Good day ladies and gentlemen and welcome to the Fourth Quarter 2007 AXIS Capital Holdings Ltd. Earnings Conference Call. My name is Lacey and I'll be your coordinator for today. At this time all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of this conference. [Operator Instructions]. I would now like to turn the call over to our host for today's call, Ms. Linda Ventresca, Investor Relations, Please proceed.

Thank you Lacey. Good morning ladies and gentlemen. I am happy to welcome you to our conference call to discuss the financial results for AXIS Capital for the quarter and year ended December 31, 2007. Our fourth quarter and full year earnings press release and financial supplement were issued yesterday evening after the market closed. If you would like copies, please visit the Investor Information section of our website www.axiscapital.com. We set aside an hour for today's call which is also available as an audio webcast through the Investor Information section of our website till Friday, February 29, 2008. An audio replay will also be available till Friday, February 15, 2008. The toll free dial-in number for the replay is 888-286-8010, the international number is 617-801-6888. The passcode for both replay dial-in numbers is 83338412. With me on today's call are Michael Butt our Chairman; John Charman our CEO and President; and David Greenfield our CFO. Before I turn the call over to John, I will remind everyone that statements made during this call, including the Q&A session which are not historical facts maybe forward-looking statements within the meaning of the U.S. Federal Securities Laws. Forward-looking statements contained in this presentation include but are not necessarily limited to, information regarding our estimate of losses related to catastrophes and other loss events, future growth prospects and financial results, evaluation of losses and loss reserves, investment strategies, investment portfolio and market performance, impact to the marketplace with respect to changes in pricing models and our expectations regarding pricing and other market conditions. These statements involve risks, uncertainties and assumptions which could cause actual results to differ materially from our expectations. For a discussion of these matters, please refer to the Risk Factor section in our most recent Form 10-K on file with the Securities and Exchange Commission. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. In addition this presentation contains information regarding operating income which is a non-GAAP financial measure within the meaning of the U.S. Federal Securities Laws. For a reconciliation of this item to the most directly comparable GAAP financial measure, please refer to our press release and Form 8-K issued last night which can be found on our website. With that, I would now like to turn the call over to John.

Thank you Linda and good morning to you all. We are extremely pleased to report record results for the quarter and the year end... year ended December 31, 2007. I'm proud that our established high-quality global franchise in both the insurance and reinsurance markets has delivered over $1 billion in annual earnings in the 6th year since our inception. We believe this achievement is unparalleled in our sector. For 2007, our overall gross premiums written was stable, relative to the prior year. However, underlining these overall top line results were continuing, important underwriting portfolio management changes. These portfolio changes and our acknowledged company expertise in managing them real-time become even more critical during soft market cycles. Our return on average common shareholders' equity was 24.6%, diluted book value per common share increased 23% in the last year to $28.79. At the same time AXIS returned over $400 million of capital to shareholders through share repurchases and dividends. I believe these quality-based results are a significant achievement during a year characterized by being highly competitive and increasingly rational in our global insurance business. With that, I would like to turn the call over to David to discuss our financial results in more detail.

Thank you John and good morning every one. As John mentioned, we are extremely pleased with the quality of our results for the fourth quarter as well as for the year. 2007 marks a record year for AXIS. Our fourth quarter results produced record net income against the comparable prior year period. The 9th quarter in a row, of such performance. Our full year net income which was more than $1 billion is also the highest in our history. On almost every measure, 2007 produced exceptionally positive results for us. This consistent and record-breaking performance throughout 2007, demonstrates the powerful earnings potential of the global AXIS franchise. For the quarter, net income was $306 million, a 9% increase over the fourth quarter of 2006. Earnings per diluted share for the quarter of $1.89, compared to $1.69 per diluted share for the fourth quarter of 2006. After-tax operating income which excludes the impact of realized gains and losses on investments was $296 million, a 4% increase from the prior year quarter. Operating earnings per diluted share increased to $1.83 from a $1.71 in the prior year quarter. For the full of 2007, net income reached nearly $1.1 billion, a 14% increase over 2006. Earnings per diluted share of $6.41 compared... for 2007, compared to $5.63 per diluted share for the prior year. After-tax operating income was also nearly $1.1 billion, an 11% increase from 2006. Operating earnings per diluted share in 2007 was $6.38, compared to $5.78 in 2006. These results translate to an impressive annualize return on average common equity for the quarter of 26.9%, and 24.6% for the full year. Our year end diluted book value per share of $28.79, increased 23% over the last 12 months. Given the conditions in the financial markets affecting the financial services sector,…

Thank you, David. And I would now like to spend some time discussing market conditions. I will start with the reinsurance market, 2008 treaty reinsurance renewals are progressing as expected and we are pleased with the quality, diversity and the balance of the portfolio that we reassembled at the 1st of January. Typically, approximately one half of our treaty reinsurance premium is expected to renew during our first quarter. We have not yet finalized all the treaty reinsurance business, we expect to buy in this quarter. However, we can provide some preliminary indications based on what we have quoted and bound since the 1st of January. It is currently our expectation that the first quarter treaty reinsurance renewals will represent a modest decline in premium, as measured against premium expiring during the quarter. Generally, the reinsurance market could be characterized as remaining stable with small pockets of irrational behavior. This behavior tends to be demonstrated by relatively new entrants to the marketplace, they appear to be desperate to make their premium budgets regardless of margin. Our reinsurance portfolio continues to be impacted by cedants retaining more business. Importantly, we demonstrated strong leadership through our non-renewals and declinatures of new business, because of either pricing concerns or underlying portfolio concerns. We have worked hard at maintaining a balanced high quality portfolio. I will begin my more specific commentary on the reinsurance market with the discussion of various areas of the global property reinsurance market, and then move on to the other areas of reinsurance. As expected modest catastrophe claims to the reinsurance market led to decreases in the margins for property reinsurance in most if not all geographic regions. However, overall returns were above acceptable levels with major U.S. perils at the high end. Generally speaking, capacity purchases net of any…

[Operator Instructions]. And our first question will come from the line of Susan Spivak with Wachovia. Please proceed.

Good morning, John. I was hoping you could ...

Good morning Susan.

Give us an idea of what you think the Berkshire Hathaway Swiss Re deal will mean for the reinsurance market? Does that take available premium out of the market? And then second if you could just follow-up on how much higher are your loss picks going to be in 2008 for that financial institution business? That would be great.

Well I think, I can't really comment on the details of the Berkshire Hathaway Swiss Re deal... Swiss Re deal, but it will be interesting to see whether both end up on the winning side or somebody has overstated the quality and the earnings against the result from that, but I don't see it to be detrimental to the reinsurance business. It's helpful to Swiss Re at this moment in time to free out capital and it's helpful to Berkshire to access that high quality portfolio, but I don't see it detrimental to the reinsurance business globally at all. With regards to our loss picks, David do you want to...?

Yes, Susan on a D&O tech coverage, a lot of that is claims made business. So we don't anticipate a large increase in '08 loss picks for things that are occurring in '07, but in effect we will monitor our loss picks throughout the year and continue the reserve conservatively as I've said.

And Susan that... as I've said in my comments that we have a very diversified professional lines portfolio which is weighted more towards the SME areas and so that has actually performed pretty well.

Okay. John it just seems that every call we are on there is no one with any major exposure to the sub-prime D&O crisis and so in your opinion where do you think all the exposure lies?

Well I think Susan you've been around about quite as well as I have and you will have to understand there are some businesses that are little bit better at understanding their true exposures and others, let alone managing them and I leave that to the audience to decide and differentiate between the companies that are involved in these businesses.

Well, thank you and also thanks for the great detail on the market, it's very helpful.

Thank you Susan.

Thank you.

And our next question will come from the line of Vinay Misquith with Credit Suisse. Please proceed.

Hi good morning.

Good morning Vinay.

You've clearly made a decision to pull back on some of your lines of business, which I think is a good one. Could you provide us with some idea as to what your return holders are, when you are writing new and existing business and how you look at the trade-off between writing existing business with slightly lower margins, those that are still profitable versus buying back your stock?

