Earnings momentum for
Axis Capital Holdings Limited
) has advanced in the past week following strong third quarter
results, including 61.4% positive earnings surprise. Moreover, with
a price-to-book (P/B) ratio of just 0.87, this Zacks #2 Rank (Buy)
insurance and reinsurance provider is a true value pick.
Strong Third Quarter
On October 31, Axis Capital reported third quarter 2012 operating
earnings of $1.63 per share, which was 61.4% above the Zacks
Consensus Estimate of $1.01 and 120.3% better than the year-ago
result of 74 cents.
The quarter experienced a low level of catastrophe and large loss
activity. Also, strong equity markets and the subsequent return
from investments had a positive impact. Share buybacks boosted the
Total revenue grossed $1.02 billion in the quarter, improving 7.4%
from the year-ago quarter. The top line comfortably surpassed the
Zacks Consensus Estimate by 4%.
Net premiums earned in the reported quarter were $862 million, up
3.7% year over year. Net investment income more than doubled to
$103.6 million, largely driven by alternative investments.
Underwriting profit of $337 million in the quarter rebounded from a
loss of $342 million in the year-ago quarter. The combined ratio
improved 2550 basis points to 90.8%.
During the third quarter, AXIS Capital spent $179 million to buy
back 5.2 million shares.
Return on equity was 15.2% in the quarter, compared with 7.8% in
the year-ago quarter.
Positive Earnings Estimate Revisions
Following the solid quarter, the Zacks Consensus Estimate for 2012
increased 2.5% to $4.15 in the past 7 days, representing a
year-over-year increase of approximately 429.7%. For 2013, the
Zacks Consensus Estimate has moved higher by 2.7% to $3.80 over the
same time frame.
Along with a very attractive P/B multiple, Axis Capital has a
price-to-earnings (P/E) ratio as low as 8.91 (a P/B ratio under 3.0
and P/E ratio below 15.0 indicate value).
Moreover, the company has a 1-year return on equity (ROE) of 8.6%,
higher than its peer group average of 7.6%.
Headquartered in Pembroke, Bermuda, and founded in 2001, AXIS
Capital Holdings Limited is a global provider of specialty lines
insurance and treaty reinsurance. With a market capitalization of
$4.3 billion and 1,100 full time employees, the company operates in
Bermuda, the U.S., Singapore, Europe, Canada, Australia and Latin
America. It competes with ACE Limited (
) and Swiss Re Ltd (
) among others.
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