of the Regulations or otherwise in compliance with all applicable provisions of the Regulations.

        This document is for distribution only to persons who (i) are outside the United Kingdom, (ii) have professional experience in matters relating to investments, (iii) are persons falling within Article 49(2)(a) to (d) ("high net worth companies, unincorporated associations, etc.") or Article 60 ("participation in employee share schemes") of The Financial Services and Markets Act 2000 (Financial Promotion) Order 2001 (as amended) or (iv) are persons to whom this document may otherwise lawfully be issued or passed on to (all such persons together being referred to as "relevant persons"). This document must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this document relates is available only to relevant persons and will be engaged in only with relevant persons.

        The common shares being offered pursuant to this prospectus shall not be offered, transferred or sold in the Netherlands to any person other than to natural or legal persons who trade or invest in securities in the conduct of their profession or trade (which includes banks, pension funds, insurance companies, securities firms, investment institutions, central governments, large international and supranational institutions, other institutional investors and treasury departments of large enterprises).

ii

PROSPECTUS SUMMARY

        This summary highlights information contained elsewhere in this prospectus. While we have highlighted what we believe is the most important information about us and this offering in this summary, you should read the entire prospectus carefully, including the "Risk Factors" and "Forward-Looking Statements" sections and our consolidated financial statements and the notes to those consolidated financial statements before making an investment decision. In this prospectus, references to the "Company," "we," "us" or "our" refer to AXIS Capital Holdings Limited and its subsidiaries, including AXIS Specialty Limited ("AXIS Specialty"), AXIS Re Limited ("AXIS Re"), AXIS Specialty Europe Limited ("AXIS Specialty Europe"), AXIS Reinsurance Company ("AXIS Reinsurance"), AXIS Specialty Insurance Company ("AXIS Insurance"), Sheffield Insurance Corporation, which the Company acquired as of February 28, 2003 and intends to rename AXIS Surplus Insurance Company ("AXIS Surplus"), and any other direct or indirect subsidiary, unless the context suggests otherwise. References to "AXIS Holdings" refer solely to AXIS Capital Holdings Limited. References in this prospectus to "dollars" or "$" are to the lawful currency of the United States of America, unless the context otherwise requires. Unless otherwise stated, all figures assume no exercise of the underwriters' over-allotment option. All share amounts, per share data and strike prices contained in this prospectus have been adjusted to reflect an 8 for 1 share split which the Company will effect prior to the consummation of the offering contemplated by this prospectus. For your convenience, we have provided a Glossary, beginning on page G-1, of selected reinsurance, insurance and investment terms and have printed these terms in boldfaced type the first time they are used in this prospectus.

OUR COMPANY

Overview

        We provide specialty lines insurance and treaty reinsurance on a global basis, with headquarters in Bermuda. Through our operating subsidiaries based in Bermuda, Ireland and the United States, we focus on writing coverage for specialized classes of risk through our team of highly skilled and experienced underwriters. Since our founding in November 2001, we have successfully assembled a strong management team of proven leaders with significant industry experience, established a global underwriting infrastructure and built a broad product portfolio. In 2002, our first full year of operation, we wrote $1.1 billion of gross premiums, generated $265.1 million of net income, produced a combined ratio of 70.7% and earned a return on average equity of 14.7%. As of December 31, 2002, we had $1.96 billion of shareholders' equity. In the first quarter of 2003, we wrote $608.6 million of gross premiums, generated $107.1 million of net income and produced a combined ratio of 73.1%. We believe that we have already established a recognized franchise in the insurance and reinsurance industry and are well-positioned to provide our products to our customers.

        The insurance and reinsurance industry has recently experienced severe dislocation as a result of an unprecedented impairment of capital, which has caused a substantial contraction in global underwriting capacity. We believe this impairment has been caused primarily by the following factors:

•

Record loss events in 2001 and 2002;



•

Continued adverse loss development from industry legacy issues;



•

An adverse investment environment;



•

Exit of key players from certain markets; and



•

A significant number of ratings downgrades.

        We believe that from the beginning of 2001 through the end of 2002, capital available to write property and casualty insurance and reinsurance has been impaired by an estimated $241 to $261 billion in potential and realized underwriting and investment losses. This amount is equal to 34%

1

to 37% of the approximately $700 billion in available capital at the end of 2000. At the same time that capacity has declined, we believe the demand for commercial insurance and reinsurance has increased as insureds have become increasingly aware of their risk exposures. These industry developments have provided new companies such as ours with an opportunity to provide much needed underwriting capacity at attractive rates in conjunction with improved terms and conditions.

        In forming our Company, our strategy was to establish an entity with a solid capital base, a strong management team, a globally diversified product portfolio and a cost-effective underwriting platform capable of allowing us to react quickly to changing market dynamics. We believe the ability to execute this strategy in the current market without the burden of historical losses relating to the tragic events of September 11, 2001, asbestos, environmental or other legacy exposures differentiates us from many incumbent insurers and reinsurers. In our first full year of operation, we believe we have begun to successfully execute this strategy, and we are committed to capitalizing on the opportunities created by ongoing market dislocations.

        We seek to use our management's extensive expertise, experience and long-standing market relationships to identify and underwrite attractively priced risks while delivering innovative insurance and reinsurance solutions to our customers. Our underwriters are focused on constructing a portfolio of risks that fully utilizes our capital while optimizing the risk-reward characteristics of the portfolio. For our global insurance and U.S. insurance segments, we have designed our corporate and underwriting structure to create an operating platform that utilizes new procedures and technologies, which we believe provides us with a competitive advantage. We intend to continue to exercise highly disciplined underwriting practices and manage a diverse book of business while seeking to maximize our profitability and generate superior returns on equity.

        In 2002, our business was comprised of two underwriting segments: specialty lines and treaty reinsurance. With effect from January 1, 2003, we added two new segments following our acquisitions of AXIS Reinsurance and AXIS Surplus. Our business is now comprised of four segments: global insurance (formerly specialty lines), global reinsurance (formerly treaty reinsurance), U.S. insurance and U.S. reinsurance. During the year ended December 31, 2002, we wrote gross premiums for our global insurance and global reinsurance segments of $793.8 million and $314.2 million, respectively. In the first quarter of 2003, we wrote gross premiums of $243.6 million in our global insurance segment, $211.5 million in our global reinsurance segment, $91.9 million in our U.S. insurance segment and $61.5 million in our U.S. reinsurance segment.

        Our global insurance segment primarily includes the following specialty lines risk classifications sourced outside of the United States:

•

Specialty Risks (including Terrorism, Marine and Aviation War Risk and Political Risk);



•

Onshore and Offshore Energy;



•

Aviation and Aerospace;



•

Commercial Property; and



•

Marine.

        Our global reinsurance segment primarily includes treaty reinsurance business sourced outside of the United States covering the following underlying risks:

•

Property;



•

Workers' Compensation, Personal Accident and Life; and



•

Marine and Aviation.

2

        Our U.S. insurance segment primarily includes the following specialty lines risk classifications sourced in the United States and principally covering exposures in the United States:

•

Commercial Property;



•

Professional Lines; and



•

Commercial Liability.

        Our U.S. reinsurance segment principally provides casualty treaty reinsurance products sourced in the United States and principally covering exposures in the United States for the following underlying risks:

•

Professional Lines; and



•

Casualty Clash.

        We market and distribute our products primarily through the world's largest insurance and reinsurance brokers, such as Marsh Inc. ("Marsh"), including its subsidiary, Guy Carpenter & Company, Inc. ("Guy Carpenter"), Aon Corporation ("Aon"), Willis Group Holdings Ltd. ("Willis") and Benfield Group ("Benfield"), among others.

Competitive Strengths

        We believe our competitive strengths have enabled, and will continue to enable us to capitalize on the significant dislocation in the insurance and reinsurance marketplace. These strengths include:

•

Experienced Management and Underwriting Team with Proven Track Record.  The extensive depth and knowledge of our management and underwriting teams provide us with the ability to successfully select and price complex risks.



•

Long-Standing Market Relationships.  Our underwriters have well-established personal relationships with our insureds, cedents and brokers.



•

Demonstrated Ability to Attract High Quality Talent.  From inception, we have successfully targeted and hired high quality management and underwriting talent.



•

Disciplined Approach to Underwriting and Risk Management.  Our disciplined, conservative approach to underwriting utilizing peer review processes, combined with our strict management of global aggregate exposures across products and sophisticated modeling capabilities, allows us to realize attractive prices, favorable terms and risk diversification.



•

Low-Cost International Infrastructure and Versatile Underwriting Platform.  Our international presence, centralized coordination and proprietary technologies provide us with the flexibility to adapt to market conditions in real time and practice a highly opportunistic underwriting approach.



•

Superior Financial Strength.  Our insurance subsidiaries are rated "A" (Strong) by Standard & Poor's and "A" (Excellent) by A.M. Best. These ratings are intended to assist policyholders and reflect opinions of our financial strength and our ability to pay policyholder claims and are not applicable to the securities offered in this prospectus.

3

Strategy

        Our corporate objective is to generate superior returns on equity while establishing ourselves as a global leader in providing specialty lines insurance and treaty reinsurance products to our customers. We intend to achieve this objective by executing the following strategies:

•

Establish Global Leadership in Key Business Lines by Leveraging Management's Significant Experience and Relationships.  We continue to rely on our senior management team's extensive customer relationships to take advantage of the current dislocation in the insurance market, generate new business and establish ourselves as a leading writer of specialty lines and treaty reinsurance.



•

Opportunistically Manage a Diverse Portfolio of Specialty Risks.  We will continue to be opportunistic and selective participants in business lines that have been or may be most affected by the significant contraction in global underwriting capacity.



•

Continue Commitment to Highly Disciplined Underwriting Practices.  We continue to utilize our disciplined underwriting approach to minimize risk and reduce the volatility of our operating results.



•

Maintain a Conservative Balance Sheet and Superior Financial Ratings.  We are committed to maintaining our excellent capitalization, financial strength and ratings over the long-term.



•

Realize Increased Profitability by Maintaining Our Efficient, Low-Cost Infrastructure.  We will maintain the flexibility provided by our low-cost infrastructure to selectively participate in new business opportunities, or retrench from existing business lines, without incurring significant additional costs.



•

Manage Capital Prudently.  We intend to manage our capital prudently relative to our risk exposure to maximize profitability and long-term growth in shareholder value.

Risks Relating to Our Company

        As part of your evaluation of our company, you should take into account the risks we face in our business. These risks include:

•

Limited Operating History.  We began our business in November 2001, and as a result, there is limited historical financial and operating information available to help you evaluate our performance or an investment in our common shares.



•

Exposure to Natural and Man-Made Disasters.  We may have substantial exposure to unexpected losses resulting from natural and man-made disasters and other catastrophic events, the incidence and severity of which are inherently unpredictable.



•

Uncertainty of Loss Reserves.  To the extent actual claims exceed our expectations, this could cause a material increase in our liabilities and a reduction in our profitability, including an operating loss and reduction of capital.



•

Failure of Loss Limitation Methods.  We cannot be sure that the loss limitation methods we employ will be effective to mitigate the effect on our financial condition or results of operations from one or more catastrophic or other events.



•

Emerging Claims and Coverage Issues.  Unexpected and unintended issues related to claims and coverage may emerge as practices and conditions change both inside and outside of the insurance and reinsurance industry.

4

•

Risk Associated with Reinsurance Underwriting.  In our reinsurance business, we do not separately evaluate each of the individual risks assumed under reinsurance treaties and are subject to the risk that the ceding companies may not have adequately evaluated the risks to be reinsured and that the premiums ceded may not adequately compensate us for the risks we assume.



•

Loss of Key Employees.  If we were to lose the services of members of our management team, our business could be adversely affected.

        For more information about these and other risks, see "Risk Factors" beginning on page 9. You should carefully consider these risk factors together with all the other information included in this prospectus.

Corporate History and Organization

        We were founded with $1.7 billion of capital and began operations in November 2001 as AXIS Specialty. AXIS Specialty and its subsidiaries became wholly owned subsidiaries of AXIS Holdings pursuant to an exchange offer consummated on December 31, 2002 (the "Exchange Offer").

        Set forth below is a chart of our corporate organization showing only our operating insurance companies.

        Our principal executive offices are located at 106 Pitts Bay Road, Pembroke HM 08, Bermuda, and our telephone number at that location is (441) 296-2600.

5

THE OFFERING

        The number of shares shown to be outstanding after the offering is based upon 138,324,536 common shares outstanding as of March 31, 2003 and excludes:

•

2,010,000 common shares that may be issued pursuant to the underwriters' over-allotment option;



•

19,501,576 common shares that may be issued pursuant to warrants outstanding as of March 31, 2003 at a price of $12.50 per share;



•

4,673,512 common shares that may be issued pursuant to options that had been granted as of March 31, 2003 at a weighted average exercise price of $13.14 per share; and



•

8,938,888 additional common shares available for future issuance under our stock option and incentive plans.

6

SUMMARY CONSOLIDATED FINANCIAL INFORMATION

        The following table sets forth our summary historical consolidated financial information for the periods ended and as of the dates indicated. AXIS Specialty was incorporated on November 8, 2001 and commenced operations on November 20, 2001. AXIS Holdings was incorporated on December 9, 2002. On December 31, 2002, AXIS Specialty and its subsidiaries became wholly owned subsidiaries of AXIS Holdings pursuant to the Exchange Offer. In the Exchange Offer, the shareholders of AXIS Specialty exchanged their shares for identical shareholdings in AXIS Holdings. Following the Exchange Offer, AXIS Specialty distributed all of its wholly owned subsidiaries to AXIS Holdings. The Exchange Offer represents a business combination of companies under common control and has been accounted for at historical cost. As a result, the consolidated financial information presented gives effect to the exchange of equity interests as though it occurred as of the inception date of AXIS Specialty on November 8, 2001.

        The summary income statement data for the year ended December 31, 2002 and for the period from inception (November 8, 2001) through December 31, 2001 are derived from our audited consolidated financial statements included elsewhere in this prospectus, which have been prepared in accordance with generally accepted accounting principles in the United States ("U.S. GAAP"). The summary income statement data for the quarters ended March 31, 2003 and March 31, 2002 and the summary balance sheet data as of March 31, 2003 are derived from our unaudited condensed consolidated financial statements included elsewhere in this prospectus. The unaudited condensed consolidated financial statements have been prepared on the same basis as our audited consolidated financial statements and, in our opinion, include all adjustments, consisting only of normal recurring adjustments, that we consider necessary for a fair presentation of our results of operations and financial position for these periods. These historical results are not necessarily indicative of results to be expected from any future period. Due to our limited operating history, the ratios presented may not be indicative of our future performance. You should read the following summary consolidated financial information together with the other information contained in this prospectus, including "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and related notes included elsewhere in this prospectus.

7

(1)

The financial information for this period reflects our results from November 8, 2001, the date of incorporation of AXIS Specialty, to December 31, 2001.

(2)

The net loss and loss expense ratio is calculated by dividing net losses and loss expenses by net premiums earned.

(3)

The acquisition cost ratio is calculated by dividing total acquisition costs by net premiums earned.

(4)

The general and administrative expense ratio is calculated by dividing general and administrative expenses by net premiums earned.

(5)

The combined ratio is the sum of the net loss and loss expense ratio, the acquisition cost ratio and the general and administrative expense ratio.