Yes, I didn't catch the very early part of your first question but Vinay, I think, we are the most diversified of the class of 01 in Bermuda and we deliberately setup from the onset of the foundation of our company to create that diversification throughout, by product and by geographic location globally. That stands us in extremely good state during soft market plays and because of the way that we have constructed our company and our people and the way that we've made sure that we are an integrated business, we already able to be a lot more efficient and focused in our underwriting activity than a lot of the more cumbersome businesses in our industry. And I have said time and time again, there is not another senior management team in the industry that is as deeply embedded in the day-to-day underwriting activity of the company and portfolio managers throughout the company on a daily basis. And we are not jumping into new lines of business, what we are doing is using our expertise, but may be moving around, moving away from the big ticket premium numbers where there seems to be the senseless competition. And having to dig lower and deeper within those business activities, to find places where we can make our earnings that takes a lot of energy, it takes a lot of experience. It takes a lot of extra blood but that's what I think we've achieve during 2007, because if you remember I started saying from the early part of the second quarter that the competition was increasing a pace and it was becoming irrational in the insurance markets and that's what we have witnessed. But I think if there is one thing we are good at, we are acknowledged as being able to ride these soft market cycles, protect our earnings, protect our portfolios. We are equipped if you would have said this to me six years ago, about the sort of soft market cycle, we would have collapsed underwriting activity by 20% or 30%. I think because of the diversity and the technology we have and the experience we have and the global position we occupy. Our soft market play is pretty well flat to down 10%, as suppose to what if would have been six years ago. Now, it means to say that the difference between where we would have been six years ago on our income and where we are today, it may be that, that balance is not quite as profitable as the core business, but its still, we expect it to be extremely profitable. And that's a unique feature that I think of the changes occurred over the last 5 or 6 years at Axis.

Sure that's fair, are you still finding some small niche growth opportunities like the Media/Pro acquisition that you can, use to grow your business in the future.

Absolutely and we are investing heavily in the technology that allows us to take maximum advantage of those opportunities. But as I said, we are not getting into businesses that we don't already have the experience and capability of. What we are doing is looking at a broader activity within them.

Sure, one last clarification, I saw that you had growth in the professional lines and casualty insurance would that have been from the Media/Pro acquisition?

Yes.

Thank you.

As I said we have been pretty defense... we have been defensive on all the other stuff through 2007.

Sure, that's great, thank you.

Thank you, Vinay.

Thank you.

[Operator Instructions]. And our next question will come from the line of Matthew Heimermann with J. P. Morgan. Please proceed.

Hi, good morning everyone.

Good morning Matt.

Thanks. Couple of questions, first, were there... was there any incentive comp impact on the G&A in the quarter and if so how much?

There was some impact on it Matt, we normally don't disclose the actual amount.

Just in thinking about it year-over-year was it... was it comparable with the year ago quarter?

Yes it was.

Okay. The other question I had was it look liked your pay to incurred ratios arose both on a gross and net basis in 4Q, and I just was curious as to what on the paid side was driving that?

It just... we are just continuing to settle the KRW claims, I think, I know rough over 80% now of settled on the KRW claims and we did settle some in the fourth quarter that droves that number up a bit.

Okay, and that was on the insurance side, correct?

Yes.

Okay. And then I guess just with respect John, on the reinsurance purchasing, can you talk a little bit about kind of... it clearly looks like short-term lines where you are buying most of this back, but are you basically just tying to at this point limit the volatility of the outcome, is that the right way to think about what you are doing?

Well, I think we are buying not only on the short-tail side but that's where the bulk of the spend is, because that's where the most of the activity is. But we are continuing to buy using facultative markets on top of our quota share arrangements on the cash to decide as well. But as I said in the last quarter, I can never understand companies that retain a lot more business during sub-market cycles because historically, I don't think that's been a very good idea. What we do is to use the reinsurance market more effectively and more efficiently to defend our margins and to make sure all that, we have a balance... as balance of portfolio going into 2008, as we can. It is part of that portfolio management.

I guess, just is there... just in terms of thinking about on the property side at least your Cat exposure whether we talked in PML or maybe standard deviation of expected loss, is the net effect of these purchases that year-on-year reduction be increasing it's relatively stable, or you buying enough that actually on the margin the risk in your portfolio is actually falling.

I think that... and our reinsurance, main reinsurance program protecting our property portfolio, attached in May of last year and I think that whilst we were combating the competitive nature of property insurance business, we also maintained margin, by actually demanding that re-insurers recognize the quality of our underlying portfolio and the strength of our underwriting procedures and gave us sufficient recognition that we could underwrite through the rest of '07 and into 2008, protecting our margins

Okay, that's fair. And then I guess just one last numbers question, the 16-month reinsurance contract that incepted a year ago was that a one-off deal or is that something that potentially is going to come up for renewal either in the first quarter or second quarter, I guess depending on when it is accepted?

