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AXIS Capital (AXS) Q2 Earnings and Revenues Beat Estimates

Zacks Equity Research

AXIS Capital Holdings Limited AXS reported second-quarter 2019 operating income of $1.62 per share, which beat the Zacks Consensus Estimate by 21.8%. Moreover, the bottom line increased 27.6% year over year.

The company noted pricing momentum across substantially all business lines

Operational Update

Operating revenues of about $1.26 billion beat the Zacks Consensus Estimate by 3.6%. However, the top line declined 3.1% year over year.

Gross premiums written declined 0.2% year over year to about $1.6 billion, largely attributable to a 6% decrease in Insurance, largely offset by a 9% rise in Reinsurance segments. It increased 1% on a constant currency basis.

Net investment income increased 25.5% year over year to nearly $137.9 million.

Total expenses in the quarter under review declined 4.9% year over year to $1.1 billion, courtesy of the reduced net losses and loss expenses, interest expense and financing costs, transaction and reorganization expenses.

Combined ratio deteriorated 300 basis points (bps) to 96.1%.

Axis Capital Holdings Limited Price, Consensus and EPS Surprise

Axis Capital Holdings Limited Price, Consensus and EPS Surprise

Axis Capital Holdings Limited price-consensus-eps-surprise-chart | Axis Capital Holdings Limited Quote

Segmental Results

Insurance: Gross premiums written fell 6% year over year to $968.3 million due to repositioning of the portfolio and accident and health lines due to the non-renewal of a significant contract. Net premiums earned declined 1% year over year to $537.3 million

Underwriting income of $11.3 million plunged 80% year over year. Combined ratio deteriorated 740 bps to 97.8%.

Reinsurance: Gross premiums written increased 8.9% year over year to $679.4 million driven by new business. Net premiums earned however declined 3.6% year over year to $586.3 million.

Underwriting income of $67.4 million increased 13.7% year over year. Combined ratio improved 160 bps year over year to 89.1%.

Financial Standing

AXIS Capital exited the second quarter with cash and cash equivalents of $1.1 billion, down 40% from 2018-end level.

Senior notes totaled $1.4 billion, up 3.4% from 2018 end.

Book value per share increased 6% from first quarter end to $55.99 as of Jun 30, 2019.

Operating return on equity totaled 14.3% in the second quarter.

Dividend Update

The company announced a dividend of 40 cents per share in the reported quarter. Over the past year, total dividend declared was $1.59 per share.

Zacks Rank

AXIS Capital currently 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

Of the insurance industry players that have reported second-quarter results so far, The Progressive Corporation PGR and RLI Corp. RLI beat the respective Zacks Consensus Estimate for earnings. However, The Travelers Companies, Inc. TRV missed the same.

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