(6)

The as adjusted balance sheet data as of March 31, 2003 reflects the estimated net proceeds of the sale of 13,400,000 common shares by us in this offering (assuming no exercise of the underwriters' over-allotment option) at an assumed initial public offering price of $20.50 per share (the midpoint of the price range set forth on the cover page of this prospectus) and after deducting the underwriting discounts and commissions and estimated offering expenses.

(7)

Book value per share is based on total shareholders' equity divided by basic shares outstanding of 138,324,536 as of March 31, 2003 and 151,724,536 shares as adjusted as of March 31, 2003.

(8)

Diluted book value per share is calculated based on total shareholders' equity, adjusted for the proceeds expected to be received upon the exercise of options and warrants, divided by the number of common shares and common share equivalents outstanding at the end of the period.

8

RISK FACTORS

        An investment in our common shares involves a number of risks. You should carefully consider the following information about these risks, together with the other information contained in this prospectus, before investing in our common shares. The risks and uncertainties described below are not the only ones we face. However, these are the risks our management believes are material. Additional risks not presently known to us or that we currently deem immaterial may also impair our business or results of operations. Any of the risks described below could result in a significant or material adverse effect on our results of operations or financial condition, and a corresponding decline in the market price of our common shares. You could lose all or part of your investment.

        This prospectus also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of certain factors, including the risks described below and elsewhere in this prospectus. See "Forward-Looking Statements."

Risks Related to Our Company

Our future performance is difficult to predict because we have a limited operating history.

        We began our business in November 2001, and have a limited operating and financial history. As a result, there is limited historical financial and operating information available to help you evaluate our performance or an investment in our common shares. Insurance companies in their initial stages of development face substantial business and financial risks and may suffer significant losses. They must successfully develop business relationships, establish operating procedures, hire staff, install management information and other systems and complete other tasks necessary to conduct their intended business activities. It is possible that we will not be successful in implementing our business strategy or accomplishing these necessary tasks. In addition, because we have not experienced any substantial claims to date, our historical financial results may not accurately indicate our future performance.

Our financial condition could be adversely affected by the occurrence of natural and man-made disasters.

        We may have substantial exposure to unexpected losses resulting from natural disasters, man-made catastrophes and other catastrophic events. Catastrophes can be caused by various events, including hurricanes, earthquakes, hailstorms, explosions, severe winter weather, fires, war, acts of terrorism, political instability and other natural or man-made disasters. In addition, we have written and will continue to write policies explicitly covering war, acts of terrorism and political risk. The incidence and severity of such catastrophes are inherently unpredictable and our losses from catastrophes could be substantial. The occurrence of claims from catastrophic events is likely to result in substantial volatility in our financial condition or results of operations for any fiscal quarter or year and could have a material adverse effect on our financial condition or results of operations and our ability to write new business. This volatility is compounded by accounting regulations that do not permit reinsurers to reserve for such catastrophic events until they occur. We expect that increases in the values and concentrations of insured property may increase the severity of such occurrences in the future. Although we attempt to manage our exposure to such events, a single catastrophic event could affect multiple geographic zones or the frequency or severity of catastrophic events could exceed our estimates. As a result, the occurrence of one or more catastrophic events could have a material adverse effect on our financial condition or results of operations.

9

If actual claims exceed our loss reserves, our financial results could be significantly adversely affected.

        Our results of operations and financial condition depend upon our ability to assess accurately the potential losses associated with the risks that we insure and reinsure. To the extent actual claims exceed our expectations, we will be required to immediately recognize the less favorable experience. This could cause a material increase in our liabilities and a reduction in our profitability, including an operating loss and reduction of capital. To date, we have not been required to make any of these adjustments. However, it is early in our history, and the number and size of reported claims has been small. It is expected that in the future, the number of claims will increase, and their size could exceed our expectations.

        We establish loss reserves to cover our estimated liability for the payment of all losses and loss expenses incurred with respect to premiums earned on the policies that we write. Our operating history is too limited and our loss history is too insufficient to allow us currently to extrapolate reserves directly. Instead, our current loss reserves are based on estimates involving actuarial and statistical projections of our expectations of the ultimate settlement and administration costs of claims incurred but not reported ("IBNR"). We utilize actuarial models as well as historical insurance industry loss development patterns to establish appropriate loss reserves, as well as estimates of future trends in claims severity, frequency and other factors. Establishing an appropriate level of loss reserves is an inherently uncertain process. Accordingly, actual claims and claim expenses paid will likely deviate, perhaps substantially, from the reserve estimates reflected in our consolidated financial statements.

        If our loss reserves are determined to be inadequate, we will be required to increase loss reserves at the time of such determination with a corresponding reduction in our net income in the period in which the deficiency is rectified. It is possible that claims in respect of events that have occurred could exceed our loss reserves and have a material adverse effect on our results of operations or our financial condition in general.

The failure of any of the loss limitation methods we employ could have a material adverse effect on our financial condition or our results of operations.

        We seek to mitigate our loss exposure by writing a number of our insurance and reinsurance contracts on an excess of loss basis. In addition, we limit program size for each client and purchase reinsurance for our own account. In the case of proportional reinsurance treaties, we seek per occurrence limitations or loss and loss expense ratio caps to limit the impact of losses from any one event. We cannot be sure that any of these loss limitation methods will be effective. We also seek to limit our loss exposure by geographic diversification. Geographic zone limitations involve significant underwriting judgments, including the determination of the area of the zones and the inclusion of a particular policy within a particular zone's limits. Various provisions of our policies, such as limitations or exclusions from coverage or choice of forum, negotiated to limit our risks may not be enforceable in the manner we intend. As a result of these risks, one or more catastrophic or other events could result in claims that substantially exceed our expectations, which could have a material adverse effect on our financial condition or results of operations.

The effects of emerging claim and coverage issues on our business are uncertain.

        As industry practices and legal, judicial, social and other environmental conditions change, unexpected and unintended issues related to claims and coverage may emerge. These issues may adversely affect our business by either extending coverage beyond our underwriting intent or by increasing the number or size of claims. In some instances, these changes may not become apparent until some time after we have issued insurance or reinsurance contracts that are affected by the changes. As a result, the full extent of liability under our insurance or reinsurance contracts may not be known for many years after a contract is issued. One recent example of an emerging claims and

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coverage issue is larger settlements and jury awards against professionals and corporate directors and officers covered by professional liability and directors' and officers' liability insurance.

The risk associated with reinsurance underwriting could adversely affect us.

        In our reinsurance business, we do not separately evaluate each of the individual risks assumed under reinsurance treaties. This is common among reinsurers. Therefore, we will be largely dependent on the original underwriting decisions made by ceding companies. We are subject to the risk that the ceding companies may not have adequately evaluated the risks to be reinsured and that the premiums ceded may not adequately compensate us for the risks we assume.

We could be adversely affected by the loss of one or more principal employees or by an inability to attract and retain staff.

        Our success will depend in substantial part upon our ability to attract and retain our principal employees. As of March 31, 2003, we had 227 full-time employees and, accordingly, depend upon them for the generation and servicing of our business. We rely substantially upon the services of our executive management team. Although we are not aware of any planned departures or retirements, if we were to lose the services of members of our management team, our business could be adversely affected. We believe we have been successful in attracting and retaining key personnel since our inception. We do not currently maintain key man life insurance policies with respect to our employees except for our Chief Executive Officer, John R. Charman.

Our operating subsidiaries are rated by Standard & Poor's and A.M. Best, and a decline in these ratings could affect our standing among brokers and customers and cause our sales and earnings to decrease.

        Ratings have become an increasingly important factor in establishing the competitive position of insurance and reinsurance companies. Standard & Poor's maintains a letter scale rating system ranging from "AAA" (Extremely Strong) to "R" (under regulatory supervision). A.M. Best maintains a letter scale rating system ranging from "A++" (Superior) to "F" (in liquidation). Our insurance subsidiaries have been rated "A" (Strong) by Standard & Poor's, which is the sixth highest of twenty-one rating levels, and "A" (Excellent) by A.M. Best, which is the third highest of fifteen rating levels. The objective of Standard & Poor's and A.M. Best's rating systems is to provide an opinion of an insurer's financial strength and ability to meet ongoing obligations to its policyholders. Our ratings reflect Standard & Poor's and A.M. Best's opinions of our financial strength, are not evaluations directed to investors in our common shares and are not recommendations to buy, sell or hold our common shares.

        Our ratings are subject to periodic review by, and may be revised downward or revoked at the sole discretion of, Standard & Poor's and/or A.M. Best. If our ratings are reduced from their current levels by either Standard & Poor's or A.M. Best, our competitive position in the insurance and reinsurance industry would suffer, and it would be more difficult for us to market our products. A downgrade, therefore, could result in a substantial loss of business as insureds, ceding companies and brokers that place such business move to other insurers and reinsurers with higher ratings. In addition, we will be in default of our revolving credit facility if any of AXIS Specialty, AXIS Reinsurance, AXIS Insurance and AXIS Surplus fails to maintain a rating of at least B++ from A.M. Best.

Our reliance on brokers subjects us to their credit risk.

        In accordance with industry practice, we generally pay amounts owed on claims under our insurance and reinsurance contracts to brokers, and these brokers, in turn, pay these amounts over to the clients that have purchased insurance or reinsurance from us. Although the law is unsettled and depends upon the facts and circumstances of the particular case, in some jurisdictions, if a broker fails

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to make such a payment, we might remain liable to the insured or ceding insurer for the deficiency. Conversely, in certain jurisdictions, when the insured or ceding insurer pays premiums for these policies to brokers for payment over to us, these premiums might be considered to have been paid and the insured or ceding insurer will no longer be liable to us for those amounts, whether or not we have actually received the premiums from the broker. Consequently, we assume a degree of credit risk associated with brokers around the world. However, due to the unsettled and fact specific nature of the law, we are unable to quantify our exposure to this risk. To date we have not experienced any losses related to such credit risks.

Since we depend on a few brokers for a large portion of our revenues, loss of business provided by any one of them could adversely affect us.

        We market our insurance and reinsurance worldwide primarily through insurance and reinsurance brokers. Marsh, including its subsidiary Guy Carpenter, Aon, Willis and Benfield provided 37.9%, 20.7%, 10.6% and 5.5% (for a total of 74.7%), respectively, of our gross premiums written in the year ended December 31, 2002. We believe these brokers also have, or may in the future acquire, ownership interests in insurance and reinsurance companies that may compete with us, and these brokers may favor their own insurers or reinsurers over other companies. Loss of all or a substantial portion of the business provided by one or more of these brokers could have a material adverse effect on our business.

If we choose to purchase reinsurance, we may be unable to do so, and if we successfully purchase reinsurance, we may be unable to collect.

        We purchase reinsurance for our own account in order to mitigate the effect of large and multiple losses upon our financial condition. A reinsurer's insolvency, or inability or refusal to make payments under the terms of its reinsurance agreement with us could have a material adverse effect on us because we remain liable to the insured.

        From time to time, market conditions have limited, and in some cases have prevented, insurers and reinsurers from obtaining the types and amounts of reinsurance that they consider adequate for their business needs. For example, following the tragic events of September 11, 2001, terms and conditions in the reinsurance and retrocessional markets generally became less attractive. Accordingly, we may not be able to obtain our desired amounts of reinsurance or retrocessional reinsurance. In addition, even if we are able to obtain such reinsurance or retrocessional reinsurance, we may not be able to negotiate terms that we deem appropriate or acceptable or obtain such reinsurance or retrocessional reinsurance from entities with satisfactory creditworthiness.

Our investment performance may affect our financial results and ability to conduct business.

        Our funds are invested by several professional investment advisory management firms under the direction of our management team in accordance with detailed investment guidelines set by us. See "Business—Investments." Although our investment policies stress diversification of risks, conservation of principal and liquidity, our investments are subject to market-wide risks and fluctuations, as well as to risks inherent in particular securities. In particular, the volatility of our claims may force us to liquidate securities, which may cause us to incur capital losses. If we do not structure our investment portfolio so that it is appropriately matched with our insurance and reinsurance liabilities, we may be forced to liquidate investments prior to maturity at a significant loss to cover such liabilities. Investment losses could significantly decrease our asset base, thereby affecting our ability to conduct business. For the year ended December 31, 2002, 15.4% or $97.4 million of our total revenues was derived from our invested assets. This represented 36.7% of our net income.

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We may be adversely affected by interest rate changes.

        Our operating results are affected, in part, by the performance of our investment portfolio. Our investment portfolio contains interest rate sensitive-instruments, such as bonds, which may be adversely affected by changes in interest rates. Changes in interest rates could also have an adverse effect on our investment income and results of operations. For example, if interest rates decline, funds reinvested will earn less than expected.

        In addition, our investment portfolio includes mortgage-backed securities. As of March 31, 2003, mortgage-backed securities constituted approximately 35.3% of our invested assets (assets under management by third party investment managers). As with other fixed income investments, the fair market value of these securities fluctuates depending on market and other general economic conditions and the interest rate environment. Changes in interest rates can expose us to prepayment risks on these investments. In periods of declining interest rates, mortgage prepayments generally increase and mortgage-backed securities are prepaid more quickly, requiring us to reinvest the proceeds at the then current market rates.

        Interest rates are highly sensitive to many factors, including governmental monetary policies, domestic and international economic and political conditions and other factors beyond our control. Although we attempt to take measures to manage the risks of investing in a changing interest rate environment, we may not be able to mitigate interest rate sensitivity effectively. Our mitigation efforts include maintaining a high quality portfolio with a relatively short duration to reduce the effect of interest rate changes on book value. Despite our mitigation efforts, a significant increase in interest rates could have a material adverse effect on our book value.

We may require additional capital in the future, which may not be available or may only be available on unfavorable terms.

        Our future capital requirements depend on many factors, including our ability to write new business successfully and to establish premium rates and reserves at levels sufficient to cover losses. To the extent that the funds generated by this offering are insufficient to fund future operating requirements and/or cover claim losses, we may need to raise additional funds through financings or curtail our growth and reduce our assets. Any equity or debt financing, if available at all, may be on terms that are not favorable to us. In the case of equity financings, dilution to our shareholders could result, and in any case such securities may have rights, preferences and privileges that are senior to those of the shares offered hereby. If we cannot obtain adequate capital on favorable terms or at all, our business, operating results and financial condition could be adversely affected.

Our operating results may be adversely affected by currency fluctuations.

        Our functional currency is the U.S. dollar. For the year ended December 31, 2002, 12.7% of our gross premiums were written in currencies other than the U.S. dollar and we expect that a similar proportion will be written in currencies other than the U.S. dollar in 2003. A portion of our loss reserves and investments are also in non-U.S. currencies. We may, from time to time, experience losses resulting from fluctuations in the values of these non-U.S. currencies, which could adversely affect our operating results.

        We have no currency hedges in place, nor are we currently aware of any material exposures to loss payments that will be paid in non-U.S. currencies. We intend to consider the use of hedges when we are advised of known or probable significant losses that will be paid in non-U.S. currencies. However, it is possible that we will not successfully structure those hedges so as to effectively manage these risks.

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The regulatory system under which we operate, and potential changes thereto, could have a material adverse effect on our business.

        General.    Our insurance and reinsurance subsidiaries may not be able to obtain or maintain necessary licenses, permits, authorizations or accreditations in locales where we currently engage in business or in new locales, or may be able to do so only at significant cost. In addition, we may not be able to comply fully with, or obtain appropriate exemptions from, the wide variety of laws and regulations applicable to insurance or reinsurance companies or holding companies. Failure to comply with or to obtain appropriate authorizations and/or exemptions under any applicable laws could result in restrictions on our ability to do business or certain activities that are regulated in one or more of the jurisdictions in which we operate and could subject us to fines and other sanctions, which could have a material adverse effect on our business. In addition, changes in the laws or regulations to which our insurance and reinsurance subsidiaries are subject could have a material adverse effect on our business.

