AXIS Capital Posts Solid 1Q Earnings - Analyst Blog


AXIS Capital Holdings Limited ( AXS ) reported first-quarter 2013 net operating income of $1.92 per share, which breezed past the Zacks Consensus Estimate of $1.19. Earnings surged 79% year over year. Net operating income of $227 million improved nearly 70% year over year.

Improvement in top line driven by higher premiums and net realized investment gains aided the solid numbers.

Including net realized investment gains of $41.1 million or 34 cents per share and foreign exchange gain of $34.3 million or 29 cents per share, AXIS Capital reported net income of $302.8 million or $2.55 per share. This compares favorably with a profit of $122 million or 96 cents per share in the prior-year quarter.

The year-ago quarter included net realized investment loss of $11.2 million or 9 cents per share, foreign exchange loss of $20.3 million or 16 cents per share and loss on repurchase of preferred shares of $4.6 million or 4 cents.

Quarterly Operational Performance

Gross premiums written by AXIS Capital in the quarter increased 15% year over year to $1.7 billion, aided by 15% improvement in reinsurance segment and 14% in insurance segment.

Net premiums earned in the reported quarter were $874 million, up 3.3% year over year.

Net investment income of AXIS Capital declined 6.1% year over year to $108.9 million, largely driven by lower reinvestment yields.

Total revenue of AXIS Capital grossed $1.03 billion in the quarter, improving 5.2% from the year-ago quarter. The top line comfortably surpassed the Zacks Consensus Estimate of $941 million.

Total expenses in the quarter were $706.3 million, escalating 15.8% year over year, largely due to higher general and administrative expenses.

Underwriting income of AXIS Capital increased nearly threefold year over year to $170.8 million in the quarter. Combined ratio improved 1180 basis points to 83% in the quarter.

Quarterly Segment Update

Insurance Segment : Gross premiums written in the quarter under review improved 14% year over year to $597 million, driven by better performance at accident & health line of business and property, professional lines and liability lines of business

Net premiums earned augmented 3% year over year to $402 million on the back of expansion in accident & health, and property businesses.

Underwriting income increased nearly fourfold to $41 million in the reported quarter.

Combined ratio for the quarter improved 760 basis points to 89.9%.

Reinsurance Segment : Gross premiums written in the quarter improved 15% year over year to $1.1 billion, largely driven by improved performance across all lines of businesses.

Net premiums earned improved 4% in the quarter to $472 million.

Underwriting income more than doubled to $130 million in the quarter.

Combined ratio improved 1610 basis points to 72.5% in the quarter.

Financial Position

AXIS Capital exited the quarter with cash and cash equivalents of $0.86 billion, up 0.7% from 2012 end level.

Total capitalization as of Mar 31, 2013, was $6.9 billion, including $1.0 billion of long-term debt and $0.5 billion of preferred equity.

Book value per share was $44.67 as of Mar 31, 2013, up 13% year over year.

Return on equity was 17.1% in the reported quarter up from 10.8% in the year-ago quarter.

Net cash flow from operations was $221 million, up 25.6% year over year.

Share Repurchase and Dividend

In the reported quarter, AXIS Capital spent $131 million to buyback 3.4 million shares. It includes 3 million shares from Trident II, L.P. and affiliated entities, who disposed of their remaining interest in AXIS Capital during the quarter. AXIS Capital is left with $634 million under its authorization.

Results at few other Property and Casualty Insurer

RLI Corporation ( RLI ) reported first-quarter 2013 operating earnings of $1.04 per share. The result lagged the Zacks Consensus Estimate of $1.06 by 1.89% but surpassed the year-ago level of 96 cents by 8.3%.  The year-over-year improvement came on the back of better underwriting results at Casualty and Surety.

Everest Re Group Ltd . ( RE ) reported first-quarter 2013 operating earnings of $5.88 per share, substantially beating the Zacks Consensus Estimate of $4.32 per share. Earnings were also up 31.3% year over year.

Montpelier Re Holdings Ltd . ( MRH ) reported first-quarter 2013 operating income $1.18 per share, better than the Zacks Consensus Estimate of 89 cents. However, earnings were 4.1% lower than $1.23 per share in the year-ago quarter.

Zacks Rank

AXIS Capital currently carries a Zacks Rank #2 (Buy).

AXIS CAP HLDGS (AXS): Free Stock Analysis Report

MONTPELIER RE (MRH): Free Stock Analysis Report

EVEREST RE LTD (RE): Free Stock Analysis Report

RLI CORP (RLI): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: AXS , MRH , RE , RLI

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