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AXIS Capital's (AXS) Q2 Earnings Beat, Revenues Fall Y/Y

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AXIS Capital Holdings Limited AXS reported second-quarter 2020 operating income of 84 cents per share, which beat the Zacks Consensus Estimate by 27.3%. However, the bottom line decreased 48.1% year over year.

Higher gross premiums written and lower expenses were offset  by higher catastrophe losses and soft performance of Reinsurance segment.

Axis Capital Holdings Limited Price, Consensus and EPS Surprise


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

Operational Update

Second-quarter operating revenues amounted to nearly $1.2 billion, down 8.9% year over year. The downside can primarily be attributed to lower premiums earned and decline in net investment income.

Gross premiums written increased 4.1% year over year to about $1.7 billion, largely attributable to 7.2% increase in the insurance segment.

Net investment income decreased 67.3% year over year to nearly $45 million, primarily due to negative returns from credit and real estate funds.

Total expenses in the quarter under review declined 1.5% year over year to $1 billion, courtesy of reduced acquisition costs, general and administrative expenses, reorganization expenses, lower amortization of value of business acquired, and amortization of intangible assets.

Catastrophe and weather-related losses, net of reinstatement premiums increased 41% year over year to $36 million.

Combined ratio improved 140 basis points (bps) to 94.7%.

Segmental Results

Insurance: Gross premiums written grew 7.2% year over year to $1 billion primarily attributable to increases in professional lines, property, marine and liability lines driven by new business and favorable rate changes, partially offset by decreases in credit and political risk and terrorism lines.

Net premiums earned increased 7.4% year over year to $577 million.

Underwriting income of $34.4 million surged 204% year over year. Combined ratio improved 360 bps to 94.2%.

Reinsurance: Gross premiums written decreased 0.1% year over year to $678.6 million due to decrease in catastrophe, agriculture, and accident and health lines largely offset by increases in motor, liability and professional lines. Net premiums earned declined 10.1% year over year to $526.9 million.

Underwriting income of $53 million decreased 21.3% year over year. Combined ratio deteriorated 110 bps year over year to 90.2%.

Financial Standing

AXIS Capital exited the second quarter with cash and cash equivalents of $1.1 billion, down 12.4% from 2019-end level.

Book value per share increased 11% from first quarter end to $55.09 as of Jun 30, 2020.

Annualized operating return on equity contracted 550 bps to 6.3% in the second quarter.

Dividend Update

The company announced a dividend of 41 cents per share in the reported quarter. Over the past year, total dividend declared was $1.63 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, which have reported second-quarter results so far, earnings of Cincinnati Financial Corporation CINF, First American Financial Corporation FAF and RLI Corp. RLI beat the respective Zacks Consensus Estimate.

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