        AXIS Specialty.    AXIS Specialty is a registered Class 4 Bermuda insurance and reinsurance company. Among other matters, Bermuda statutes, regulations and policies of the BMA require AXIS Specialty to maintain minimum levels of statutory capital, surplus and liquidity, to meet solvency standards, to obtain prior approval of ownership and transfer of shares and to submit to certain periodic examinations of its financial condition. These statutes and regulations may, in effect, restrict AXIS Specialty's ability to write insurance and reinsurance policies, to make certain investments and to distribute funds.

        The offshore insurance and reinsurance regulatory environment has become subject to increased scrutiny in many jurisdictions, including the United States and various states within the United States. Compliance with any new laws or regulations regulating offshore insurers or reinsurers could have a material adverse effect on our business. In addition, although AXIS Specialty does not believe it is or will be in violation of insurance laws or regulations of any jurisdiction outside Bermuda, inquiries or challenges to AXIS Specialty's insurance or reinsurance activities may still be raised in the future.

        AXIS U.S. Subsidiaries.    AXIS Reinsurance is organized in New York and is licensed to write certain lines of insurance and reinsurance in New York and elsewhere throughout the United States. There is currently a restriction on its license in North Carolina that prevents it from writing new business in that state. We have applied to the North Carolina regulators to have this restriction removed. AXIS Insurance and AXIS Surplus are organized and licensed to write certain lines of insurance in Connecticut and Illinois, respectively, and are eligible to write certain lines of insurance in certain other U.S. jurisdictions on an excess or surplus lines basis (AXIS Reinsurance, AXIS Insurance and AXIS Surplus are collectively referred to as the "AXIS U.S. Subsidiaries"). The AXIS U.S. Subsidiaries are subject to the laws and regulations of their respective states of domicile and other jurisdictions in which they are licensed or otherwise eligible to engage in business. These laws and regulations, among other things, subject some affiliate transactions between such entities and other members of our holding company system to regulatory authority and require them to maintain minimum levels of capital, surplus and liquidity and comply with applicable risk-based capital requirements. In addition, they impose restrictions on the payment of dividends and distributions and in certain cases require them to file insurance premium rates and policy forms. These statutes and regulations may, in effect, restrict the ability of the AXIS U.S. Subsidiaries to write new business or distribute assets to AXIS Holdings. The purpose of the state insurance laws and regulations is to protect U.S. insureds and U.S. ceding insurance companies, not our shareholders.

        In recent years, the U.S. insurance regulatory framework has come under increased federal scrutiny, and some state legislators have considered or enacted laws that may alter or increase state regulation of insurance and reinsurance companies and holding companies. Moreover, the National Association of Insurance Commissioners ("NAIC"), which is an association of the insurance commissioners of all 50 states and the District of Columbia, and state insurance regulators regularly

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reexamine existing laws and regulations. Changes in these laws and regulations or the interpretation of these laws and regulations could have a material adverse effect on our business.

        AXIS Specialty Europe.    AXIS Specialty Europe is a non-life insurance company incorporated under the laws of Ireland and as such is subject to the regulation and supervision of the Irish Financial Services Regulatory Authority pursuant to the Irish Insurance Acts 1909 to 2000, Regulations relating to insurance business and the Central Bank and Financial Services Authority of Ireland Act 2003 (the "2003 Act") (together "the Insurance Acts and Regulations"). The 2003 Act established a single regulatory authority for the financial services industry in Ireland and, with effect from May 1, 2003, responsibility for the regulation and supervision of the insurance and (to the extent it currently exists) reinsurance industries in Ireland passed to the Irish Financial Services Regulatory Authority (hereinafter the "Irish Regulatory Authority" — which includes, as appropriate, the Central Bank and Financial Services Authority of Ireland (of which the Irish Financial Services and Regulatory Authority forms a constituent part) and the Minister for Enterprise, Trade & Employment (the previous regulator of the insurance industry in Ireland)). Among other things, without the consent of the Irish Regulatory Authority, AXIS Specialty Europe is not permitted to reduce the level of its capital, may not make any dividend payments, may not make intercompany loans and must maintain a minimum solvency margin. Additionally, AXIS Specialty Europe has agreed, in connection with receiving its authorization to engage in the insurance business, not to write any reinsurance business. Also, an insurance company supervised by the Irish Regulatory Authority may have its authorization revoked by the Irish Regulatory Authority under certain circumstances, including, among others, if the Irish Regulatory Authority determines that such company has not used its authorization for the last 12 months, has expressly renounced its authorization or has ceased to carry on business covered by the authorization for more than six months, or no longer fulfills the conditions required by the Insurance Acts and Regulations.

        AXIS Re.    AXIS Re is a reinsurance company incorporated under the laws of Ireland. Under Irish law, a reinsurance company such as AXIS Re is required to maintain a minimum level of paid up share capital. As a general matter, AXIS Re is not subject to the same level of regulation in Ireland as AXIS Specialty Europe. However, the Insurance Acts and Regulations provide that the Irish Regulatory Authority may create regulations that cause the general insurance laws and regulations in Ireland to apply to reinsurance companies that carry on the type of business that AXIS Re carries on. If any regulations were adopted, such regulations could require AXIS Re to apply to the Irish Regulatory Authority to be authorized to carry on its business, which authorization would likely contain conditions with which AXIS Re would then have to comply, such as in regard to capitalization, maintenance of reserves, reserving policy, investment policy, solvency requirements and the filing of returns. If such an application for authorization were not successful or if AXIS Re were unable to comply with such conditions as might be attached to such authorization, it would not be lawful for it to continue to carry on its business and it would have to cease operations.

        The Irish Regulatory Authority has the power under Section 22 of the Insurance Act, 1989 (as inserted by Section 5 of the Insurance Act, 2000) to direct AXIS Re to cease writing business indefinitely or for a specified period for, among other grounds, inadequate capitalization, unsuitable directors and/or management or insufficient staff based in Ireland.

        In addition, the European Commission is currently considering proposals the effect of which would be to harmonize the regulation of reinsurers across the European Union (the "EU") and to permit a reinsurer authorized in one EU member state to carry on business in any other EU member state without requiring further authorization. If these proposals were to become law in Ireland, AXIS Re would be subject to a higher level of regulation than currently. However, while it is likely that such a proposal will be adopted, at this preliminary stage it is not possible to determine the form that such regulation will take, and what impact, if any, such regulation would have on our financial condition and results of operations.

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        Changes in these laws and regulations or the interpretation of these laws and regulations could have a material adverse effect on our business or results of operations.

Our inability to obtain the necessary credit could affect our ability to offer reinsurance in certain markets.

        AXIS Specialty is not licensed or admitted as an insurer in any jurisdiction other than Bermuda. Because many jurisdictions do not permit insurance companies to take credit for reinsurance obtained from unlicensed or non-admitted insurers on their statutory financial statements unless appropriate security mechanisms are in place, we anticipate that our reinsurance clients will typically require AXIS Specialty to post a letter of credit or other collateral. We expect that our $550 million credit facility will be used for this purpose. However, if this facility is not sufficient or if we are unable to renew this facility or are unable to arrange for other types of security on commercially reasonable terms, AXIS Specialty could be limited in its ability to write business for certain of our clients.

Our business could be adversely affected by Bermuda employment restrictions.

        We may need to hire additional employees to work in Bermuda. Under Bermuda law, non-Bermudians (other than spouses of Bermudians) may not engage in any gainful occupation in Bermuda without an appropriate governmental work permit. Work permits may be granted or extended by the Bermuda government upon showing that, after proper public advertisement in most cases, no Bermudian (or spouse of a Bermudian) is available who meets the minimum standard requirements for the advertised position. The Bermuda government recently announced a new policy limiting the duration of work permits to six years, with certain exemptions for key employees. Currently, all 15 of our Bermuda-based professional employees who require work permits have been granted permits by the Bermuda government. This includes three key employees: Michael Butt, Andrew Cook and William Fischer. The terms of these permits range from one to three years depending on the individual. It is possible that we could lose the services of one or more of our key employees if we were unable to obtain or renew their work permits, which could have a material adverse affect on our business.

Our ability to pay dividends may be constrained by our holding company structure.

        AXIS Holdings is a holding company and, as such, has no direct operations of its own. AXIS Holdings does not expect to have any significant operations or assets other than its ownership of the shares of its operating insurance and reinsurance subsidiaries, AXIS Specialty, AXIS Re, AXIS Specialty Europe, AXIS Reinsurance, AXIS Insurance and AXIS Surplus (collectively, our "Insurance Subsidiaries"). Dividends and other permitted distributions from our Insurance Subsidiaries are expected to be our primary source of funds to meet ongoing cash requirements, including any future debt service payments and other expenses, and to pay dividends, if any, to our shareholders. Our Insurance Subsidiaries (with the exception of AXIS Re) are subject to significant regulatory restrictions limiting their ability to declare and pay dividends. The inability of our Insurance Subsidiaries to pay dividends in an amount sufficient to enable us to meet our cash requirements at the holding company level could have a material adverse effect on our operations and our ability to pay dividends to our shareholders. While we currently intend to pay dividends, if you require dividend income you should carefully consider these risks before relying on an investment in our company. For more information regarding restrictions on the payment of dividends by our Insurance Subsidiaries, see "Dividend Policy" and "Regulation."

Our ability to pay dividends may be constrained by certain regulatory and other constraints.

        AXIS Holdings is subject to Bermuda regulatory constraints that will affect its ability to pay dividends on its common shares and make other payments. Under the Bermuda Companies Act of 1981, as amended (the "Companies Act"), AXIS Holdings may declare or pay a dividend out of

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distributable reserves only if it has reasonable grounds for believing that it is, or would after the payment be, able to pay its liabilities as they become due and if the realizable value of its assets would thereby not be less than the aggregate of its liabilities and issued share capital and share premium accounts. Furthermore, our ability to pay our dividends is limited under our Credit Agreement, which provides that we cannot pay cash dividends to our shareholders in excess of $150 million in the aggregate during the period that any commitments or obligations are outstanding thereunder, which period the Company currently expects to end on March 25, 2004. While we currently intend to pay dividends, if you require dividend income you should carefully consider these risks before relying on an investment in our company. For more information regarding restrictions on the payment of dividends by AXIS Holdings, see "Dividend Policy" and "Regulation."

Our founding shareholders and certain of our directors may have conflicts of interest with us.

        Our founding shareholders and certain of our directors engage in commercial activities and enter into transactions or agreements with us or in competition with us, which may give rise to conflicts of interest. Of our directors, Mr. Charles Davis is the Vice Chairman and a director of Marsh & McLennan Companies, Inc., Mr. Donald Greene is a director of AXA Financial and of Equitable Life Assurance, and Mr. Frank Tasco is a director of Travelers Property Casualty Corp. In addition, we derive a significant portion of our business through insurance and reinsurance relationships and other arrangements in which Marsh or its affiliates have acted as a broker or insurance or reinsurance intermediary. In addition, our founding shareholders and certain of our directors have sponsored, and may in the future sponsor, other entities engaged in or intending to engage in insurance and reinsurance underwriting, some of which may compete with us. They have also entered into or may in the future enter into, agreements with companies that may compete with us. We do not have any agreement or understanding with any of these parties regarding the resolution of potential conflicts of interest. In addition, we may not be in a position to influence any party's decision to engage in activities that would give rise to a conflict of interest. These parties may take actions that are not in our shareholders' best interests.

Risks Related to Our Industry

We operate in a highly competitive environment, and substantial new capital inflows into the insurance and reinsurance industry will increase competition.

        The insurance and reinsurance industry is highly competitive. We compete on an international and regional basis with major U.S., Bermuda, European and other insurers and reinsurers and certain underwriting syndicates, some of which have greater financial, marketing and management resources than we do. See "Business—Competition." We compete primarily on the basis of experience, the strength of our client relationships, reputation, speed of claims payment, perceived financial strength, ratings, scope of business (both by size and geographic location), premiums charged, policy and contract terms and conditions and products offered.

        A number of newly-organized, Bermuda-based insurance and reinsurance entities compete in the same market segments in which we operate. In addition, we may not be aware of other companies that may be planning to enter the segments of the insurance and reinsurance market in which we operate or of existing companies that may be planning to raise additional capital. Increased competition could result in fewer submissions, lower premium rates and less favorable policy terms and conditions, which could have a material adverse impact on our growth and profitability.

        Further, insurance/risk-linked securities and derivative and other non-traditional risk transfer mechanisms and vehicles are being developed and offered by other parties, including non-insurance company entities, which could impact the demand for traditional insurance and reinsurance. A number of new, proposed or potential legislative or industry developments could also increase competition in our industries.

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        New competition could cause the demand for insurance or reinsurance to fall or the expense of customer acquisition and retention to increase, either of which could have a material adverse effect on our growth and profitability.

Recent events may result in political, regulatory and industry initiatives which could adversely affect our business.

        The supply of insurance and reinsurance coverage has decreased due to withdrawal of capacity and substantial reductions in capital resulting from, among other things, the tragic events of September 11, 2001. This tightening of supply may result in governmental intervention in the insurance and reinsurance markets, both in the United States and worldwide. For example, on November 26, 2002, the Terrorism Risk Insurance Act was enacted to ensure the availability of insurance coverage for terrorist acts in the United States. This law requires insurers writing certain lines of property and casualty insurance to offer coverage against certain acts of terrorism causing damage within the United States or to U.S. flagged vessels or aircraft. In return, the law requires the federal government to indemnify such insurers for 90% of insured losses resulting from covered acts of terrorism, subject to a premium-based deductible. The law expires automatically at the end of 2005. See "Regulation—United States—Legislative Changes." Currently there is a great deal of uncertainty as to what effect the law will have on the insurance industry. At a minimum, insurers will offer increased underwriting capacity in the United States for terrorism-related coverage, which could have an adverse effect on our business because we believe we were among the few insurers already offering terrorism protection when the Act was adopted. We are currently unable to predict the extent to which the foregoing and other new initiatives may affect the demand for our products or the risks which may be available for us to consider underwriting. At the same time, threats of further terrorist attacks and the military initiatives and political unrest in the Middle East and Asia have adversely affected general economic, market and political conditions, increasing many of the risks associated with the insurance markets worldwide.

The insurance and reinsurance business is historically cyclical, and we expect to experience periods with excess underwriting capacity and unfavorable premium rates.

        Historically, insurers and reinsurers have experienced significant fluctuations in operating results due to competition, frequency of occurrence or severity of catastrophic events, levels of capacity, general economic conditions and other factors. The supply of insurance and reinsurance is related to prevailing prices, the level of insured losses and the level of industry surplus which, in turn, may fluctuate in response to changes in rates of return on investments being earned in the insurance and reinsurance industry. As a result, the insurance and reinsurance business historically has been a cyclical industry characterized by periods of intense price competition due to excessive underwriting capacity as well as periods when shortages of capacity permitted favorable premium levels. Although premium levels for many products have increased in recent months, the supply of insurance and reinsurance may increase, either by capital provided by new entrants or by the commitment of additional capital by existing insurers or reinsurers, which may cause prices to decrease. Any of these factors could lead to a significant reduction in premium rates, less favorable policy terms and fewer submissions for our underwriting services. In addition to these considerations, changes in the frequency and severity of losses suffered by insureds and insurers may affect the cycles of the insurance and reinsurance business significantly, and we expect to experience the effects of such cyclicality. For a more detailed discussion of the cyclicality of the insurance and reinsurance industry, please see "Industry Background."

