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AXIS Capital (AXS) Provides Q4 Catastrophe Loss Estimates

Zacks Equity Research

AXIS Capital Holdings Ltd. AXS estimates preliminary pre-tax loss between $90 million and $110 million, primarily due to Japanese typhoon Hagibis. The estimated losses comprise net of reinsurance recoveries, retrocessional covers and estimated reinstatement premiums.

While catastrophe risk modelling specialist, RMS, estimates the industry losses between $7 billion and $11 billion owing to typhoon Hagibis, catastrophe risk modeling firm AIR Worldwide expects loss in the range of $8 billion to as much as $16 billion.

The Zacks Consensus Estimate for AXIS Capital’s fourth-quarter earnings is currently pegged at 36 cents, indicating an improvement of 120.3% from the year-ago quarter reported figure.  However, 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 induce underwriting volatility and affects the combined ratio.

The company’s cat loss in the first nine months of 2019 was $196.1 million, up 22.5% year over year, due to a higher level of catastrophe and weather-related losses. Improved pricing, prudent underwriting and reinsurance cover should provide some relief from cat loss in the fourth quarter.

Shares of this Zacks Rank #5 (Strong Sell) property and casualty insurer gained 12.8% year to date, outperforming the industry’s rally of 8.6%. Continued solid performance at Specialty Insurance, Reinsurance as well as Accident and Health, and improved portfolio mix and effective capital deployment should help the stock sustain momentum.

Stocks to Consider

Some better-ranked stocks from the same space are Donegal Group Incorporation DGICA, RLI Corporation RLI and Cincinnati Financial Corporation CINF. While Donegal Group Incorporation and RLI Corporation sports a Zacks Rank # 1 (Strong Buy), Cincinnati Financial carries a Zacks Rank # 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Donegal Group Incorporation provides personal and commercial lines of property and casualty insurance to businesses and individuals in the Mid-Atlantic, Midwestern, New England, and southern states. The company beat estimates in the trailing four quarters by 248.34%, on average.

RLI Corporation underwrites property and casualty insurance in the United States and internationally. The company beat estimates in the trailing four quarters by 154.89%, on average.

Cincinnati Financial Corporation provides property casualty insurance products in the United States and offers coverage for commercial casualty, commercial property, commercial auto, and workers' compensation. The company beat estimates in the trailing four quarters by 20.79%, on average.

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RLI Corp. (RLI) : Free Stock Analysis Report
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