AXIS Capital Holdings Limited
) second-quarter 2014 earnings per share of $1.63 outperformed the
Zacks Consensus Estimate by nearly 33%. Earnings improved nearly
four-fold year over year.
The outperformance came on the back of improved results in the two
segments of the company. Expenses also decreased in the quarter
aiding margin expansion. A lower share count due to continued share
repurchases boosted the bottom line.
Including net realized investment gains of 25 cents and foreign
exchange loss of 9 cents, the company reported net income of $1.79
per share, up substantially from 62 cents earned in the year-ago
Net premiums earned by AXIS Capital improved 6% to $1 billion
driven by better results at both Insurance and Reinsurance.
Net investment income of AXIS Capital improved 38.5% year over year
to $115 million.
On the back of higher net premiums, investment income and other
insurance related income, total revenue of AXIS Capital improved
8.6% year over year to $1.1 billion. It surpassed the Zacks
Consensus Estimate by 1.2%.
Total expense in the quarter decreased about 5% year over year
owing to lower net losses and loss expenses.
Underwriting income substantially improved to $126.6 million from
$9.9 million in the year-ago quarter. Combined ratio improved 1,090
basis points (bps) to 90.8%.
: Gross premiums written in this segment declined 3% year over year
driven by weak performances at the property, professional and
credit and political risk lines of business. Better performing
accident and health business limited the downside.
Net premiums earned increased about 10% year over year owing to
growth in professional, accident and health and liability business
lines and a positive impact of the reduction in ceded reinsurance
Underwriting income was $29.4 million, reflecting a turnaround from
the year-ago loss of $14.5 million. Combined ratio improved 540 bps
year over year to 96.8%.
: Gross premiums written in the quarter increased 9% year over year
to $477 million, largely driven by growth in the professional
lines, continued expansion of the agriculture lines and an increase
in the level of multi-year contracts written. However, weak
performance at catastrophe and motor business lines were partial
Net premiums earned increased 4% after accounting for improvement
in the business written in the professional, agriculture and
Meanwhile, underwriting income increased 74% with combined ratio
improving 820 bps year over year.
AXIS Capital exited the quarter with cash and cash equivalents of
$1 billion, up 13.1% from the 2013-end level.
Total capitalization at quarter end was $7.4 billion, including
$1.5 billion of long-term debt and $0.6 billion of preferred
equity. The figure was up 8.8% over the 2013-end level.
Cash flows from operations of $241 million increased 2.1% year over
Book value per share was $49.69 at the end of the quarter, up 16%
year over year.
Share Repurchase Update
During the reported quarter, AXIS Capital repurchased 3.1 million
of its common shares for $139 million. As of Jul 29, the company
had remaining authorization of $450 million under its common share
repurchase program that will expire on Dec 31, 2015.
AXIS Capital presently carries a Zacks Rank #3 (Hold).
Performance of other Property and Casualty Insurer
While ACE Limited (
) outperformed the Zacks Consensus Estimate on solid underwriting
performance coupled with improved investment results, RLI
) earnings were in line with the Zacks Consensus Estimate. However,
The Travelers Companies Inc. (
) missed the Zacks Consensus Estimate on higher-than-expected
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