Risks Related to Our Common Shares and This Offering

There is no prior public market for our common shares and therefore you cannot be certain that an active trading market or a specific share price will be established.

        Currently there is no public trading market for our common shares and, as a result of this risk, it is possible that an active trading market will not develop and continue upon completion of this offering

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or that the market price of our common shares will decline below the initial public offering price. We have applied to list our common shares on the New York Stock Exchange under the symbol "AXS." The initial public offering price per common share will be determined by agreement among us and the representatives of the underwriters and may not be indicative of the market price of our common shares after our initial public offering.

Future sales of common shares may affect their market price and the future exercise of options and warrants will result in immediate and substantial dilution.

        We cannot predict what effect, if any, future sales of our common shares, or the availability of common shares for future sale, will have on the market price of our common shares. Sales of substantial amounts of our common shares in the public market following our initial public offering, or the perception that such sales could occur, could adversely affect the market price of our common shares and may make it more difficult for you to sell your common shares at a time and price which you deem appropriate. See "Description of Share Capital—Shareholders Agreement" and "Shares Eligible for Future Sale" for further information regarding circumstances under which additional common shares may be sold.

        Upon completion of our initial public offering, there will be 151,724,536 common shares outstanding. If the underwriters' over-allotment option for an additional 3,225,000 common shares (2,010,000 common shares being provided by us and 1,215,000 common shares being provided by the selling shareholders) is exercised, 153,734,536 common shares will be outstanding. Moreover, an additional 24,175,088 common shares will be issuable upon the full exercise or conversion of outstanding vested options and warrants. In the event that any outstanding options or warrants to purchase common shares are exercised, you will suffer immediate and substantial dilution of your investment.

        We, our directors, executive officers, certain of our warrant holders and certain of our existing shareholders have agreed, with limited exceptions, for a period of 180 days after the date of this prospectus, that we and they will not, without the prior written consent of Morgan Stanley & Co. Incorporated and Citigroup Global Markets Inc. on behalf of the underwriters (and our directors, executive officers and certain of our existing shareholders have agreed, with certain limited exceptions, for a period of 270 days after the date of this prospectus, that they will not, without our prior written consent), directly or indirectly, offer to sell, sell or otherwise dispose of any of our common shares. All of the shareholders party to our shareholders agreement are subject to similar restrictions for a period of 180 days after the date of this prospectus. Following the consummation of this offering, certain of our existing shareholders and their transferees will have the right to require us to register their common shares under the Securities Act of 1933 (the "Securities Act") for sale into the public markets, subject to the 180- and 270-day lock-up agreements and the restrictions in our shareholders agreement. See "Description of Share Capital—Shareholders Agreement." Upon the effectiveness of any such registration statement, all shares covered by the registration statement will be freely transferable. In addition, following the consummation of this offering, we intend to file a registration statement on Form S-8 under the Securities Act to register an aggregate of 16,615,192 common shares reserved for issuance under our 2003 Long-Term Equity Compensation Plan, our 2003 Directors Long-Term Equity Compensation Plan and certain other outstanding equity awards and grants. Subject to the exercise of issued and outstanding options, shares registered under the registration statement on Form S-8 will be available for sale into the public markets after the expiration of the 180- and 270-day lock-up agreements.

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Public investors will suffer immediate and substantial dilution as a result of this offering.

        The initial public offering price per common share is significantly higher than our net tangible book value per share. Accordingly, if you purchase common shares in this offering, you will suffer immediate and substantial dilution of your investment. Based upon the issuance and sale of 13,400,000 common shares at an assumed initial public offering price of $20.50 per share (the midpoint of the price range set forth on the cover page of this prospectus), you will incur immediate dilution of approximately $5.30 in the net tangible book value per common share if you purchase common shares in this offering.

There are provisions in our charter documents which may reduce or increase the voting rights of our common shares.

        Our bye-laws generally provide that shareholders have one vote for each common share held by them and are entitled to vote, on a non-cumulative basis, at all meetings of shareholders. However, pursuant to a mechanism specified in our bye-laws the voting rights exercisable by a shareholder may be limited so that certain persons or groups are not deemed to hold 9.5% or more of the voting power conferred by our common shares. The votes that could be cast by a shareholder but for these restrictions will be allocated to the other shareholders. In addition, our board of directors may limit a shareholder's exercise of voting rights where it deems it necessary to do so to avoid adverse tax, legal or regulatory consequences.

        Under these provisions, certain shareholders may have the right to exercise their voting rights limited to less than one vote per share, while other shareholders may have the right to exercise their voting rights increased to more than one vote per share. Moreover, these provisions could have the effect of reducing the voting power of certain shareholders who would not otherwise be subject to the limitation by virtue of their direct share ownership. Our bye-laws provide that shareholders will be notified of the applicable voting power exercisable with respect to their common shares prior to any vote to be taken by the shareholders. See "Description of Share Capital—Voting Rights."

        As a result of any reallocation of votes, your voting rights might increase above 5% of the aggregate voting power of the outstanding common shares, thereby possibly resulting in your becoming a reporting person subject to Schedule 13D or 13G filing requirements under the Securities Exchange Act of 1934, as amended (the "Exchange Act").

        We also have the authority under our bye-laws to request information from any shareholder for the purpose of determining whether a shareholder's voting rights are to be reallocated pursuant to the bye-laws. If a shareholder fails to respond to our request for information or submits incomplete or inaccurate information in response to a request by us, we may, in our sole discretion, eliminate the shareholder's voting rights.

There are provisions in our bye-laws which may restrict the ability to transfer common shares and which may require shareholders to sell their common shares.

        Our board of directors may decline to register a transfer of any common shares (i) if it appears to the board of directors, in their sole and reasonable discretion, after taking into account the limitations on voting rights contained in our bye-laws, that any non-de minimis adverse tax, regulatory or legal consequences to us, any of our subsidiaries or any of our shareholders may occur as a result of such transfer, or (ii) subject to any applicable requirements of the New York Stock Exchange, if a written opinion from counsel supporting the legality of the transaction under U.S. securities laws has not been provided or if any required governmental approvals have not been obtained.

        Our bye-laws also provide that if our board of directors determines that share ownership by a person may result in non-de minimis adverse tax, legal or regulatory consequences to us, any of our subsidiaries or any of our shareholders, then we have the option, but not the obligation, to require that shareholder to sell to us or to third parties to whom we assign the repurchase right for fair market

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value the minimum number of common shares held by such person which is necessary to eliminate the non-de minimis adverse tax, legal or regulatory consequences. See "Description of Share Capital—Restrictions on Transfer of Common Shares or Warrants" and "Description of Share Capital—Acquisition of Common Shares by Us."

Applicable insurance laws may make it difficult to effect a change of control of our company.

        Before a person can acquire control of a U.S. insurance company, prior written approval must be obtained from the insurance commissioner of the state where the domestic insurer is domiciled. Prior to granting approval of an application to acquire control of a domestic insurer, the state insurance commissioner will consider such factors as the financial strength of the applicant, the integrity and management of the applicant's board of directors and executive officers, the acquiror's plans for the management of the applicant's board of directors and executive officers, the acquiror's plans for the future operations of the domestic insurer and any anti-competitive results that may arise from the consummation of the acquisition of control. Generally, state statutes provide that control over a domestic insurer is presumed to exist if any person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing, 10% or more of the voting securities of the domestic insurer. Because a person acquiring 10% or more of our common shares would indirectly control the same percentage of the stock of the AXIS U.S. Subsidiaries, the insurance change of control laws of Connecticut, Illinois and New York would likely apply to such a transaction.

        In addition, the Insurance Acts and Regulations in Ireland require that anyone acquiring or disposing of a direct or indirect holding in an insurance company (such as AXIS Specialty Europe) that represents 10% or more of the capital or of the voting rights of such company or that makes it possible to exercise a significant influence over the management of such company, or anyone who proposes to decrease or increase that holding to specified levels, must first notify the Irish Regulatory Authority of their intention to do so. They also require any insurance company that becomes aware of any acquisitions or disposals of its capital involving the specified levels to notify the Irish Regulatory Authority. The specified levels are 20%, 33% and 50% or such other level of ownership that results in the company becoming the acquiror's subsidiary. The Irish Regulatory Authority has three months from the date of submission of a notification within which to oppose the proposed transaction if the Irish Regulatory Authority is not satisfied as to the suitability of the acquiror "in view of the necessity to ensure sound and prudent management of the insurance undertaking." Any person having a shareholding of 10% or more of the issued share capital in AXIS Holdings would be considered to have an indirect holding in AXIS Specialty Europe over the 10% limit.

        While our bye-laws limit the voting power of any shareholder to less than 9.5%, there can be no assurance that the applicable regulatory body would agree that a shareholder who owned greater than 10% of our common shares did not, because of the limitation on the voting power of such shares, control the applicable Insurance Subsidiary.

        These laws may discourage potential acquisition proposals and may delay, deter or prevent a change of control of our Company, including through transactions, and in particular unsolicited transactions, that some or all of our shareholders might consider to be desirable.

A few large shareholders may be able to influence shareholder decisions.

        Immediately upon completion of this offering, we expect to have at least six beneficial owners each of whom owns beneficially common shares representing 5.0% or more of the voting power of our common shares on a fully diluted basis. As a result of their ownership position, these shareholders voting together may have the ability to significantly influence matters requiring shareholder approval, including, without limitation, the election of directors and amalgamations, consolidations, changes of control of our company and sales of all or substantially all of our assets.

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U.S. persons who own our common shares may have more difficulty in protecting their interests than U.S. persons who are shareholders of a U.S. corporation.

        The Companies Act, which applies to us, differs in certain material respects from laws generally applicable to U.S. corporations and their shareholders. Set forth below is a summary of certain significant provisions of the Companies Act which includes, where relevant, information on modifications thereto adopted pursuant to our bye-laws, applicable to us, which differ in certain respects from provisions of Delaware corporate law. Because the following statements are summaries, they do not discuss all aspects of Bermuda law that may be relevant to us and our shareholders.

        Interested Directors.    Under Bermuda law and our bye-laws, a transaction entered into by us, in which a director has an interest, will not be voidable by us, and such director will not be liable to us for any profit realized pursuant to such transaction, provided the nature of the interest is disclosed at the first opportunity at a meeting of directors, or in writing to the directors. In addition, our bye-laws allow a director to be taken into account in determining whether a quorum is present and to vote on a transaction in which that director has an interest following a declaration of the interest pursuant to the Companies Act provided that the director is not disqualified from doing so by the chairman of the meeting. Under Delaware law, such transaction would not be voidable if:

•

The material facts as to such interested director's relationship or interests were disclosed or were known to the board of directors and the board of directors in good faith authorized the transaction by the affirmative vote of a majority of the disinterested directors;



•

Such material facts were disclosed or were known to the shareholders entitled to vote on such transaction and the transaction was specifically approved in good faith by vote of the majority of shares entitled to vote thereon; or



•

The transaction was fair as to the corporation as of the time it was authorized, approved or ratified.

Under Delaware law, such interested director could be held liable for a transaction in which such director derived an improper personal benefit.

        Certain Transactions with Significant Shareholders.    As a Bermuda company, we may enter into certain business transactions with our significant shareholders, including asset sales, in which a significant shareholder receives, or could receive, a financial benefit that is greater than that received, or to be received, by other shareholders with prior approval from our board of directors but without obtaining prior approval from our shareholders. Amalgamations require the approval of the board of directors and, except in the case of amalgamations with and between wholly-owned subsidiaries, a resolution of shareholders approved by a majority of at least 75% of the votes cast. If we were a Delaware corporation, we would need, subject to certain exceptions, prior approval from shareholders holding at least two-thirds of our outstanding common stock not owned by such interested shareholder to enter into a business combination (which, for this purpose, includes mergers and asset sales of greater than 10% of our assets that would otherwise be considered transactions in the ordinary course of business) with an interested shareholder for a period of three years from the time the person became an interested shareholder, unless we opted out of the relevant Delaware statute.

        Shareholders' Suits.    The rights of shareholders under Bermuda law are not as extensive as the rights of shareholders in many U.S. jurisdictions. Class actions and derivative actions are generally not available to shareholders under the laws of Bermuda. However, the Bermuda courts ordinarily would be expected to follow English case law precedent, which would permit a shareholder to commence an action in the name of the company to remedy a wrong done to the company where an act is alleged to be beyond the corporate power of the company, is illegal or would result in the violation of our memorandum of association or bye-laws. Furthermore, consideration would be given by the court to acts that are alleged to constitute a fraud against the minority shareholders or where an act requires the approval of a greater percentage of our shareholders than actually approved it. The winning party

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in such an action generally would be able to recover a portion of attorneys' fees incurred in connection with such action. Our bye-laws provide that shareholders waive all claims or rights of action that they might have, individually or in the right of the company, against any director or officer for any act or failure to act in the performance of such director's or officer's duties, except with respect to any fraud or dishonesty of such director or officer. Class actions and derivative actions generally are available to shareholders under Delaware law for, among other things, breach of fiduciary duty, corporate waste and actions not taken in accordance with applicable law. In such actions, the court has discretion to permit the winning party to recover attorneys' fees incurred in connection with such action.

        Indemnification of Directors and Officers.    Under Bermuda law and our bye-laws, we may indemnify our directors, officers or any other person appointed to a committee of the board of directors (and their respective heirs, executors or administrators) to the full extent permitted by law against all actions, costs, charges, liabilities, loss, damage or expense incurred or sustained by such person by reason of any act done, concurred in or omitted in the conduct of our business or in the discharge of his/her duties; provided that such indemnification shall not extend to any matter in which any of such persons is found, in a final judgement or decree not subject to appeal, to have committed fraud or dishonesty. Under Delaware law, a corporation may indemnify a director or officer of the corporation against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in defense of an action, suit or proceeding by reason of such position if (i) such director or officer acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and (ii) with respect to any criminal action or proceeding, such director or officer had no reasonable cause to believe his conduct was unlawful.

        To further understand the risks associated with U.S. persons who own our common shares, see "Description of Share Capital—Differences in Corporate Law" for more information on the differences between Bermuda and Delaware corporate laws.

Anti-takeover provisions in our bye-laws could impede an attempt to replace or remove our directors, which could diminish the value of our common shares.

        Our bye-laws contain provisions that may entrench directors and make it more difficult for shareholders to replace directors even if the shareholders consider it beneficial to do so. In addition, these provisions could delay or prevent a change of control that a shareholder might consider favorable. For example, these provisions may prevent a shareholder from receiving the benefit from any premium over the market price of our common shares offered by a bidder in a potential takeover. Even in the absence of an attempt to effect a change in management or a takeover attempt, these provisions may adversely affect the prevailing market price of our common shares if they are viewed as discouraging takeover attempts in the future.

        For example, our bye-laws contain the following provisions that could have such an effect:

•

election of our directors is staggered, meaning that the members of only one of three classes of our directors are selected each year;



•

shareholders have limited ability to remove directors;



•

the total voting power of any shareholder owning 9.5% or more of our common shares will be reduced to less than 9.5% of the total voting power of our common shares;



•

our directors may decline to record the transfer of any common shares on our share register if it appears to the board of directors, in their sole and reasonable discretion, after taking into account the limitations on voting rights contained in our bye-laws, that any non-deminimis adverse tax, regulatory or legal consequences to us, any of our subsidiaries or any shareholder, would result from such transfer; and

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•

subject to any applicable requirements of the New York Stock Exchange, our directors may decline to record the transfer of any common shares on our share register unless the board of directors obtains: (i) a written opinion from counsel supporting the legality of the transaction under U.S. securities laws and (ii) approval from appropriate governmental authority if such approval is required.

