Vinay Misquith – Evercore Partners Gregory W. Locraft – Morgan Stanley & Co. Incorporated Graham Y. Tanaka – Tanaka Capital Ian Gutterman – Adage Capital

Welcome to the third quarter of 2011 Axis Capital earnings conference call and webcast. All participants will be in listen only mode. (Operator Instructions). Please note, this event is being recorded. I would now like to turn the conference over to Linda Ventresca, Executive Vice President.

I am happy to welcome you to our conference call to discuss the financial results for Axis Capital for the third quarter ended September 30, 2011. Our earnings press release and financial supplements 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 relations section of our website. A replay of the teleconference will be available by dialing 877-344-7529 in the US and the international number is 412-317-0088. The conference code for both replay dial in numbers is 10004922. With me on today’s call are John Charman, our CEO and President and Albert Benchimol, our CFO. Before I turn the call over to John, I will remind everyone that statements made during this call, including the question and answer session, which are not historical facts may be forward-looking statements within the meanings of the US 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, policies and other loss events, general economic, capital and credit market conditions, future growth prospects, financial results, and capital management initiatives, the valuations 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 10K on file with the Securities & Exchange Commission. We undertake no obligation to update or revise publically 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 US federal securities laws. For a reconciliation of this item to the most directly comparable GAAP financial measure, please refer to our press release which can be found on our website. With that, I’d like to turn the call over to John.

I will start by providing a brief overview of our financial results for the quarter and then leave it to Albert to provide more detail. Following that, I will discuss our underwriting operations and our view of the market outlook, and then open the line for questions. The market continues to experience cycle change. Many foolishly expect instant gratification across the board. That is not what cycle change brings. I said three quarters ago that absent a major market changing event, the insurance market was on the cusp of cycle change characterized by a day-by-day battle, geography-by-geography, product line by product line, and account-by-account. This battle is being fought by underwriters to stem the overwhelming broad rate reductions over the last five years and move towards much needed rate increases. Gradually and deliberately the shorter term specialty lines are responding. There is still significant ground to be covered in many professional and casualty lines. Investment yields being at all time lows are having increased pressure for positive pricing change. It is not a matter of if for these other lines, more a matter of when. At Axis we are patient but demanding. Our underwriters will not participate in what we consider to be underpriced product lines or individual accounts. Our underwriters are however, responding appropriately in those lines where we see opportunity as well as driving growth in newer lines as well as new geographies. On balance, this means gross premiums were up 11% for the quarter and net premiums were up 8% for the quarter. Our third quarter underwriting results were very good in light of catastrophe activity which we would consider higher than normal for the quarter. Our total net catastrophe losses, net of reinstatements in the quarter were $91 million. In addition to these catastrophe losses, our…

As John noted, we reported a reasonably good quarter given the high frequency and severity of property and CAT losses as well as the difficult financial market conditions. Of note, are the good growth in promising lines and markets including A&H, Canada, Australia, Europe, and renewable energy, consolidated combined ratio of 91.5%, quarterly cash flow from operations of $399 million, quarterly operating income ROE of 7.8% and quarterly net income ROE of 17.5%. To put this quarter in context, both this year’s third quarter and last year’s had similar impacts from named large catastrophes. In this year’s quarter net catastrophe losses after related premium adjustments and taxes were $84 million or $0.66 per share. In the 2010 quarter, these aggregated $82 million or $0.61 per share. In both periods CAT losses added 10.8 points to the loss ratio. Likewise, prior year reserve releases subtracted about 9.5 points from the loss ratio, yet our quarterly operating income was down $94 million from $189 million to $95 million. That difference can be attributed to the higher additional property losses that John referred to in his introductory remarks, as well as lower investment income primarily due to the lower valuations of our alternative asset portfolio where the changes in market value is presented in operating investment income. We will discuss these in greater detail on this call, but essentially all other aspects of our operations are performing as well as could be expected under current market conditions. Let’s start with the income statement. Consolidated third quarter gross written premiums were up 11% to $835 million, while net premiums written were up 8% in the quarter. The lower growth rate reflects primarily a shift in business mix towards lines with higher session rates. Consolidated net premiums earned grew 11% continuing to benefit from the…

