Third quarter income for Bermuda-based AXIS Capital Holdings Limited dropped sharply on hurricanes to $6.3 million, or 4 cents per share, compared to $147 million, or 90 cents per share, for the year ago third quarter.

In his earnings statement last night, AXIS President and CEO John Charman also announced that his company intends to "vigorously defend" against shareholder class action lawsuits which his company believes are "without merit".

Last Friday at least two law firms, Schatz & Nobel, P.C. and Lerach Coughlin Stoia Geller Rudmand & Robbins, filed similar class action suits in the US District Court for the Southern District of New York on behalf of all purchasers of AXIS Capital Holdings Ltd. publicly traded securities between August 2, 2003-October 14, 2004.

The Schatz & Nobel complaint alleges: "During the Class Period, AXIS violated federal securities laws by making materially false or misleading public statements.

Specifically, the complaint alleges that AXIS was involved in the payment of "contingent commissions" which improperly influenced the insurance bid-making process. On October 14, 2004, New York Attorney General Eliot Spitzer announced that he had charged several of the nation's largest insurance companies and the largest broker with bid rigging and pay-offs that he claimed violated fraud and competition laws. On these revelations, AXIS' shares fell approximately 10 percent, from a close of $25.89 per share on October 13, 2004 to close at $23.36 on October 15, 2004."

Mr. Charman said last night in his statement: "We believe these lawsuits are without merit and intend to vigorously defend against them."

As previously reported, AXIS Capital's US holding company has been subpoenaed by the Attorney General three times in the last three months.

An August 26 subpoena sought information regarding incentive commission agreements between its insurance companies and insurance brokers.

A September 20 subpoena sought information regarding fictitious and inflated quotes submitted by insurance companies to insurance brokers while the most recent October 21 subpoena sought information regarding tying, or conditioning direct insurance on the placement of reinsurance. He said as well that AXIS is co-operating fully with the inquiries and is also conducting its own internal investigation led by outside counsel to examine the subject raised by the Attorney General.

"Consistent with long-standing and wide-spread industry practice, we have entered into incentive commission agreements with brokers. As a result of this investigation, we have ceased entering into, and have suspended making payments under, incentive commission agreements." Mr. Charman said.

"My colleagues and I have worked diligently over a very long period of time - a period pre-dating the establishment of AXIS - to establish ourselves as leaders in our respective markets and have held ourselves to the highest standards of ethics, integrity and professionalism in all of our business with intermediaries and clients. Consistent with this philosophy, we do not believe we have engaged in the improper business practices that are the focus of the Attorney General of the State of New York's investigation."

Mr. Charman said in the earnings statement last night that AXIS had weathered the storms of the third quarter by producing a positive income of $6.3 million.

He said: "The investment community and many other parties have waited for major losses such as those that have occurred over the last three months to test the Bermuda class of 2001.

"I am therefore delighted to be able to report a profit for the quarter in spite of the now estimated $30 - $40 billion of damage caused by this season's unprecedented number of hurricanes and typhoons.

"One of our founding goals was to create high quality global insurance and reinsurance businesses that were soundly diversified both by product line and geography. We have now achieved substantial market share in both these businesses. To achieve net income, therefore, in the face of these substantial and widespread industry losses is a great credit to all of our staff and their disciplined underwriting."

Mr Charman continued: "We continue to be satisfied with the underlying fundamentals in each of our segments and that these fundamentals will deliver ongoing strategic shareholder value. We have increased our shareholders' equity in a challenging quarter for the industry. We believe that our loyal clients as well as prospective new ones will rely on the quality of our capital and operations to meet their buying needs. AXIS moves forward strongly."

Net income for the nine months ended September 30, 2004 was $313.9 million, or $1.89 per share, compared to $371.9 million, or $2.46 per share, for the corresponding period in 2003. Gross premiums written for the third quarter of 2004 increased 8.5 percent to $687.7 million compared to $633.9 million a year ago. Gross premiums written for the first nine months of 2004 were $2,361.1 million compared to $1,794.0 million for the first nine months of 2003.

The company generated a combined ratio of 109.7 percent, a loss ratio of 85.4 percent and an expense ratio of 24.3 percent during the 2004 quarter compared to 69.2 percent, 46.3 percent and 22.9 percent, respectively, for the third quarter of 2003.

The increase in the loss ratio was primarily a result of net losses and loss expenses of $227.4 million from Hurricanes Charley, Frances, Ivan and Jeanne. These losses are before the impact of reinstatements and tax recoveries.

For the nine months ended September 30, 2004, net investment income, including realised gains of $9.4 million, was $114.0 million compared with $67.8 million, including realised gains of $21.2 million, for the nine months ended September 30, 2003.

Shareholders' equity was $3.1 billion as at September 30, 2004. Diluted book value per share at September 30, 2004 was $19.00 compared to $17.48 at December 31, 2003.