That's a renewable contract, Matt.

Okay and what's the dollar number in what quarter will that renew, or is it up for renewal?

It was reasonable, and it will come up shortly.

Okay, I appreciate it. Thank you.

Matt take care.

Thank you Matt.

And at this time, we have a question from the line of Alain Karaoglan from Bank of America. Please proceed.

Good morning.

Good morning Alain.

Good morning.

A couple of questions, in terms of the reserve releases and I may have missed it but could you... I know you mentioned short-tail lines of business, could you tell us which year's they are related to and you mentioned something about the comparability of this third and fourth quarter and full year to last year. Could you clarify what you meant by that? And I assume on causality lines, you are still... have the policy of not releasing reserves at least five years after you've written the business?

Yes, well let me answer that second question first most emphatically, because people tend to forget when they are comparing us with our competitors or our peer group, that we have only released short-tail lines since our inception, but David do you want to...?

Yes, on your earlier questions Alain, the releases come from a number of different years on the insurance side, they come from earlier years of 2003, 2004 period and on the reinsurance side they came from more recent years. But the areas that we are releasing reserves are where we... we just haven't seen the claim development that we anticipated, particularly in lines like property, aviation and marine.

And Alain you were right, it came back to the casualty reserving but we said that we would not review our casualty reserves until they were five years after we have underwritten the business because it was a new line of business for us and so that's a correct statement.

Okay.

And the other comment on your question was related to the current year at... current accident year, what I was explaining is that, if you recall from the third quarter, we indicated that we had given more weight to the current accident year experience in the third quarter than we had on in previous years. So what's not comparable is that third and fourth quarters to the prior year on a stand-alone basis but when you look at the full year, essentially they are comparable.

Okay. And the other question relates to the G&A expenses which as a percentage of premiums have spiked up significantly this quarter, how should we think about it on a percentage basis? Will the full year amount be more relevant or even the full year amount because of Media/Pro is a little bit overstated. In this quarter for example in your insurance business your G&A was 19.7% of premiums.

Right if you... well as I said earlier when you look at the quarter on a stand-alone basis there are some additional compensation costs in this quarter that don't come in earlier quarters during the year. We don't necessarily look it on a percentage basis, we do have increased costs as I have mentioned in my remarks for staff that has been added, that comes from Media/Pro as well as other staff we have added over the course of the year. So the G&A line will go up because of those things and will carry into 2008. If you are looking at it on a dollars basis, I would just have look more as a third quarter figure in terms of the run rate that I think we will see in '08 for our G&A costs.

Alain you know that we acquired a large number of people through the acquisition of Media/Pro but also as a company we have invested deliberately and heavily in senior people over the last 12 to 18 months as well as increased technology spend and it's a substantial investment which we believe is a sound investment which we will see returns off in the future.

Great. Thank you very much and congratulations on a great year.

I appreciate it.

[Operator Instructions]. Our next question will come from the line Josh Smith with TIAA-CREF. Please proceed.

Morning, thanks for taking the call.

Good morning Josh.

Good morning. I'm not sure if you guys had a chance to see Travelers' presentation, which I thought was very effective with respect to the professional liability, exposures, they gave us and notices of potential claims. They referenced a reinsurance cover that would limit the aggregates for a given year. Would you consider exposures like that in the future?

Well I think if you don't mind us saying so, Josh, they have a completely different portfolio than ours. And I think you have to be mindful of that. I'm not necessary sure it's relevant to us and I'm not ducking the issue. I'm just telling you about the relevance of it to our financials.

Right.

I don't think it is relevant to us. If you take out U.S. financial institutions book for instance, our average gross underwriting limit was $9 million and our average attachment point was over $75 million.

And are there any aggregate reinsurance covers on that book?

Sorry.

Are there any...?

No.

Okay. Well that ...

I think you are dealing with completely different portfolios.

Those two numbers.

And different exposures.

Those two numbers you gave were very helpful, thank you.

That's okay.

This concludes the Q&A session of today's call. I will now turn the call back over to John Charman for closing remarks.

Well that's very kind and once again thank you, ladies and gentlemen. As I said that this is a landmark in the history of the company and that we have unable to produce during some very challenging market conditions, over $1 billion worth of net income. And we look forward to continuing to outperform the market in 2008 and thank you for your attention.

Thank you for your participation in today's conference. This concludes your presentation. You may now disconnect. Good day.