The outlook for Bermuda-based Axis Specialty Ltd and its operating affiliates has been revised to positive from stable and they have been affirmed the financial strength rating (FSR) of A (excellent) and issuer credit ratings (ICR) of “a+” by AM Best.Concurrently, Best has revised the outlook to positive from stable and affirmed the ICR of “bbb+” and all existing debt ratings of Axis Capital Holdings Ltd.Additionally, the ratings agency has downgraded the FSR to B++ (good) from A (Excellent) and ICR to “bbb+” from “a+” of Axis Specialty Insurance Company. The outlook for both ratings is stable.Subsequently, Best has withdrawn the ratings due to management’s plans to cease writing new business, and thus place this company in run off.The ratings reflect Axis’ consistently strong operating performance on a relative and absolute basis, excellent risk-based capitalisation, robust enterprise risk management controls and a highly experienced management team, said Best. Axis’ operating strategy has historically emphasised underwriting profitability with a balanced risk profile.Given the current soft casualty market conditions the company is well-positioned with a diversified book of business and expanding worldwide infrastructure, added Best. Axis’ book of business emphasises short to medium-tail lines and focuses on specialty risks including property, marine and political risk, along with property catastrophe coverages.The ratings agency said that Axis’ historical operating performance has been strong, with a five-year average combined ratio and a five-year average return on equity through 2010, which places the company among the top of its Bermudian peer group.In Best’s opinion, Axis’ solid performance was attributable to its highly-developed and integrated risk management controls and strong systems capabilities.Furthermore, Axis retains a very strong level of risk-based capitalisation under various Best stress scenarios. As a result, Best expects Axis to continue managing its capital base in a conservative manner within acceptable ranges to support its current ratings. Both financial leverage and interest coverage also are at acceptable levels relative to Axis Capital Holdings’ ratings.Partially offsetting these positive rating factors was Axis’ exposure to large catastrophe losses as well as the current soft casualty market environment.These challenges and other rating factors, which could lead to a downgrade or revision in the outlook to negative, include unfavourable operating profitability trends, outsized catastrophe or investment losses relative to peers, significant adverse loss reserve development and/or a material decline in risk-adjusted capital. Alternatively, factors that could lead to an upgrade include continued favourable operating profitability coupled with maintenance of strong risk-adjusted capital levels.