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AXIS Capital (AXS) Q1 Earnings Miss Estimates, Down Y/Y

Zacks Equity Research

AXIS Capital Holdings Limited AXS reported first-quarter 2019 operating income of $1.24 per share, missing the Zacks Consensus Estimate by 11.4%. Moreover, the bottom line declined 15.1% year over year, mainly due to lower revenues.

Operational Update

Operating revenues of about $1.2 billion lagged the Zacks Consensus Estimate by 1.6%. Also, the top line dipped 2.1% year over year.

Gross premiums written declined 3% year over year to about $2.6 billion, largely driven by a 3% decrease each in Insurance and Reinsurance segments.

Net investment income increased 6.2% year over year to nearly $107 million.

Total expenses in the quarter under review declined 3% year over year to $1.2 billion, courtesy of the reduced foreign exchange losses and the amortization of value of the business acquired.

AXIS Capital’s underwriting income totaled $778.2 million, down 45.9% year over year. Combined ratio expanded 610 basis points (bps) to 96.9%.

In the quarter under consideration, pre-tax cost savings of $17 million — $69 million on an annualized basis — related to the company’s transformation initiative and the integration of Novae have been recognized.

Axis Capital Holdings Limited Price, Consensus and EPS Surprise

Axis Capital Holdings Limited Price, Consensus and EPS Surprise | Axis Capital Holdings Limited Quote

Segmental Results

Insurance: Gross premiums written fell 3.4% year over year to $851.1 million due to non-renewals and timing differences. However, the same was offset by a rise in liability and professional lines, driven by new business and marine lines plus favorable rate changes across the portfolio to some extent.
Net premiums earned declined 4% year over year to $556.7 million.

Underwriting income of $209 million plunged 69.9% year over year. Combined ratio expanded 850 bps to 96.6%.

Reinsurance: Gross premiums written in the first quarter were down 3% year over year to $173 million, primarily due to motor, credit and surety plus property lines on account of non-renewals. However, the metric was to some extent offset by a rise in catastrophe, accident and health, and liability lines supported by new business.

Net premiums earned slid 1.7% year over year to $577.5 million.

Underwriting income of $56.9 million significantly decreased 23.4% year over year. Combined ratio expanded 260 bps year over year to 91%.

Financial Standing

AXIS Capital exited the first quarter with cash and cash equivalents of $1.2 billion, down 6.6% from 2018-end level.

Senior notes were $1.3 billion, inching up by 0.1% from 2018 end.

Book value per share increased 5.8% year over year to $52.84 as of Mar 31, 2019 compared with the figure as of Dec 31, 2018.

Operating return on equity totaled 9.5% at the end of the first quarter compared with 10.8% in the year-ago period.

Dividend Update

The company announced a dividend of 40 cents per share in the reported quarter. Over the past year, total dividends declared amounted to $1.58 per share.

Zacks Rank

AXIS Capital carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

Among other players from the insurance industry having reported first-quarter earnings so far, the bottom-line figures of The Travelers Companies, Inc. TRV, Cincinnati Financial Corporation CINF and The Progressive Corporation PGR beat the respective Zacks Consensus Estimate.

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Axis Capital Holdings Limited (AXS) : Free Stock Analysis Report

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