I’ll start by discussing market conditions faced by our insurance segment, then followed by our reinsurance segment. In our insurance segment, most lines of business continued to trend directionally upwards either sharing positive rate movements in absolute terms, or less negative movements than previously. This is a very important statement given that the market is in cycle change mode. Rate change for the segment overall was flat, indicative of the bottoming of the market we think we’re seeing now with improvement in the various lines pacing differently. Both our US and international divisions experienced very encouraging overall rate improvement in the quarter. Rates in our US division which is heavily weighted towards US property, was up 6% overall ahead of the 12 month rolling average of -1%. In our international division, which is essentially comprised of our specialty lines, overall rate change was 3% ahead of the rolling 12 month average of 2%. Across Axis Insurance, property and energy classes continued to show high single digit rate increases. Specialty classes such as terrorism and aviation which continued to be written by the market at adequate pricing levels and are still subject to fierce competition and decreasing rates, do not feature meaningfully in our portfolio as our participations have already been substantially reduced over the last few years because of margin erosion. In professional lines, which is suffering from heavy competition, rates on our portfolio continues to be down high single digits overall. However, the gap between new and renewal pricing seems to be narrowing and terms and conditions have been holding steady for some time. We are cautiously optimistic that we may be in the early stages of a transition it the professional lines market as well. The last cycle change in this line was at the beginning of the…

(Operator Instructions) Your first question comes from Vinay Misquith – Evercore Partners. Vinay Misquith – Evercore Partners: John, on the cycle turn, just curious there has been a lot of discussion, where do you think we are right now versus the last hard market? Are we in ’99 and 2000? And, what catalyst do you think will get us up to stronger pricing versus the lower single digit pricing right now?

I think the characteristics of the market are somewhat different from 2001 which was the last hard market, because you have to go back to there were three main issues that caused the market to change then. The first was the fact of the reemergence of latent liability issues especially from asbestos rearing its ugly head again and catching everybody out. And then secondly, there was the most appalling losses being produced from the excessive competition in the marketplace between 1996 and 2001 that emerged in 2000 and was emerging again in 2001. Then on top of that, you had the unexpected and unmodeled World Trade Center tragedy loss which at the time was being talked about between $50 and $80 billion. And I said at the time, it wasn’t the straw that broke the camel’s back it was a haystack. And so I think the circumstances are very different. Even though the market has assumed somewhere between $75 and $80 billion large either CAT losses or large individual losses this year, the market is still relatively sluggish in understanding the need to reprice its CAT products. I’ve been very surprised as well, that the non-CAT products have still been under such fierce competition. But as I’ve said, it’s only in the last few months that people are now beginning – balance sheets are now beginning to show the strain of some of the ridiculous competition we’ve seen throughout some of the lines of business over the last four or five years. I think, my instinct, everything my experience and my instinct tells me that 2012 will be a fundamentally different marketplace from what it is today but it’s not going to be excess. It is going to be a battle, and as I said it is a risk-by-risk and product-by-product and geography-by-geography, but it’s there and I can assure you once that momentum changes and then the underwriting community have the confidence to charge rate increases as opposed to feeling that their obliged to succeed to rate decreases, once that confidence is within the marketplace, rating moves quite quickly. So I’m actually cautiously optimistic for next year. Vinay Misquith – Evercore Partners: Also, this time around the capital position of the industry seems to be better than during the last cycle. Do you think even if pricing increases that reinsurers will get more business or do you think that the primary insurers, because they’re adequately capitalized will keep the same amount of business net?

Well, that assumes that the industry is properly reserved for casualty business on longer term lines, I suppose when you talk about excess capital. I don’t see evidence of excess capital within the marketplace. I think people are being very prudent and they’re beginning to think about being much more careful about the way they deploy their capital. And the risk reward characteristics of the business they’re underwriting has to increase pretty dramatically over the next two to three years to be able to satisfy the demands of their capital base. Vinay Misquith – Evercore Partners: Just a follow up, this is for Albert actually, how much of the increase in the reinsurance loss ratio ex CATs was due to the regional programs you mentioned?

In the quarter it was approximately almost 10 points. It was 10 points in terms of the aggregate [treaties]. Vinay Misquith – Evercore Partners: So the 10 points was just on the reinsurance segment, correct?

The aggregate [treaties] were all paid out of the reinsurance segment.

Your next question comes from Gregory W. Locraft – Morgan Stanley & Co. Incorporated. Gregory W. Locraft – Morgan Stanley & Co. Incorporated: I wanted to just follow up on the buy backs. Obviously, you guys were very clear that they’re attractive and you have an increased appetite to do so at the current valuation. My other understanding, it seems like from the commentaries, should we be using operating earnings for kind of the governor for how much you might do this quarter and next? And can you maybe directly address whether you would start in the fourth quarter versus the first?

I think the second part of your question is now that we’ve announced it we feel that we can do that starting today if we chose to. The second part is one where, as John has said, we really want to balance on a quarter-by-quarter basis where the opportunities are. So if we feel we have opportunities to write business in the right markets we’ll certainly buy less stock and if we have less opportunities we’ll buy more. I am uncomfortable giving you any guidance as to how much we will purchase in any quarter. It really will depend on the conditions as we see them on the ground. Gregory W. Locraft – Morgan Stanley & Co. Incorporated: Turning to the disclosure regarding PMLs and RMS 11 again, there’s been a dramatic improvement I think, as this year has progressed and so I just wanted to once again understand how should we be thinking about your peak zone limited relative to capital in terms of as a capacity constraint on the business because that’s been obviously a big perception issue in the marketplace in 2011?

I would start with two statements, the first is that our appetite in terms of an extreme event in terms of exposing 25% of our capital to a one in 250 event remains. I think what you’ve heard from us pretty consistently since the beginning of the year is that that appetite is not available at any price. So we would be willing to use the top of our appetite if we were very well paid for it. If we are not well paid for it there are a number of accounts that if there aren’t relationship or longer term profitability issues to consider, we may determine to get out of. Some of that is what you may have seen during this quarter or during the last six months. As we looked at the renewals, and John had referred to it, significant reduction in Australia and Asia, in the January and March because we felt that notwithstanding some of the pricing increases, they did not meet some of our requirements. The same thing happened in the June/July. And, I go back to John’s point, we have the capacity, we are prepared to utilize it but we have no intention to utilize all of it at any price.

I just want to pick up on Albert’s points which are absolutely correct. I said in the last quarter of last year we started really reflecting on the previous three or four years of CAT and large losses and look at the effect of climate change on these losses. And I really do believe that the CAT market really needs to step back and rethink a great deal of the sort of structure that they’re offering cedents in terms of retentions, in terms of pricing, in terms of reinstatements. It is not just the non-peak CAT zones that you know I have a big issue about, it actually is the peak CAT zones as well. And the market just thinks if there’s a loss it can add 40% to 50% to a structure and they think that they’ve done very well, instead of stepping back and looking to see whether the structure is realistic in the conditions we’re facing today. I really do believe that the senior underwriters within the major CAT writing businesses really ought to reflect more carefully on the scale of the losses as well as the frequency of the losses that we’re seeing on a global basis and recalibrate for the way they look for their risk/reward characteristics. Gregory W. Locraft – Morgan Stanley & Co. Incorporated: Again, given the updated disclosures and where book value is you’ve got excess capacity now in every zone, so you can certainly go at it.

