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AXIS Capital (AXS) Provides Q3 Catastrophe Loss Estimates

Zacks Equity Research

AXIS Capital Holdings Ltd. AXS estimates preliminary pre-tax loss between $150 million and $175 million, stemming from Hurricane Dorian, Japanese typhoons and other weather-related events. The estimated losses are net of reinsurance recoveries, retrocessional covers and estimated reinstatement premiums.

Risk modeling and analytics firm RMS expects insured losses to range between $3.5 billion and $6.5 billion from Hurricane Dorian while catastrophe modeler Karen Clark & Co. estimates insured losses in the United States and Caribbean to be around $5 billion, per media release. RMS estimates insured losses from Typhoon Faxai to be between $5 billion and $9 billion while catastrophe risk modeling firm AIR Worldwide expects loss in the range of $3 billion to $7 billion. AXIS Capital noted industry insured losses of about $6 billion from Hurricane Dorian and $8 billion from Japanese typhoons.

The Zacks Consensus Estimate for AXIS Capital’s third-quarter earnings is currently pegged at 82 cents, indicating decline of 14.6% from the year-ago quarter reported figure.  We expect estimates to move south once analysts start incorporating loss estimates into their numbers.

AXIS Capital’s exposure to natural disasters, man-made catastrophes and other catastrophic events induces underwriting volatility and affects the combined ratio.

However, its cat loss in the second quarter of 2019 was $25 million, lower than $38 million incurred in the year-ago quarter, given a not-so-active cat environment. Improved pricing, prudent underwriting and reinsurance cover should provide some relief from cat loss in the third quarter.

Shares of this Zacks Rank #3 (Hold) property and casualty insurer rallied 11.8% in the third quarter, outperforming the industry’s decrease of 0.9%. Continued solid performance at Specialty Insurance, Reinsurance as well as Accident and Health coupled with improved portfolio mix and effective capital deployment should help the stock retain the momentum.


Recently another insurer, Arch Capital Group ACGL also provided third-quarter pre-tax gross catastrophe loss estimate. It projects losses in the range of $65-$75 million from Hurricane Dorian and Typhoon Faxai. The estimated losses are net of reinsurance recoveries and reinstatement premiums.

Stocks to Consider

Some better-ranked property and casualty insurers include Palomar Holdings PLMR and Hallmark Financial Services HALL,  each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Palomar Holdings provides personal and commercial specialty property insurance products. The company delivered 20.00% positive earnings surprise in the last reported quarter.

Hallmark Financial underwrites, markets, distributes, and services property/casualty insurance products to businesses and individuals in the United States. The company delivered 20.00% positive earnings surprise in the last reported quarter.

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