AXIS Holdings is a Bermuda company and it may be difficult for you to enforce judgments against it or its directors and executive officers.

        We are incorporated pursuant to the laws of Bermuda and our business is based in Bermuda. In addition, certain of our directors and officers reside outside the United States, and all or a substantial portion of our assets and the assets of such persons are located in jurisdictions outside the United States. As such, it may be difficult or impossible to effect service of process within the United States upon us or those persons or to recover against us or them on judgments of U.S. courts, including judgments predicated upon civil liability provisions of the U.S. federal securities laws. Further, no claim may be brought in Bermuda against us or our directors and officers in the first instance for violation of U.S. federal securities laws because these laws have no extraterritorial jurisdiction under Bermuda law and do not have force of law in Bermuda. A Bermuda court may, however, impose civil liability, including the possibility of monetary damages, on us or our directors and officers if the facts alleged in a complaint constitute or give rise to a cause of action under Bermuda law.

        We have been advised by Conyers Dill & Pearman, our Bermuda counsel, that there is doubt as to whether the courts of Bermuda would enforce judgments of U.S. courts obtained in actions against us or our directors and officers, as well as the experts named herein, predicated upon the civil liability provisions of the U.S. federal securities laws or original actions brought in Bermuda against us or such persons predicated solely upon U.S. federal securities laws. Further, we have been advised by Conyers Dill & Pearman that there is no treaty in effect between the United States and Bermuda providing for the enforcement of judgments of U.S. courts, and there are grounds upon which Bermuda courts may not enforce judgments of U.S. courts. Some remedies available under the laws of U.S. jurisdictions, including some remedies available under the U.S. federal securities laws, may not be allowed in Bermuda courts as contrary to that jurisdiction's public policy. Because judgments of U.S. courts are not automatically enforceable in Bermuda, it may be difficult for you to recover against us based upon such judgments.

Risks Related to Taxation

We may become subject to taxes in Bermuda after March 28, 2016, which may have a material adverse effect on our results of operations and your investment.

        The Bermuda Minister of Finance, under the Exempted Undertakings Tax Protection Act 1966, as amended, of Bermuda, has given each of AXIS Holdings and AXIS Specialty an assurance that if any legislation is enacted in Bermuda that would impose tax computed on profits or income, or computed on any capital asset, gain or appreciation, or any tax in the nature of estate duty or inheritance tax, then the imposition of any such tax will not be applicable to AXIS Holdings, AXIS Specialty or any of their respective operations, shares, debentures or other obligations until March 28, 2016. See "Material Tax Considerations—Taxation of AXIS Holdings and Subsidiaries—Bermuda." Given the limited duration of the Minister of Finance's assurance we cannot be certain that we will not be subject to any Bermuda tax after March 28, 2016.

We may be subject to U.S. tax that may have a material adverse effect on our results of operations and your investment.

        AXIS Holdings and AXIS Specialty are Bermuda companies, AXIS Specialty Holdings Ireland Limited ("AXIS Ireland Holdings"), AXIS Re and AXIS Specialty Europe are Irish companies, AXIS Specialty UK Limited ("AXIS UK") and AXIS Specialty UK Holdings Limited ("AXIS UK Holdings")

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are U.K. companies and AXIS Specialty (Barbados) Limited ("AXIS Barbados") is a Barbados company. We intend to manage our business so that each of these companies will operate in such a manner that none of these companies will be subject to U.S. tax (other than U.S. excise tax on insurance and reinsurance premium income attributable to insuring or reinsuring U.S. risks and U.S. withholding tax on certain U.S. source investment income), because none of these companies should be treated as engaged in a trade or business within the United States. However, because there is considerable uncertainty as to the activities which constitute being engaged in a trade or business within the United States, we cannot be certain that the U.S. Internal Revenue Service ("IRS") will not contend successfully that any of AXIS Holdings or its foreign subsidiaries is/are engaged in a trade or business in the United States. If AXIS Holdings or any of its foreign subsidiaries were considered to be engaged in a business in the United States, we could be subject to U.S. corporate income and branch profits taxes on the portion of our earnings effectively connected to such U.S. business in which case our results of operations and your investment could be materially adversely affected. See "Material Tax Considerations—Taxation of AXIS Holdings and Subsidiaries—United States."

        AXIS Holdings or a subsidiary might be subject to U.S. tax on a portion of its income (which in the case of a foreign subsidiary would only include income from U.S. sources) if AXIS Holdings or such subsidiary is considered a personal holding company ("PHC"), for U.S. federal income tax purposes. This status will depend on whether 50% or more of our shares could be deemed to be owned (pursuant to certain constructive ownership rules) by five or fewer individuals and whether 60% or more of AXIS Holdings' income, or the income of any of its subsidiaries, as determined for U.S. federal income tax purposes, consists of "personal holding company income." We believe based upon information made available to us regarding our existing shareholder base that neither AXIS Holdings nor any of its subsidiaries should be considered a PHC. Additionally, we intend to manage our business to minimize the possibility that we will meet the 60% income threshold. However, because of the lack of complete information regarding our ultimate share ownership (i.e., as determined by the constructive ownership rules for PHCs), we cannot be certain that AXIS Holdings and/or any of its subsidiaries will not be considered a PHC or that the amount of U.S. tax that would be imposed if it were not the case would be immaterial. See "Material Tax Considerations—Taxation of AXIS Holdings and Subsidiaries—United States—Personal Holding Companies."

We may be subject to U.K. tax that may have a material adverse effect on our results of operations.

        None of us, except for AXIS UK and AXIS UK Holdings, are incorporated in the United Kingdom. Accordingly, none of us, other than AXIS UK and AXIS UK Holdings, should be treated as being resident in the United Kingdom unless our central management and control is exercised in the United Kingdom. The concept of central management and control is indicative of the highest level of control of a company, which is wholly a question of fact. The directors of each of us, other than AXIS UK and AXIS UK Holdings, intend to manage our affairs so that none of us, other than AXIS UK and AXIS UK Holdings, are resident in the United Kingdom for tax purposes.

        A company not resident in the United Kingdom for corporation tax purposes can nevertheless be subject to U.K. corporation tax if it carries on a trade through a branch or agency in the United Kingdom but the charge to U.K. corporation tax is limited to profits (including revenue profits and capital gains) connected with such branch or agency.

        The directors of each of us, other than AXIS UK and AXIS UK Holdings (which are resident in the United Kingdom by virtue of being incorporated and managed there), AXIS Ireland Holdings (which has established a branch in the United Kingdom) and AXIS Specialty Europe (which it is intended should establish a branch in the United Kingdom), intend that we will operate in such a manner so that none of us, other than AXIS UK, AXIS UK Holdings, AXIS Ireland Holdings and AXIS Specialty Europe, carry on a trade through a branch or agency in the United Kingdom. Nevertheless, because neither case law nor U.K. statute definitively defines the activities that constitute trading in the United Kingdom through a branch or agency, the U.K. Inland Revenue might contend

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successfully that any of us, other than AXIS UK, AXIS UK Holdings, AXIS Ireland Holdings and AXIS Specialty Europe, are/is trading in the United Kingdom through a branch or agency in the United Kingdom.

        If any of the U.S. subsidiaries qualifying for benefits under the tax treaty between the United Kingdom and the United States were trading in the United Kingdom through a branch or agency, they would only be subject to U.K. corporation tax if the branch or agency constituted a permanent establishment for the purposes of that treaty and then only to the extent that any profits were attributable to that permanent establishment in the United Kingdom.

        If AXIS Ireland Holdings, AXIS Re and AXIS Specialty Europe were trading in the U.K. through a branch or agency and they were entitled to the benefits of the tax treaty between Ireland and the United Kingdom, they would only be subject to U.K. corporation tax on the profits which were attributable to a permanent establishment in the United Kingdom. The branch established in the United Kingdom by AXIS Ireland Holdings constitutes a permanent establishment of that company and the profits attributable to that permanent establishment (which have been calculated by the company on the basis of cost plus 10%) are subject to U.K. corporation tax. It is believed that the branch that is to be established in the United Kingdom by AXIS Specialty Europe will represent a permanent establishment of that company in the United Kingdom and that the profits attributable to that permanent establishment will be subject to U.K. corporation tax.

        The United Kingdom has no income tax treaty with Bermuda.

        There are circumstances in which companies that are neither resident in the United Kingdom nor entitled to the protection afforded by a double tax treaty between the United Kingdom and the jurisdiction in which they are resident may be exposed to income tax in the United Kingdom (other than by deduction or withholding) on the profits of a trade carried on there even if that trade is not carried on through a branch or agency, but the directors of each of us intend that we will operate in such a manner that none of us will fall within the charge to income tax in the United Kingdom (other than by deduction or withholding) in this respect.

        If any of us, other than AXIS UK and AXIS UK Holdings, were treated as being resident in the United Kingdom for U.K. corporation tax purposes, or if any of us, other than AXIS Ireland Holdings and AXIS Specialty Europe, were to be treated as carrying on a trade in the United Kingdom through a branch or agency or of having a permanent establishment in the United Kingdom, our results of operations and your investment could be materially adversely affected.

        It should be noted that the British Government has published draft legislation to modernize the taxation of foreign companies operating in the United Kingdom through branches, for accounting periods starting on or after January 1, 2003. If the draft legislation is enacted in its current form, a non-U.K. resident company will only fall within the charge to U.K. corporation tax if it carries on a trade in the United Kingdom through a permanent establishment. The term "permanent establishment" is defined for these purposes in a manner which is consistent with various internationally recognized characteristics commonly used in the United Kingdom's double tax treaties.

We may be subject to Irish tax that may have a material adverse effect on our results of operations.

        Companies resident in Ireland are generally subject to Irish corporation tax on their worldwide income and capital gains. None of us, except for AXIS Ireland Holdings, AXIS Re and AXIS Specialty Europe, are incorporated in Ireland. As such, none of us, other than AXIS Ireland Holdings, AXIS Re and AXIS Specialty Europe, should be treated as being resident in Ireland unless our central management and control is exercised in Ireland. The concept of central management and control is indicative of the highest level of control of a company, and is wholly a question of fact. The directors of each of us, other than AXIS Ireland Holdings, AXIS Re and AXIS Specialty Europe, intend to operate in such a manner so that the central management and control of each of us, other than AXIS Ireland Holdings, AXIS Re and AXIS Specialty Europe, is exercised outside of Ireland. Nevertheless,

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because central management and control is a question of fact to be determined based on a number of different factors, the Irish Revenue Commissioners might contend successfully that the central management and control of any of us, other than AXIS Ireland Holdings, AXIS Re and AXIS Specialty Europe, is exercised in Ireland. Should this occur, such company will be subject to Irish corporation tax on their worldwide income and capital gains.

        The trading income of a company not resident in Ireland for Irish tax purposes can also be subject to Irish corporation tax if it carries on a trade through a branch or agency in Ireland. The directors of each of us, other than AXIS Ireland Holdings, AXIS Re and AXIS Specialty Europe, intend to operate in such a manner so that none of us, other than AXIS Ireland Holdings, AXIS Re and AXIS Specialty Europe, carry on a trade through a branch or agency in Ireland. Nevertheless, because neither case law nor Irish legislation definitively defines the activities that constitute trading in Ireland through a branch or agency, the Irish Revenue Commissioners might contend successfully that any of us, other than AXIS Ireland Holdings, AXIS Re and AXIS Specialty Europe, is trading through a branch or agency in Ireland. Should this occur, such companies will be subject to Irish corporation tax on profits attributable to that branch or agency.

        If any of us, other than AXIS Ireland Holdings, AXIS Re and AXIS Specialty Europe, were treated as resident in Ireland for Irish corporation tax purposes, or as carrying on a trade in Ireland through a branch or agency, our results of operations and your investment could be materially adversely affected.

If corporate tax rates in Ireland increase, our business and financial results could be adversely affected.

        Trading income derived from the insurance and reinsurance businesses carried on in Ireland by AXIS Specialty Europe and AXIS Re is generally taxed in Ireland at a rate of 12.5%. Over the past number of years, various EU member states have, from time to time, called for harmonization of corporate tax rates within the EU. Ireland, along with other member states, has consistently resisted any movement towards standardized corporate tax rates in the EU. The Government of Ireland has also made clear its commitment to retain the 12.5% rate of corporation tax until at least the year 2025. Should, however, tax laws in Ireland change so as to increase the general corporation tax rate in Ireland, our results of operations could be materially adversely affected.

If investments held by AXIS Specialty Europe or AXIS Re are determined not to be integral to the insurance and reinsurance businesses carried on by those companies, additional Irish tax could be imposed and our business and financial results could be adversely affected.

        Based on administrative practice, taxable income derived from investments made by AXIS Specialty Europe and AXIS Re is generally taxed in Ireland at the rate of 12.5% on the grounds that such investments either form part of the permanent capital required by regulatory authorities, or are otherwise integral to the insurance and reinsurance businesses carried on by those companies. AXIS Specialty Europe and AXIS Re intend to operate in such a manner so that the level of investments held by such companies does not exceed the amount that is integral to the insurance and reinsurance businesses carried on by AXIS Specialty Europe and AXIS Re. If, however, investment income earned by AXIS Specialty Europe or AXIS Re exceeds these thresholds, or if the administrative practice of the Irish Revenue Commissioners changes, Irish corporations tax could apply to such investment income at a higher rate (currently 25%) instead of the general 12.5% rate, and our results of operations could be materially adversely affected.

If you acquire 10% or more of AXIS Holdings' shares, you may be subject to taxation under the "controlled foreign corporation" ("CFC") rules.

        Each "10% U.S. Shareholder" of a foreign corporation that is a CFC for an uninterrupted period of 30 days or more during a taxable year, and who owns shares in the CFC directly or indirectly

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through foreign entities on the last day of the CFC's taxable year, must include in its gross income for U.S. federal income tax purposes its pro rata share of the CFC's "subpart F income," even if the subpart F income is not distributed. A foreign corporation is considered a CFC if "10% U.S. Shareholders" own (directly, indirectly through foreign entities or by attribution by application of the constructive ownership rules (i.e., "constructively"), of section 958(b) of the Internal Revenue Code of 1986, as amended (the "Code")) more than 50% of the total combined voting power of all classes of voting stock of such foreign corporation, or the total value of all stock of such corporation. A "10% U.S. Shareholder" is a U.S. Person (as defined in "Material Tax Considerations—Taxation of Shareholders—United States Taxation") who owns (directly, indirectly through foreign entities or constructively) at least 10% of the total combined voting power of all classes of stock entitled to vote of the foreign corporation. For purposes of taking into account insurance income, a CFC also includes a foreign insurance company in which more than 25% of the total combined voting power of all classes of stock (or more than 25% of the total value of the stock) is owned by 10% U.S. Shareholders, on any day during the taxable year of such corporation, if the gross amount of premiums or other consideration for the reinsurance or the issuing of insurance or annuity contracts exceeds 75% of the gross amount of all premiums or other consideration in respect of all risks.

        We believe that because of the anticipated dispersion of our share ownership, provisions in our organizational documents that limit voting power and other factors, no U.S. Person who owns shares of AXIS Holdings directly or indirectly through one or more foreign entities should be treated as owning (directly, indirectly through foreign entities or constructively) 10% or more of the total voting power of all classes of shares of AXIS Holdings, or any of its foreign subsidiaries (these provisions are described in "Description of Share Capital"). It is possible, however, that the IRS could challenge the effectiveness of these provisions and that a court could sustain such a challenge. See "Material Tax Considerations—Taxation of Shareholders—United States Taxation— Classification of AXIS Holdings or Its Foreign Subsidiaries as Controlled Foreign Corporations."

U.S. Persons who hold common shares may be subject to U.S. income taxation at ordinary income rates on their proportionate share of our "related party insurance income" ("RPII").

        If the RPII of any of AXIS Specialty, AXIS Re and AXIS Specialty Europe (the "Foreign Insurance Subsidiaries") were to equal or exceed 20% of such company's gross insurance income in any taxable year and direct or indirect insureds (and persons related to such insureds) own (or are treated as owning directly or indirectly through entities) 20% or more of the voting power or value of AXIS Holdings, then a U.S. Person who owns shares of AXIS Holdings (directly or indirectly through foreign entities) on the last day of the taxable year would be required to include in its income for U.S. federal income tax purposes such person's pro rata share of such Foreign Insurance Subsidiary's RPII for the entire taxable year, determined as if such RPII were distributed proportionately only to U.S. Persons at that date regardless of whether such income is distributed. In addition, any RPII that is includible in the income of a U.S. tax-exempt organization may be treated as unrelated business taxable income. The amount of RPII earned by the Foreign Insurance Subsidiaries (generally, premium and related investment income from the direct or indirect insurance or reinsurance of any direct or indirect U.S. holder of common shares or any person related to such holder) will depend on a number of factors, including the geographic distribution of the Foreign Insurance Subsidiaries' business and the identity of persons directly or indirectly insured or reinsured by the Foreign Insurance Subsidiaries. We believe that the gross RPII of each Foreign Insurance Subsidiary did not in prior years of operation and is not expected in the foreseeable future to equal or exceed 20% of each such subsidiary's gross insurance income, and we do not expect the direct or indirect insureds of the Foreign Insurance Subsidiaries (and related persons) to directly or indirectly own 20% or more of either the voting power or value of our common shares, but we cannot be certain that this will be the case because some of the factors which determine the extent of RPII may be beyond our control.

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        The RPII rules provide that if a U.S. Person disposes of shares in a foreign insurance corporation in which U.S. Persons own 25% or more of the shares (even if the amount of RPII is less than 20% of the corporation's gross insurance income and the ownership of its shares by direct or indirect insureds and related persons is less than the 20% threshold), any gain from the disposition will generally be treated as ordinary income to the extent of the holder's share of the corporation's undistributed earnings and profits that were accumulated during the period that the holder owned the shares (whether or not such earnings and profits are attributable to RPII). In addition, such a holder will be required to comply with certain reporting requirements, regardless of the amount of shares owned by the holder. These RPII rules should not apply to dispositions of common shares because AXIS Holdings will not itself be directly engaged in the insurance business. The RPII provisions, however, have never been interpreted by the courts or the U.S. Treasury Department in final regulations, and regulations interpreting the RPII provisions of the Code exist only in proposed form. It is not certain whether these regulations will be adopted in their proposed form or what changes or clarifications might ultimately be made thereto or whether any such changes, as well as any interpretation or application of RPII by the IRS, the courts, or otherwise, might have retroactive effect. The U.S. Treasury Department has authority to impose, among other things, additional reporting requirements with respect to RPII. Accordingly, the meaning of the RPII provisions and the application thereof to us and our subsidiaries is uncertain. See "Material Tax Considerations—Taxation of Shareholders—United States Taxation—The RPII CFC Provisions."

U.S. Persons who hold common shares will be subject to adverse tax consequences if we are considered to be a Passive Foreign Investment Company ("PFIC") for U.S. federal income tax purposes.

        We believe that we are not, have not been, and we currently do not expect to become, a PFIC for U.S. federal income purposes. We cannot assure you, however, that we will not be deemed a PFIC by the IRS. If we were considered a PFIC, it could have material adverse tax consequences for an investor that is subject to U.S. federal income taxation, including subjecting the investor to a greater tax liability than might otherwise apply and subjecting the investor to tax on amounts in advance of when tax would otherwise be imposed. There are currently no regulations regarding the application of the PFIC provisions to an insurance company. New regulations or pronouncements interpreting or clarifying these rules may be forthcoming. We cannot predict what impact, if any, such guidance would have on an investor that is subject to U.S. federal income taxation. See "Material Tax Considerations—Taxation of Shareholders—United States Taxation—Passive Foreign Investment Companies."

U.S. Persons who hold common shares will be subject to adverse tax consequences if we or any of our subsidiaries are considered to be a Foreign Personal Holding Company ("FPHC") for U.S. federal income tax purposes.

        AXIS Holdings and/or any of its foreign subsidiaries could be considered to be an FPHC for U.S. federal income tax purposes if more than 50% of our shares could be deemed to be owned by five or fewer individuals who are citizens or residents of the United States, and 60% or more of AXIS Holdings income, or that of its foreign subsidiaries, consists of "foreign personal holding company income," as determined for U.S. federal income tax purposes. We believe based upon information made available to us regarding our existing shareholder base that neither AXIS Holdings nor any of its foreign subsidiaries should be considered an FPHC for any prior year of operations or immediately following the offering. Additionally, we intend to manage our business to minimize the possibility that we will meet the 60% income threshold. However, because of the lack of complete information regarding our ultimate share ownership, we cannot be certain that AXIS Holdings and/or any of its foreign subsidiaries will not be considered an FPHC. If we were considered an FPHC it could have material adverse tax consequences for an investor that is subject to U.S. federal income taxation, including subjecting the investor to a greater tax liability than might otherwise apply and subjecting the investor to tax on amounts in advance of when tax would otherwise be imposed. In addition, if we were considered an FPHC, upon the death of any U.S. individual owning common shares, such individual's

29

heirs or estate would not be entitled to a "step-up" in the basis of the common shares which might otherwise be available under U.S. federal income tax laws. See "Material Tax Considerations—Taxation of Shareholders—United States Taxation—Foreign Personal Holding Companies."

U.S. tax-exempt organizations who own our common shares may recognize unrelated business taxable income.

        A U.S. tax-exempt organization may recognize unrelated business taxable income if a portion of our insurance income is allocated to the organization. In general, insurance income will be allocated to a U.S. tax-exempt organization if either we are a CFC and the tax-exempt shareholder is a U.S. 10% Shareholder or there is RPII and certain exceptions do not apply. Although we do not believe that any U.S. Persons should be allocated such insurance income, we cannot be certain that this will be the case. See "Material Tax Considerations—Taxation of Shareholders—United States Taxation—Classification of AXIS Holdings or Its Foreign Subsidiaries as Controlled Foreign Corporations" and "Material Tax Considerations—Taxation of Shareholders—United States Taxation—The RPII CFC Provisions." Potential U.S. tax-exempt investors are advised to consult their own tax advisors.

Changes in U.S. federal income tax law could materially adversely affect an investment in our common shares.

        Legislation has been introduced in the U.S. Congress intended to eliminate certain perceived tax advantages of companies (including insurance companies) that have legal domiciles outside the United States but have certain U.S. connections. In this regard, legislation has been introduced that includes a provision that permits the IRS to reallocate or recharacterize items of income, deduction or certain other items related to a reinsurance agreement between related parties to reflect the proper source, character and amount for each item (in contrast to current law, which only refers to source and character). While there are no currently pending legislative proposals which, if enacted, would have a material adverse effect on us or our shareholders, it is possible that broader-based legislative proposals could emerge in the future that could have an adverse impact on us or our shareholders.

        Additionally, the U.S. federal income tax laws and interpretations regarding whether a company is engaged in a trade or business within the United States, or is a passive foreign investment company or whether U.S. Persons would be required to include in their gross income the "subpart F income" or the related party insurance income of a controlled foreign corporation are subject to change, possibly on a retroactive basis. There are currently no regulations regarding the application of the passive foreign investment company rules to insurance companies and the regulations regarding related party insurance income are still in proposed form. New regulations or pronouncements interpreting or clarifying such rules may be forthcoming. We cannot be certain if, when or in what form such regulations or pronouncements may be provided and whether such guidance will have a retroactive effect.

The impact of Bermuda's letter of commitment to the Organization for Economic Cooperation and Development to eliminate harmful tax practices is uncertain and could adversely affect our tax status in Bermuda.

        The Organization for Economic Cooperation and Development, which is commonly referred to as the OECD, has published reports and launched a global dialogue among member and non-member countries on measures to limit harmful tax competition. These measures are largely directed at counteracting the effects of tax havens and preferential tax regimes in countries around the world. In the OECD's report dated June 26, 2000, Bermuda was not listed as a tax haven jurisdiction because it had previously signed a letter committing itself to eliminate harmful tax practices by the end of 2005 and to embrace international tax standards for transparency, exchange of information and the elimination of any aspects of the regimes for financial and other services that attract business with no substantial domestic activity. We are not able to predict what changes will arise from the commitment or whether such changes will subject us to additional taxes.

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FORWARD-LOOKING STATEMENTS

        Some of the statements under "Prospectus Summary," "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Business" and elsewhere in this prospectus may include forward-looking statements which reflect our current views with respect to future events and financial performance. These statements include forward-looking statements both with respect to us specifically and the insurance and reinsurance sectors in general. Statements which include the words "expect," "intend," "plan," "believe," "project," "anticipate," "will" and similar statements of a future or forward-looking nature identify forward-looking statements for purposes of the federal securities laws or otherwise.

        All forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. We believe that these factors include but are not limited to those described under "Risk Factors" above and the following:

•

ineffectiveness or obsolescence of our business strategy due to changes in current or future market conditions;



•

increased competition on the basis of pricing, capacity, coverage terms or other factors;



•

greater frequency or severity of claims and loss activity, including as a result of natural or man-made catastrophic events, than our underwriting, reserving or investment practices anticipate based on historical experience or industry data;



•

the effects of acts of terrorism or war;



•

developments in the world's financial and capital markets that adversely affect the performance of our investments;



•

changes in regulation or tax laws applicable to us, our subsidiaries, brokers or customers;



•

acceptance of our products and services, including new products and services;



•

changes in the availability, cost or quality of reinsurance;



•

changes in the distribution or placement of risks due to increased consolidation of insurance and reinsurance brokers;



•

decreased demand for our insurance or reinsurance products;



•

loss of key personnel;



•

the effects of mergers, acquisitions and divestitures;



•

changes in rating agency policies or practices;



•

changes in legal theories;



•

changes in accounting policies or practices; and



•

changes in general economic conditions, including inflation, foreign currency exchange rates, interest rates and other factors.

        The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this prospectus. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

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        If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary materially from what we projected. Any forward-looking statements you read in this prospectus reflect our current views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. All subsequent written and oral forward-looking statements attributable to us or individuals acting on our behalf are expressly qualified in their entirety by this paragraph. You should specifically consider the factors identified in this prospectus which could cause actual results to differ before making an investment decision.

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USE OF PROCEEDS

        We estimate that our net proceeds from the initial public offering of our common shares, based on an assumed initial public offering price of $20.50 per share (the midpoint of the price range set forth on the cover page of this prospectus) and after deducting the underwriting discounts and commissions and our estimated offering expenses, will be approximately $255.5 million. We estimate that our net proceeds will be approximately $294.3 million if the underwriters exercise their over-allotment option in full. We will not receive any of the proceeds from the sale of common shares by the selling shareholders. We intend to use the net proceeds of this offering as additional capital for operations and general corporate purposes depending on our needs at the time.

DIVIDEND POLICY

        Our board of directors currently intends to authorize the payment of a dividend of $0.07 per common share per quarter to our shareholders of record, beginning in the third quarter of 2003. Any determination to pay cash dividends will be at the discretion of our board of directors and will be dependent upon our results of operations and cash flows, our financial position and capital requirements, general business conditions, legal, tax, regulatory and any contractual restrictions on the payment of dividends and any other factors our board of directors deems relevant.

        We are a holding company and have no direct operations. Our ability to pay dividends depends, in part, on the ability of our Insurance Subsidiaries to pay dividends to us. Our Insurance Subsidiaries (with the exception of AXIS Re) are subject to significant regulatory restrictions limiting their ability to declare and pay dividends.

        Additionally, we are subject to Bermuda regulatory constraints that will affect our ability to pay dividends on our common shares and make other payments. Under the Companies Act, we may declare or pay a dividend out of distributable reserves only if we have reasonable grounds for believing that we are, or would after the payment be, able to pay our liabilities as they become due and if the realizable value of our assets would thereby not be less than the aggregate of our liabilities and issued share capital and share premium accounts.

        As of March 31, 2003, the maximum amount of distributions that our subsidiaries could pay to AXIS Holdings under applicable laws and regulations without prior regulatory approval was approximately $358.6 million.

        We entered into a $550 million Credit Agreement dated as of March 27, 2003 with a syndicate of banks led by of JPMorgan Chase Bank, as Administrative Agent and Lender. Pursuant to the terms of our Credit Agreement, we cannot pay cash dividends to our shareholders in excess of $150 million in the aggregate during the period that any commitments or obligations are outstanding thereunder, which period the Company currently expects to end on March 25, 2004.

        For more information regarding restrictions on the payment of dividends by us and our Insurance Subsidiaries, see "Regulation."

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CAPITALIZATION

        The following table sets forth our consolidated capitalization as of March 31, 2003, on an actual basis and as adjusted to give effect to the sale of 13,400,000 common shares offered by us in this offering at an assumed initial public offering price of $20.50 per share (the midpoint of the price range set forth on the cover page of this prospectus) and after deducting estimated underwriting discounts and commissions and our estimated offering expenses and assuming the underwriters do not exercise their over-allotment option.

        You should read this table in conjunction with "Selected Consolidated Financial Information" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and related notes that are included elsewhere in this prospectus.

(1)

Consists of a $550 million Credit Agreement, dated as of March 27, 2003. Under the terms of this Credit Agreement, up to $550 million may be used by AXIS Holdings, AXIS Specialty, AXIS Reinsurance, AXIS Insurance and AXIS Surplus to issue letters of credit and up to $100 million may be used by AXIS Holdings and AXIS Specialty for general corporate purposes, with total borrowings not to exceed $550 million.

        The number of shares shown to be outstanding as adjusted for the offering is based upon 138,324,536 common shares outstanding as of March 31, 2003 and excludes:

•

2,010,000 common shares that may be issued pursuant to the underwriters' over-allotment option;



•

19,501,576 common shares that may be issued pursuant to warrants outstanding as of March 31, 2003 at a price of $12.50 per share;



•

4,673,512 common shares that may be issued pursuant to options that had been granted as of March 31, 2003 at a weighted average exercise price of $13.14 per share; and



•

8,938,888 additional common shares available for future issuance under our stock option and incentive plans.

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DILUTION

        As of March 31, 2003, our net tangible book value was $2.05 billion, or $14.82 per common share. As used below, our net tangible book value per common share represents shareholders' equity, minus the balance for intangible assets, divided by the number of common shares outstanding. After giving effect to the issuance of 13,400,000 of our common shares at an assumed initial public offering price of $20.50 per share (the midpoint of the price range set forth on the cover page of this prospectus), assuming that the underwriters' over-allotment option is not exercised, and the application of the estimated net proceeds therefrom, our net tangible book value as of March 31, 2003 would have been $2.3 billion, or $15.20 per common share. This amount represents an immediate increase of $0.38 per common share to the existing shareholders and an immediate dilution of $5.30 per common share issued to the new investors purchasing shares offered hereby at the assumed initial public offering price. The following table illustrates this per share dilution:

(1)

If the underwriters' over-allotment option is exercised in full, dilution per share to new investors will be $5.25.