We’re in good shape. We’re going to push price. Gregory W. Locraft – Morgan Stanley & Co. Incorporated: Last one John and then I’ll jump back in the queue is just Thai flooding, obviously it’s an issue that is cooking. I know it’s too early to really gage but you tend to be closer to the markets than many so how are you reading the situation from a loss perspective?

Albert’s our Thai flood expert.

As you might imagine, we’ve already gone through and looked at our various insureds. We looked at our reinsurance contracts and obviously the water in some cases is still rising. But, everything that we see right now makes us look at whatever were to happen would be well contained within our attritional expectations and normal large loss expectations. We don’t see this as an unusual income moving event.

Your next question comes from Graham Y. Tanaka – Tanaka Capital. Graham Y. Tanaka – Tanaka Capital: I wonder if you can tell us a little bit more about your strategy on the asset side and how you’re differing versus the industry? How that might be helping you in terms of whether you’re taking a less aggressive or more aggressive stance? It appears you’re being more conservative on moving risky assets off.

Let me start with the macro view and then we can talk about a couple of your comments. Fundamentally, we will always have a high quality fixed maturity investment grade portfolio. That is the core of what we do. But as I mentioned in my prepared remarks, the reality is that when you have interest rates in the low 2% yes, they might stay down for a while but after that there’s only one place for them to go and that is up. That is our single biggest balance sheet risk in terms of sensitivity. We’ve looked at a number of ways to try to mitigate interest rate risk and frankly, there aren’t too many palatable ways to do that and therefore, in our mind, the best way to mitigate interest rate risk is to add diversification to asset classes that are less directly impacted or less negatively impacted in the interest rate movements. And as we’ve been discussing now for well over a year, we think it is appropriate to have allocations somewhere in the mid teens area of hedge funds, equities, high yield, all of which have less of a direct relationship. And you know what? Everything that has happened has confirmed that. We’ve had quarters were the equities and the hedge funds have gone up very nicely and rates backed up and the value of the bond portfolio went down. So we offset that volatility. Likewise, what just happened in the third quarter, we had a significant improvement in the value of the bond portfolio as rates went down and admittedly that was modestly offset by the alternatives. So I think what we’re doing is we’re really aiming for stability in the portfolio and having asset classes that respond differently to economic developments achieve that. The reasons…

Actually, our unrealized losses on our bond portfolios were somewhere in the $4 million range at the end of the third quarter. We realized those losses in October so no big deal. We were fortunate to sell the bonds in one of the weeks that was more exuberant and optimistic on the upside so the timing of the exit, I think made sense for us.

(Operator Instructions) Your next question comes from Ian Gutterman – Adage Capital. Ian Gutterman – Adage Capital: First Albert, can I clarify a number on the CATs? I think on the call at the beginning you said $82 million, I think the press release said $91 is the difference $9 million of reinstatements?

There are some taxes and reinstatements. I can get you the exact numbers but that’s the issue. $91 million is the gross number. Ian Gutterman – Adage Capital: I was just curious what the reinstatements were?

I can get you that number. Ian Gutterman – Adage Capital: The other one on the CAT side is the very large Japanese insurer that starts with a Z, obviously there was a lot of speculation in the trade press and other places that you were at the top of that layer and you were going to get hurt when they took their estimate up here especially, given you had released some last quarter. Can you give us any color on why that wasn’t an issue for you?

Well, the first thing is you know we can’t control rumors. The second issue is that as I told you earlier, we had assumed in our first estimate pretty much that all limits were blown and we were clearly wrong. I will tell you that when we looked at our numbers in the second quarter, we could have made a very strong argument for a more significant reduction in the second quarter but we thought we should wait and see how things emerged and if we had continuing good news we would continue to do that. I can tell you that with regard to the largest mutual, although we are not fans of talking about individual accounts, I can tell you that whatever rumors are in the market with regard to what the losses are, they are well considered within our estimates. Ian Gutterman – Adage Capital: John, can you talk about trade credit and any concerns that that portfolio heats up again given the events in Europe and while we’re waiting for this referendum in Greece?

Obviously, when we were all in Monte Carlo we spent a great deal of time with the three major trade credit underwriting businesses. They control over 70% of the market basis. That was a hot topic for discussion. Firstly, let me just give you a little bit of flavor about post 2008 where the losses were incurred on that portfolio and well within our expectations contrary to a lot of other people’s views. The losses for 2008 are expected to be well made back by the profitability of 2009 and 2010. 2010 is actually running at the lowest loss rates after 18 months of any of the previous eight to 10 years. 2011 is trending similarly although, it’s very early days yet to 2010. But, will be I think marginally a deterioration over the numbers because 2010 appears to be an extremely good year. Still some waiting to go yet. So when I talked to the three major companies, they said that they were not seeing any sign of stress on their portfolios. Don’t forget, those companies rebalance their portfolios following the financial crisis. They looked at the credit quality of their clients very carefully, thinned out their portfolios. They also took out a lot of the peak exposures they had, dramatically reduced them. So we’re looking at fundamentally rebalanced portfolios. And as of today, I have no undue concern for what the European crisis is doing with regard to that particular portfolio. Ian Gutterman – Adage Capital: So it sounds like then, you would be comfortable renewing your book as is for next year if pricing is reasonably the same as this year?

And subject to the information. It’s not just pricing, we’ll take into account all the circumstances when it comes to the renewal season. I’m pretty optimistic about the portfolio. Ian Gutterman – Adage Capital: And what would make you more nervous I guess? If we Greece defaults, or Italy is close to defaulting, are those the types of events that will cause concern?

Let me just remind you Ian about the fact that I’m a big fan of the top three because they really do manage their businesses really well and they’re always a really pre-cursor – they’re always a very good litmus test to show whether there’s a recession coming down the line. They started in 2006 and 2007 to be very concerned about the US housing market. So what did they do? The first thing they did was to stop issuing credit to the manufacturers of tiles in Italy because the main export of the Italian tile manufacturers was the US market. They also pulled out dramatically reduced, not pulled out completely, the supply of credit to the automobile supplier network in the US. So if you remember what happened to Ford and GM, and all that sort of stuff the end of 2007 into 2008, they had already repositioned their portfolios. That’s the way this business reacts and you could see that by the government criticism when businesses found it very difficult to obtain the previously high levels of credit they had been able to. So I have great faith in those major credit insurers managing their portfolios and carefully restricting credit where credit needs to be restricted. Ian Gutterman – Adage Capital: Albert, do you have those reinstatements before I pass on?

Two comments I would make just to follow up on the issue with regard to the trade credit is the fact that in any of these things there are two issues. One, is making sure you underwrite it properly, the second is to make sure you reserve it prudently so that you’ve made sure that if there is anything untoward there is already some recognition of that in the reserves. As John has pointed out, 2010 may end up being one of the best years in history. And as part of our reserving, we’re already expecting that there’s going to be some deterioration from 2010 and 2011 but it’s already there, if you would, in the way we view the business. And so we’re not saying that there will not be an increase in loss ratios. What we’re saying is that from where we started and where we’re going to be reserving it, we’re comfortable with all of that. Now, with regards to your question I would point you to page 21 of the financial supplement where there is almost $7 million of tax benefit against the CATs in the third quarter. Mostly because, as you’ll recall, a lot of these are US based losses and we had the benefit of tax offsets in this quarter. That’s identified on page 21 of the financial supplement.

At this time I’m showing no further questions. This concludes our question and answer session and I would like to turn the conference back over to John Charman, CEO for any closing remarks.

Ladies and gentlemen thank you as ever for taking the time to hear us today. We look forward to meeting up with you early next year when we will be 10 years old, by the way. We will be celebrating our 10th anniversary next week. Thank you very much again.

The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.