AXIS Capital Holdings Limited (AXS) reported third-quarter 2013 net operating income of $1.74 per share, which was substantially above the Zacks Consensus Estimate of $1.17. Earnings improved 6.7% year over year.
A sturdy top line, largely driven by higher premium aided the outperformance. A lower share count also added to the upside.
Including net realized investment loss of $4.4 million or 4 cents per share and foreign exchange loss of $55.2 million or 49 cents per share, AXIS Capital reported net income of $137 million or $1.21 per share. This compares unfavorably with a profit of $223 million or $1.82 per share in the prior-year quarter.
Quarterly Operational Performance
Gross premiums written by AXIS Capital in the quarter improved 6.7% year over year to $904.8 million, aided by a 8.5% improvement in insurance segment and 3.8% in the reinsurance segment.
Net premiums earned in the reported quarter were $945 million, up 9.6% year over year.
Net investment income of AXIS Capital slid 0.2% year over year to $103.4 million.
Total revenue of AXIS Capital grossed $1.04 billion in the quarter, improving 2.6% from the year-ago quarter. The top line comfortably surpassed the Zacks Consensus Estimate of $1.03 billion.
Total expenses in the quarter were $888 million, escalating 14.5% year over year, largely due to higher net losses and loss expenses, acquisition costs and general and administrative expenses.
Underwriting income of AXIS Capital declined 1.2% year over year to $153.1 million in the quarter. The combined ratio deteriorated 100 basis points to 86.3% in the quarter.
Pre-tax net cat losses, net of reinstatement premiums, were $51 million.
Quarterly Segment Update
Insurance Segment: Gross premiums written in the quarter under review improved 9% year over year to $575 million, driven by solid performance at professional and liability lines of business with accident & health line of business and property aiding the upside.
Net premiums earned augmented 12% year over year to $448 million on the back of expansion in accident & health, and property businesses.
Underwriting loss incurred was $89 million, up 17% year over year. Combined ratio for the quarter improved 70 basis points to 80.4%.
Reinsurance Segment: Gross premiums written in the quarter increased 4% year over year to $330 million, largely driven by improved performance in professional lines of businesses as well as the agriculture line.
Net premiums earned improved 7% in the quarter to $497 million, driven by an expansion in the agriculture line of business.
Underwriting income declined 19% year over year to $64 million in the quarter. Combined ratio improved 400 basis points to 83.1% in the quarter.
AXIS Capital exited 2012 with cash and cash equivalents of $1.1 billion, up 30% from 2012 end level.
Total capitalization as of Sep 30, 2013, was $6.8 billion, including $1.0 billion of long-term debt and $0.6 billion of preferred equity.
Book value per share was $44.60 as of Sep 30, 2013, up 2% year over year.
AXIS Capital’s return on equity was 15.6% in the reported quarter down from 15.2% in the year-ago quarter.
AXIS Capital’s net cash flow from operations was $432 million, up 2% year over year.
Allied World Assurance Company Holdings, AG (AWH) reported its third-quarter 2013 operating net income of $2.93 per share, surpassing the Zacks Consensus Estimate by 37.5%. The results also surged 35.6% from the year-ago quarter results.
Montpelier Re Holdings Ltd. (MRH) reported third-quarter 2013 operating net income of $1.38 per share, beating the Zacks Consensus Estimate of 74 cents by a significant 86%. Earnings also surged 62% from 85 cents per share earned in the year-ago quarter.
Cincinnati Financial Corp. (CINF) reported third quarter 2013 operating earnings of 70 cents per share, significantly exceeding the Zacks Consensus Estimate of 55 cents per share. Earnings also grew 9.4% year over year.
AXIS Capital currently carries a Zacks Rank #2 (Buy).
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