        The following table sets forth as of March 31, 2003 the number of our common shares issued, the total consideration paid and the average price per common share paid by all of our existing shareholders and new investors, after giving effect to the issuance of 13,400,000 common shares in the offering at an assumed initial public offering price (before deducting estimated underwriting discounts and commissions and our estimated offering expenses) of $20.50 per share (the midpoint of the price range set forth on the cover page of this prospectus).

        This table does not give effect to:

•

2,010,000 common shares that may be issued pursuant to the underwriters' over-allotment option;



•

19,501,576 common shares that may be issued pursuant to warrants outstanding as of March 31, 2003 at a price of $12.50 per share;



•

4,673,512 common shares that may be issued pursuant to options that had been granted as of March 31, 2003 at a weighted average exercise price of $13.14 per share; and



•

8,938,888 additional common shares available for future issuance under our stock option and incentive plans.

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SELECTED CONSOLIDATED FINANCIAL INFORMATION

        The following table sets forth our selected historical consolidated financial information for the periods ended and as of the dates indicated. AXIS Specialty was incorporated on November 8, 2001 and commenced operations on November 20, 2001. AXIS Holdings was incorporated on December 9, 2002. On December 31, 2002, AXIS Specialty and its subsidiaries became wholly owned subsidiaries of AXIS Holdings pursuant to the Exchange Offer. In the Exchange Offer, the shareholders of AXIS Specialty exchanged their shares for identical shareholdings in AXIS Holdings. Following the Exchange Offer, AXIS Specialty distributed all of its wholly owned subsidiaries to AXIS Holdings. The Exchange Offer represents a business combination of companies under common control and has been accounted for at historical cost. As a result, the consolidated financial information presented gives effect to the exchange of equity interests as though it occurred as of the inception date of AXIS Specialty on November 8, 2001.

        The selected income statement data for the year ended December 31, 2002 and for the period from inception (November 8, 2001) through December 31, 2001 and the selected balance sheet data as of December 31, 2002 and December 31, 2001 are derived from our audited consolidated financial statements included elsewhere in this prospectus, which have been prepared in accordance with U.S. GAAP and have been audited by Deloitte & Touche, our independent auditors. The selected income statement data for the quarters ended March 31, 2003 and March 31, 2002 and the selected balance sheet data as of March 31, 2003 are derived from our unaudited condensed consolidated financial statements included elsewhere in this prospectus. The unaudited condensed consolidated financial statements have been prepared on the same basis as our audited consolidated financial statements and, in our opinion, include all adjustments, consisting only of normal recurring adjustments, that we consider necessary for a fair presentation of our results of operations and financial position for these periods. These historical results are not necessarily indicative of results to be expected from any future period. Due to our limited operating history, the ratios presented may not be indicative of our future performance. You should read the following selected consolidated financial information together with the other information contained in this prospectus, including "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and related notes included elsewhere in this prospectus.

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(1)

The financial information for this period reflects our results from November 8, 2001, the date of incorporation of AXIS Specialty, to December 31, 2001.

(2)

The net loss and loss expense ratio is calculated by dividing net losses and loss expenses by net premiums earned.

(3)

The acquisition cost ratio is calculated by dividing total acquisition costs by net premiums earned.

(4)

The general and administrative expense ratio is calculated by dividing general and administrative expenses by net premiums earned.

(5)

The combined ratio is the sum of the net loss and loss expense ratio, the acquisition cost ratio and the general and administrative expense ratio.

(6)

Book value per share is based on total shareholders' equity divided by basic shares outstanding of 138,324,536 as of March 31, 2003, 138,168,520 as of December 31, 2002 and 135,122,688 as of December 31, 2001.

(7)

Diluted book value per share is calculated based on total shareholders' equity, adjusted for the proceeds expected to be received upon the exercise of options and warrants, divided by the number of common shares and common share equivalents outstanding at the end of the period.

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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and accompanying notes which appear elsewhere in this prospectus. It contains forward-looking statements that involve risks and uncertainties. Please see "Forward-Looking Statements" for more information. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below and elsewhere in this prospectus, particularly under the headings "Risk Factors" and "Forward-Looking Statements."

General

        The following is a discussion of our results of operations and financial condition. Certain aspects of our business have loss experience characterized as low frequency and high severity. This may result in volatility in both our results of operations and financial condition.

        We commenced operations on November 20, 2001 as AXIS Specialty. Pursuant to the Exchange Offer, on December 31, 2002 the shareholders of AXIS Specialty exchanged their shares for identical shareholdings in AXIS Holdings. Following the Exchange Offer, AXIS Specialty distributed all of its wholly owned subsidiaries to AXIS Holdings. The Exchange Offer represents a business combination of companies under common control and has been accounted for at historical cost. As a result, the consolidated financial information presented gives effect to the exchange of equity interests as though it occurred as of the inception date of AXIS Specialty on November 8, 2001.

        We commenced operations on November 20, 2001; therefore, any comparison to the prior period may not be meaningful.

Business Overview

        We underwrite specialty lines insurance and treaty reinsurance on a global basis. In 2002, our business was comprised of two underwriting segments: specialty lines and treaty reinsurance. With effect from January 1, 2003, we added two new segments following our acquisitions of AXIS Reinsurance and AXIS Surplus. Our business is now comprised of four segments: global insurance (formerly specialty lines), global reinsurance (formerly treaty reinsurance), U.S. insurance and U.S. reinsurance.

        Our global insurance segment primarily includes the following specialty lines risk classifications sourced outside of the United States: specialty risks (including terrorism, marine and aviation war risk and political risk), onshore and offshore energy, aviation and aerospace, commercial property and marine.

        Our global reinsurance segment primarily includes treaty reinsurance business sourced outside of the United States covering the following underlying risks: property, workers' compensation, personal accident and life, and marine and aviation.

        Our U.S. insurance segment primarily includes the following specialty lines risk classifications sourced in the United States and principally covering exposures in the United States: commercial property, professional lines and commercial liability.

        Our U.S. reinsurance segment principally provides casualty treaty reinsurance products sourced in the United States and principally covering exposures in the United States. The underlying property and casualty insurance business classes covered by the treaties we write in our U.S. reinsurance segment include: professional lines and casualty clash.

        The amount of premiums written with respect to any particular segment or line of business may vary from quarter to quarter and year to year as a result of changes in market conditions.

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        Since we underwrite both global specialty lines insurance and treaty reinsurance risks, we have a large aggregate exposure to natural and man-made disasters, which may result in substantial volatility in our financial results.

Acquisition History

        On October 2, 2002, we completed the purchase of the Connecticut Specialty Insurance Company, a surplus lines-eligible carrier in 38 states and the District of Columbia, which was subsequently renamed AXIS Specialty Insurance Company. We paid a purchase price of $17.4 million. On November 27, 2002, we completed the purchase of Royal & SunAlliance Personal Insurance Company, which is licensed in all 50 states of the United States, the District of Columbia and Puerto Rico and was subsequently renamed AXIS Reinsurance Company. We paid a purchase price of $23.1 million. At the dates that AXIS Specialty Insurance and AXIS Reinsurance were acquired, the pre-acquisition liabilities had been assumed by the sellers or their affiliates. The respective sellers further agreed to indemnify the acquired companies and our U.S. holding company from and against any and all such liabilities. Some of the underlying liabilities have been reinsured with third parties. Other liabilities are being novated or collateralized by an irrevocable letter of credit. In the event that the reinsurance and, if applicable, the letter of credit are insufficient to pay all covered insurance claims, and the sellers do not fulfill their obligations under the indemnity, we would have liability for such claims. As of February 28, 2003, we completed the purchase of Sheffield Insurance Corporation, which is licensed in Illinois and Alabama, surplus lines eligible in 39 states and the District of Columbia and will be renamed AXIS Surplus Insurance Company. We paid a purchase price of $34.7 million. In connection with this acquisition, we added a senior team of insurance executives from Combined Specialty Group, Inc., a unit of Aon. In addition, in the first half of 2003 we acquired the renewal rights to a book of professional liability and related lines business written by the Financial Insurance Solutions unit of Kemper in exchange for a payment that is based upon the gross premiums written with respect to renewals obtained. We purchased these companies and agreed to acquire these rights as the foundation for commencing our U.S. operations.

Revenues

        We derive our revenues primarily from the sale of our insurance policies and reinsurance contracts. Insurance and reinsurance premiums are a function of the number and type of contracts we write, as well as prevailing market prices.

        Renewal dates for our business segments depend upon the underlying line of business. For the majority of business in our global insurance and U.S. insurance segments, gross premiums are written throughout the year. An exception to this is the business written in our aviation and aviation war accounts, which is predominantly written in the last quarter of the calendar year. For our global reinsurance segment in 2002, a significant portion of our gross premiums was written in the first quarter of the calendar year, with the remainder primarily split between the second and third quarters. We believe this seasonality may diminish as we expand into new treaty lines.

        Our premium income is supplemented by the income we generate from our investment portfolio. Our investment portfolio is comprised entirely of fixed income investments that are held as available for sale. Under U.S. GAAP, these investments are carried at fair market value and unrealized gains and losses on the investments are not included in our statement of operations. Rather, these unrealized gains and losses are included on our balance sheet in accumulated other comprehensive gain/(loss) as a separate component of shareholders' equity.

Expenses

        Our expenses primarily consist of net losses and loss expenses, acquisition costs and general and administrative expenses.

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        Net losses and loss expenses are management's best estimate of the ultimate cost of claims incurred during a reporting period.

        Acquisition costs relate to the fees, commissions and taxes paid to obtain business. Typically these are based on a certain percentage of the premium written and will vary by each line of business that we underwrite. In addition, we include the personnel expenses of our underwriters in acquisition costs.

        General and administrative expenses consist primarily of personnel expenses (except those allocated to acquisition costs) and general operating expenses. With the exception of acquisition costs, we do not allocate general and administrative operating expenses to our segments and instead record these costs at the corporate level.

Critical Accounting Policies

        There are certain accounting policies that we consider to be critical due to the amount of judgment and uncertainty inherent in the application of those policies. In calculating financial statement estimates, the use of different assumptions could produce materially different estimates. In addition, if factors such as those described in "Risk Factors" cause actual events to differ from the assumptions used in applying the accounting policy and calculating financial estimates, there could be a material adverse effect on our results of operations and financial condition and liquidity.

        We believe the following critical accounting policies affect significant estimates used in the preparation of our consolidated financial statements.

        Premiums.    Our revenue is generated primarily by gross premiums written from our underwriting operations. The basis for the amount of gross premiums recognized varies by the type of contract we write.

        For the majority of our specialty lines we receive a flat premium which is identified in the policy and is recorded as unearned premium on the inception date of the contract. This premium will only adjust if the underlying insured values adjust. We actively monitor underlying insured values and record adjustment premiums in the period in which amounts are reasonably determinable. We also write a small amount of business on a line slip basis, under which we assume a fixed percentage share of the premiums and losses on a particular risk or group of risks along with numerous other unrelated insurers. Statement of Financial Accounting Standard No. 60 "Accounting and Reporting By Insurance Enterprises" requires that if the ultimate premium is reasonably estimable, the estimated ultimate premium should be recognized as revenue over the period of the contract. Although a premium estimate is not contractually stated for business written on a line slip basis, we believe that the premium is reasonably estimable because we receive an initial estimate of the expected premium written from the client via the broker. This estimate has been derived by reference to one or more of the following: the historical premium volume experienced by the line slip; historical premium volume of similar line slips; and industry information on the underlying business. We may, if we believe appropriate, adjust the initial estimates provided by the broker to reflect management's best judgments and expectations. This is most likely where the underwriter has no prior experience with the line slip or client. Under such circumstances we will generally recognize as revenue a lower than advised premium written estimate. We actively monitor the development of actual reported premium to the estimates made; where actual reported premium deviates from the estimate, we carry out an analysis to determine the cause and may, if necessary, adjust the estimated premium in the period in which the determination was made. During the year ended December 31, 2002, line slip premiums accounted for 6% of total gross premiums written.

        For our reinsurance business, we write contracts on both an excess of loss basis and a proportional basis. For excess of loss contracts, the amount of premium is usually contractually documented at inception, and no management judgment is necessary. Generally, for most such contracts a deposit premium is contractually specified and is payable during the contract period. After the contract has expired, a premium adjustment is calculated, which is based on the underlying exposure of the ceded

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business. We record the deposit premium at the inception of the contract and record adjustments in the periods in which they are reasonably determinable. For business written under a proportional contract, similar to our line slip business we are able to reasonably estimate the premium written by reference to an initial estimate of expected ceded premium received from our clients. In most cases the treaties are not new and therefore the client can use historical experience to estimate the amount of premium. We may adjust the initial estimate of premium, and any adjustment is usually a factor of the underwriter's prior experience with a client. We actively monitor the development of actual premium data and if an adjustment in the premium estimate is warranted it will be recorded in the period during which the adjustment is determined. During the year ended December 31, 2002, proportional premiums accounted for 8% of total gross premiums written.

        Our premiums are earned over the period during which we are exposed to the insured or reinsured risk. Generally this period equates to the contract period, except for contracts written on a line slip or proportional basis. For line slip and proportional business, the earning period is generally taken to be twice the contract period due to the fact that some of the underlying exposures may attach towards the end of our contracts, and such underlying exposures generally have a one year coverage period.

        Reserve for losses and loss expenses.    For most insurance and reinsurance companies, the most significant judgment made by management is the estimation of the reserve for losses and loss expenses, which we also refer to as loss reserves. Our loss reserves are estimated by management and are reviewed every quarter by our independent actuarial consultants, based on generally accepted actuarial principles. The reserve for unpaid reported losses and loss expenses is established based upon our estimate of the total cost of claims that were reported to us but not yet paid (reported case reserves), the costs of additional case reserves ("ACR") on known events but not yet reported to us, and the anticipated cost of claims incurred but not reported.

        For reported losses, we establish reserves on a "case" basis within the parameters of the coverage provided in the insurance or reinsurance contracts. ACR is often estimated by our claims function ahead of official notifications but in the same manner as reported case reserves. Where there is a possibility of a claim we book an ACR, which is only revised upon final determination that no claim will arise or is adjusted as claims notifications are received. ACR is reflected in our consolidated financial statements as part of IBNR.

        IBNR is estimated using actuarial methods. Our estimate of IBNR is derived using the Bornhuetter-Ferguson method, which is typically used by companies with limited loss experience. This method takes as a starting point an assumed ultimate loss and loss expense ratio and blends in the loss and loss expense ratio implied by the experience to date. For our assumed ultimate loss and loss expense ratio for the global insurance segment we select the initial expected loss and loss expense ratios based on benchmarks provided by independent actuaries, derived from comparable client data as well as market information. These benchmarks are then adjusted for rating increases and changes in terms and conditions that had been observed in the market. For our assumed ultimate loss and loss expense ratio for the global reinsurance segment we use contract by contract initial expected loss and loss expense ratios derived during pricing. For our U.S. insurance and U.S. reinsurance segments we have used a similar reserving methodology. However, given that this is the first quarter of operations for these two segments we have calculated loss reserves by applying initial loss ratios based on industry benchmarks. As the loss history develops for these new segments, we will utilize the Bornhuetter-Ferguson methodology that we use for our global insurance and global reinsurance segments. Under U.S. GAAP, we are not permitted to establish loss reserves with respect to our catastrophe reinsurance until an event which gives rise to a loss occurs. Within our catastrophe line of business on certain contracts that respond to highly visible, major catastrophes we are not holding any IBNR, as we experienced no such catastrophes in 2002.

