AXIS Capital Holdings Limited’s (AXS) third-quarter 2014 earnings per share of $1.27 outperformed the Zacks Consensus Estimate by about 7%. Earnings, however, slumped 27% year over year.
The company experienced soft performance at the Insurance segment but a strong performing Reinsurance came as a respite. Investment results were dampened by a weak global equity market. Nonetheless, favorable reserve development and diversification continued to drive results. A lower share count due to continued share repurchases boosted the bottom line.
Including net realized investment gains of 73 cents and foreign exchange loss of 63 cents, AXIS Capital reported net income of $2.68 per share, up substantially from $1.21 in the year-ago quarter.
Operational Update
Net premiums earned by AXIS Capital improved 2% to $966 million driven by better results at both Insurance and Reinsurance.
Net investment income decreased 35% year over year to $67 million, owing to unfavorable changes in the fair value of alternative investments.
On the back of higher net premiums, and other insurance-related income, total revenue of AXIS Capital improved 10% year over year to $1.1 billion. It surpassed the Zacks Consensus Estimate by a whisker.
Total expense in the quarter decreased about 5% year over year to $839 million owing to lower foreign exchange losses.
Underwriting income of AXIS Capital declined 26% year over year to $113.6 million. Combined ratio deteriorated 590 basis points (bps) to 92.2%.
Segment Result
Insurance Segment: Gross premiums written in this segment declined 3% year over year due to weak performances at the accident and health, and professional lines of business. Better performing aviation business limited the downside.
Net premiums earned increased about 3% year over year owing to growth in professional, accident and health and liability business lines.
Underwriting income plunged 82% year over year to $16 million. Combined ratio deteriorated 1,620 bps year over year to 96.6%.
Reinsurance Segment: Gross premiums written in the quarter increased 3% year over year to $342 million, largely driven by growth in the liability line of business.
Net premiums earned increased 1% after accounting for improvement in business written in the professional, motor and liability lines.
Meanwhile, underwriting income increased 53% with combined ratio improving 500 bps year over year.
Financial Update
AXIS Capital exited the quarter with cash and cash equivalents of $1.3 billion, up 40% from the 2013-end level.
Total capitalization at quarter end was $7.3 billion, including $1.5 billion of long-term debt and $0.6 billion of preferred equity. The figure was up 7.3% over the 2013-end level.
Cash flows from operations of $343 million increased 0.3% year over year.
Book value per share was $49.88 at the end of the quarter, up 12% year over year.
Share Repurchase Update
During the reported quarter, AXIS Capital repurchased 3.2 million of its common shares for $150 million. As of Oct 29, the company had remaining authorization of $300 million under its common share repurchase program that will expire on Dec 31, 2015.
Zacks Rank
AXIS Capital presently carries a Zacks Rank #3 (Hold).
Performance by Other P&C Insurers
The bottom line at RLI Corporation (RLI), The Travelers Companies Inc. (TRV) and ACE Limited (ACE) has outperformed each of their Zacks Consensus Estimate in the third quarter.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment