AXIS Capital's Q2 Rev and Earnings Lag - Analyst Blog

By Zacks Equity Research,

Shutterstock photo

AXIS Capital Holdings Limited ( AXS ) reported second-quarter 2013 net operating income of 43 cents per share, which fell substantially short of the Zacks Consensus Estimate of 59 cents. Earnings dropped 52% year over year. Net operating income of $50 million plunged nearly 56% year over year.

Top-line improvement was more than offset by increase in expenses, inducing a year-over-year decline.

Including net realized investment gains of $14.6 million or 13 cents per share, foreign exchange gain of $10.9 million or 9 cents per share and loss on repurchase of preferred shares of $3.1 million or 3 cents, AXIS Capital reported net income of $72 million or 62 cents per share. This compares unfavorably with a profit of $168 million or $1.35 per share in the prior-year quarter.

Quarterly Operational Performance

Gross premiums written by AXIS Capital in the quarter increased 20.4% year over year to $1.22 billion, aided by a 29.2% improvement in reinsurance segment and 15.7% in the insurance segment.

Net premiums earned in the reported quarter were $945.9 million, up 11.2% year over year.

Net investment income of AXIS Capital increased 11.6% year over year to $83.1 million,

Total revenue of AXIS Capital grossed $1.04 billion in the quarter, improving 9.4% from the year-ago quarter. The top line comfortably surpassed the Zacks Consensus Estimate of $0.98 billion.

Total expenses in the quarter were $966.6 million, escalating 26.5% year over year, largely due to higher net losses and loss expenses and acquisition costs.

Underwriting income of AXIS Capital slumped nearly 92% to $9.9 million in the quarter. The combined ratio deteriorated 940 basis points to 101.7% in the quarter.

Pre-tax net cat losses, net of reinstatement premiums, were $140 million, stemming from tornadoes and hailstorms in the U.S. and flooding in Canada, Europe and Argentina.

Quarterly Segment Update

Insurance Segment : Gross premiums written in the quarter under review improved 15.7% year over year to $781.1 million, driven by better performance at accident & health line of business and property, professional lines and liability lines of business

Net premiums earned augmented 9.3% year over year to $422.3 million on the back of expansion in accident & health, and property businesses.

Underwriting loss incurred was $55.5 million, compared with income of $24.6 million in the year-ago quarter.

Combined ratio for the quarter deteriorated 1950 basis points to 89.9%.

Reinsurance Segment : Gross premiums written in the quarter increased 29.2% year over year to $438.6 million, largely driven by improved performance across all lines of businesses.

Net premiums earned improved 12.8% in the quarter to $523.5 million, driven by an expansion in the agriculture line of business.

Underwriting income declined 31.3% year over year to $65.4 million in the quarter.

Combined ratio deteriorated 800 basis points to 87.5% in the quarter.

Financial Position

AXIS Capital exited 2012 with cash and cash equivalents of $1.1 billion, up 29% from 2012 end level.

Total capitalization as of Jun 30, 2013, was $6.6 billion, including $1.0 billion of long-term debt and $0.6 billion of preferred equity.

Book value per share was $42.67 as of Jun 30, 2013, up 5% year over year.

Return on equity was 3.9% in the reported quarter down from 8.7% in the year-ago quarter.

Alliance Data's net cash flow from operations was $236 million, down 18.1% year over year.

Share Repurchase and Dividend

In the reported quarter, AXIS Capital spent $228 million to buyback 5.1 million shares. AXIS Capital is left with $409 million under its authorization.

Results at few other Property and Casualty Insurers

ACE Limited ( ACE ) reported second-quarter 2013 operating net income of $2.29 per share, up 19.3% from the Zacks Consensus Estimate of $1.92. Results improved 5.5% from $2.17 earned in the year-ago quarter.

Everest Re Group Ltd. ( RE ) reported second-quarter 2013 operating earnings of $5.10 per share, substantially beating the Zacks Consensus Estimate of $4.26 per share. Earnings were also up 20% year over year.

Chubb Corporation ( CB ) reported second-quarter operating earnings of $1.77 per share, significantly ahead of the Zacks Consensus Estimate of $1.38 per share. Earnings also increased 29% year over year.

Zacks Rank

AXIS Capital currently carries a Zacks Rank #3 (Hold).

ACE LIMITED (ACE): Free Stock Analysis Report

AXIS CAP HLDGS (AXS): Free Stock Analysis Report

CHUBB CORP (CB): Free Stock Analysis Report

EVEREST RE LTD (RE): Free Stock Analysis Report

To read this article on click here.

Zacks Investment Research

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

This article appears in: Investing , Business , Earnings , Stocks
Referenced Stocks: ACE , AXS , CB , RE

More from


Follow on:

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by