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        Applying these loss and loss expense ratios to our earned premium derives the estimated ultimate costs of the losses; from here we deduct paid losses and reported case reserves to generate our IBNR. Given this approach to estimating IBNR, we arrive at a point estimate in calculating this figure. We do not currently utilize a methodology to calculate IBNR that produces a range of loss reserves estimates.

        The following table provides a breakdown of loss and loss expense reserves by segment by type of exposure as of December 31, 2002.

        As of December 31, 2002, the reserve for IBNR losses accounted for $155.0 million or 72% of our total loss reserves.

        As of December 31, 2002, a 5% change in the reserve for IBNR losses would equate to a $7.8 million change in loss reserves, which change would represent 2.9% of net income and 0.4% of shareholders' equity.

        The methodology of estimating loss reserves is reviewed each quarter to evaluate whether the assumptions made continue to be appropriate. Any adjustments that result from this review are recorded in the quarter in which they are identified.

        Our reserving practices and the establishment of any particular reserve reflect management's judgment concerning sound financial practice and do not represent any admission of liability with respect to any claims made against us. No assurance can be given that actual claims made and payments related thereto will not be in excess of the amounts reserved. During the loss settlement period, it often becomes necessary to refine and adjust the estimates of liability on a claim either upward or downward. Even after such adjustments, ultimate liability may exceed or be less than the revised estimates.

        In assessing the adequacy of these reserves it must be noted that the actual final costs of settling claims outstanding is uncertain as it depends upon future events. There is necessarily a range of possible outcomes and the eventual outcome will almost certainly differ from the projections currently made. This uncertainty is heightened by the short time in which we have operated, thereby providing limited claims loss emergence patterns specifically for the Company. This has necessitated the use of benchmarks in deriving IBNR which, despite management's and the independent actuary's care in selecting them, have the risk of differing from actual experience.

        Stock-based Compensation Plans.    We currently account for stock compensation in accordance with Accounting Principles Board Opinion No. 25 ("APB 25") "Accounting for Stock Issued to Employees." Compensation expense for stock options and restricted stock awards granted to employees is recorded over the vesting period using the intrinsic value method. Generally, we will issue options and restricted

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stock awards to an employee with a strike price equal to the estimated fair value on the date of grant. The fair values of the strike prices for options granted and the restricted stock issued historically are consistent with independent valuations obtained by the Company. Following the release of FAS No. 148, "Accounting for Stock-based Compensation—Transition and Disclosure," we are reevaluating our accounting policy for stock-based compensation.

Results of Operations

        The following is a discussion and analysis of our consolidated results of operations for the quarters ended March 31, 2003 and March 31, 2002, for the year ended December 31, 2002 and for the period from November 8, 2001 (inception) to December 31, 2001.

Quarters ended March 31, 2003 and 2002

        We commenced operations in Bermuda in November 2001. During the year ended December 31, 2002, we expanded operations, entered new lines of business and hired additional employees. Consequently any comparison to the prior quarter will be affected by these factors.

        Premiums.    In the quarter ended March 31, 2003, gross premiums written were $608.6 million compared with $265.7 million for the quarter ended March 31, 2002. The increase of $342.9 million was due primarily to an increase in gross premiums written of $102.4 million from our global insurance segment and $87.1 million from our global reinsurance segment. In addition, our U.S. insurance and U.S. reinsurance segments began underwriting business at the start of our 2003 underwriting year and generated gross premiums written of $91.9 million and $61.5 million, respectively.

        Reinsurance premiums ceded for the quarter ended March 31, 2003 were $68.4 million compared with $5.1 million for the quarter ended March 31, 2002, an increase of $63.3 million. We purchase reinsurance primarily to reduce our exposure to risk of loss on certain lines of business written primarily within in our global and U.S. insurance segments. The increase in reinsurance premiums ceded was primarily generated by reinsurance premiums ceded by our U.S. insurance segment.

        Net premiums earned for the quarter ended March 31, 2003 were $302.4 million compared with $55.6 million for the quarter ended March 31, 2002, an increase of $246.8 million. This increase was caused by the following factors. Firstly, as the quarter ended March 31, 2002 was our first full underwriting quarter, premiums were earned only on contracts written following the commencement of operations in November of 2001 through the end of the quarter. For the quarter ended March 31, 2003, we earned premium on contracts written in both 2002 and 2003. Secondly, we increased the volume of premiums written during the quarter ended March 31, 2003 over the corresponding period in 2002.

        Net Investment Income and Net Realized Gains.    Net investment income, including realized gains, for the quarter ended March 31, 2003 was $22.6 million compared with $20.6 million for the quarter ended March 31, 2002.

        Net Investment Income. Net investment income for the quarter ended March 31, 2003 was $11.4 million compared with $19.8 million for the quarter ended March 31, 2002, a decrease of $8.4 million. This was primarily due to lower interest rates and an increase in amortization expense on our mortgage-backed securities portfolio. Net investment income consisted primarily of interest on bonds that was partially offset by investment management, accounting and custody fees of $1.2 million for the quarter ended March 31, 2003 compared with $0.7 million for the quarter ended March 31, 2002.

        The annualized effective yield (calculated by dividing the investment income generated from invested assets by the average balance of the assets managed by our portfolio managers) for the quarter ended March 31, 2003 was 2.0% compared with 5.0% for the quarter ended March 31, 2002.

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        Net Realized Gains. Net realized gains for the quarter ended March 31, 2003 were $11.2 million compared with $0.8 million for the quarter ended March 31, 2002, an increase of $10.4 million. We invest our portfolios to produce a total return; therefore, there can be significant changes in the levels of our net realized gains (losses) from quarter to quarter.

        The total return for our investment portfolio (calculated using beginning and ending market portfolio values, adjusted for external cash flows) for the quarter ended March 31, 2003 was 1.2% compared with 0.2% for the quarter ended March 31, 2002.

        Other Insurance Related Income.    Other insurance related income for the quarter ended March 31, 2003 was $1.1 million. This income was related to the movement in the fair value of our insurance contracts which meet the definition of a derivative under Statement of Financial Accounting Standard No. 133 "Accounting for Derivative Instruments and Hedging Activities." We did not record any other insurance related income in the quarter ended March 31, 2002.

        Net Losses and Loss Expenses.    Net losses and loss expenses for the quarter ended March 31, 2003 were $146.3 million compared to $29.4 million for the quarter ended March 31, 2002, an increase of $116.9 million. This increase was a direct result of the increase in the volume of net premiums earned. The net loss and loss expense ratio for the quarter ended March 31, 2003 was 48.4% compared with 52.8% for the quarter ended March 31, 2002.

        Acquisition Costs.    Acquisition costs for the quarter ended March 31, 2003 were $53.0 million compared with $8.9 million for the quarter ended March 31, 2002, an increase of $44.1 million. The increase was a direct result of the increase in the volume of net premiums earned. The acquisition cost ratio for the quarter ended March 31, 2003 was 17.5% compared to 16.0% for the quarter ended March 31, 2002. The acquisition cost ratio reflects the costs directly related to the acquisition of business. Acquisition costs included brokerage fees and commissions, taxes and profit commissions, all of which vary based on the line of business, the method of acquisition and the location of the underlying risk. Therefore, acquisition costs will vary with the mix and amount of business written. In addition, where we receive a ceding commission on our ceded contracts we will record this as an offset to acquisition costs. Included within the acquisition cost ratio was 2.9% for the quarter ended March 31, 2003 and 3.1% for the quarter ended March 31, 2002 relating to the allocation of personnel expenses of our underwriters.

        General and Administrative Expenses.    General and administrative expenses for the quarter ended March 31, 2003 were $21.6 million compared with $6.2 million for the quarter ended March 31, 2002, an increase of $15.4 million. This increase was primarily driven by the addition of operations and employees throughout 2002. The general and administrative expense ratio for the quarter ended March 31, 2003 was 7.2% compared with 11.1% for the quarter ended March 31, 2002. The reduction in the ratio was caused by an increase in the volume of net premiums earned.

        Foreign Exchange Gains.    Our functional currency is U.S. dollars. However, some of our business is written in other currencies. The following table sets forth the composition of our foreign exchange gains (losses).

        Our realized gains have principally been made on receipt of premiums denominated in Euros. The Euro appreciated by 4.0% against the U.S. dollar from January 1, 2003 to March 31, 2003.

        Income Tax Recovery.    We had an insignificant income tax recovery for the quarter ended March 31, 2003, related to our U.S. subsidiaries. During the quarter ended March 31, 2002, we had no tax recovery or charge as we operated solely out of Bermuda.

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        Net Income.    Net income for the quarter ended March 31, 2003 was $107.1 million compared to $31.7 million for the quarter ended March 31, 2002, an increase of $75.4 million. Net income for the quarter ended March 31, 2003 consisted of net underwriting income of $82.6 million, net investment income and net realized gains of $22.6 million, foreign exchange gains of $1.9 million and an overall tax benefit of $0.1 million. Net income for the quarter ended March 31, 2002 consisted of net underwriting income of $11.1 million and net investment income and net realized gains of $20.6 million.

        Comprehensive Income.    Comprehensive income for the quarter ended March 31, 2003 was $112.5 million compared to $14.1 million for the quarter ended March 31, 2002, an increase of $98.4 million. Comprehensive income represents net income adjusted for changes in the unrealized position in our investment portfolio. For the quarter ended March 31, 2003, we experienced a net increase in the unrealized position on our investment portfolio of $5.4 million compared with a decrease of $17.6 million during the quarter ended March 31, 2002.

Year ended December 31, 2002

        Premiums.    In the year ended December 31, 2002, gross premiums written were $1.1 billion. Reinsurance premiums ceded for the year ended December 31, 2002 were $89.7 million. We purchased this reinsurance primarily to reduce our exposure to risk of loss on certain lines of business written in our global insurance segment. Net premiums earned for the year ended December 31, 2002 were $536.9 million.

        Net Investment Income and Net Realized Gains.    Net investment income, including realized gains, for the year ended December 31, 2002 was $97.4 million.

        Net Investment Income. Net investment income for the year ended December 31, 2002 was $71.3 million, which consisted primarily of interest on bonds that was partially offset by investment management, accounting and custody fees of $3.7 million.

        The annualized effective yield (calculated by dividing the investment income generated from invested assets by the average balance of the assets managed by our portfolio managers) for the year ended December 31, 2002 was 4.0%.

        Net Realized Gains. Net realized gains for the year ended December 31, 2002 were $26.1 million, which included net realized investment gains of $22.5 million and net realized and unrealized gains/(losses) on investment derivative instruments of $3.6 million. Net realized and unrealized gains/(losses) on investment derivative instruments resulted from our use of derivative instruments to manage duration and currency exposure. During the year, we discontinued the use of investment derivative instruments other than foreign currency forward contracts. A discussion of those instruments is located below under "—Quantitative and Qualitative Disclosure about Market Risk."

        The total return for our investment portfolio (calculated using beginning and ending market portfolio values, adjusted for external cash flows) for the year ended December 31, 2002 was 7.5%.

        Other Insurance Related Income (Loss).    Other insurance related income (loss) for the year ended December 31, 2002 was $(0.6) million. This related to the movement in the fair value of our insurance contracts which meet the definition of a derivative under Statement of Financial Accounting Standard No. 133 "Accounting for Derivative Instruments and Hedging Activities."

        Net Losses and Loss Expenses.    Net losses and loss expenses for the year ended December 31, 2002 were $229.3 million. The net loss and loss expense ratio for the year ended December 31, 2002 was 42.7%.

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        Acquisition Costs.    Acquisition costs for the year ended December 31, 2002 were $103.7 million. The acquisition cost ratio for the year ended December 31, 2002 was 19.3%. The acquisition cost ratio reflects the costs directly related to the acquisition of business. Acquisition costs included: brokerage fees and commissions, taxes and profit commissions, all of which vary based on the line of business, the method of acquisition and the location of the underlying risk. Hence, acquisition costs will vary with the mix and amount of business written. We also allocated the personnel expenses of our underwriters to acquisition costs including a non-cash charge of $1.7 million relating to stock-based compensation.

        General and Administrative Expenses.    General and administrative expenses for the year ended December 31, 2002 were $46.5 million, which were driven primarily by personnel expenses, not allocated to acquisition costs, including a non-cash charge of $4.6 million relating to stock-based compensation. The general and administrative expense ratio for the year ended December 31, 2002 was 8.7%.

        It is not expected that the general and administrative expenses incurred in 2002 will be comparable with those expected to be incurred in 2003. We expect general and administrative costs to increase in 2003. For the year ended December 31, 2002, we expensed $4.4 million in costs associated with our establishment, licensing and organization. Although we do not believe that these costs are of a recurring nature, this reduction in costs will be more than offset by additional employee and administrative costs. We added employees and infrastructure throughout the year ended December 31, 2002, including the addition of a significant number of employees in November 2002, and have added employees and infrastructure in the first half of 2003.

        Foreign Exchange Gains.    Our functional currency is U.S. dollars. However, some of our business is written in other currencies. The following sets forth the composition of our foreign exchange gains.

        The realized gains have principally been made on receipt of premiums denominated in Sterling and Euros. Both of these currencies have strengthened against the U.S. dollar, with exchange rates having increased between January 1, 2002 and December 31, 2002, by 10.8% for Sterling and 18.0% for the Euro.

        The majority of the unrealized gains is due to the strengthening of the Sterling and the Euro on cash balances and insurance and reinsurance premium balances receivable denominated in these currencies.

        Income Tax Recovery.    Our income tax recovery of $1.4 million was primarily derived from our U.S. subsidiaries which, due to their limited operations during the year ended December 31, 2002, provided tax loss carry forwards.

        Net Income.    Net income for the year ended December 31, 2002 was $265.1 million, comprised of net underwriting income of $156.7 million, net investment income and net realized gains of $97.4 million, foreign exchange gains of $9.6 million and an overall tax benefit of $1.4 million.

        Comprehensive Income.    Comprehensive income for the year ended December 31, 2002 was $291.1 million, which was comprised of net income of $265.1 million and a net increase in unrealized gain of $25.9 million.

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Period ended December 31, 2001

        We commenced operations as AXIS Specialty on November 20, 2001. During the period ended December 31, 2001, we wrote $26.7 million of gross premiums, which was primarily derived from the aviation and aviation war lines of business within our global insurance segment. Due to the short duration of the period, gross and net premiums earned were $1.9 million. Net investment income was $4.8 million for the period and net realized gains were $0.4 million.

        Net losses and loss expenses were $1.0 million, and acquisition costs were $0.8 million. General and administrative expenses were $2.6 million for the period ended December 31, 2001, which includes start up costs of $1.1 million. Net income for the period ended December 31, 2001 was $2.7 million, and comprehensive income was $2.2 million.

Underwriting Results by Operating Segments

        Our business is comprised of four segments: global insurance (formerly specialty lines), global reinsurance (formerly treaty reinsurance), U.S. insurance and U.S. reinsurance.

        The following tables summarize the underwriting results and ratios for our business segments as of and for the quarters ended March 31, 2003 and March 31, 2002.

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        The following table summarizes the underwriting results and ratios for our business segments as of and for the year ended December 31, 2002.