AXIS Capital Holdings Limited
) reported second quarter 2012 operating earnings of 90 cents per
share, missing the Zacks Consensus Estimate by 3 cents but surging
ahead of 65 cents earned in the year ago-quarter. Operating income
was $113 million in the quarter, up 36% from the second quarter of
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Higher premiums as well as lower expenses fueled the performance.
The company also benefited from lower catastrophe activities with
the bottom line being buoyed by share buybacks.
Including net realized investment gains of $28.8 million, or 23
cents per share, foreign exchange loss of $35.8 million, or 29
cents per share and loss on repurchase of preferred shares of $9.4
million or 7 cents a share, the company reported a net income of
$168.2 million, or $1.35 per share. This compares favorably with
$101 million or 79 cents per share in the prior-year quarter.
The year-ago quarter included net realized investment gains of
$36.6 million or 28 cents per share and foreign exchange loss of
$18.6 million or 14 cents per share.
Gross premiums written in the quarter decreased 3% year over year
to $1.0 billion.
Net premiums earned in the reported quarter were $850 million, up
1.3% year over year.
Net investment income decreased 26% year over year to $74 million,
largely due to lower returns from other investments and fixed
Total revenue grossed $955 million in the quarter, improving 2.2%
from the year-ago quarter. The top line comfortably surpassed the
Zacks Consensus Estimate of $946 million.
Total expenses in the quarter were $764 million, declining 11.6%
year over year, largely due to lower net losses and loss expenses.
The combined ratio improved to 92.3% in the quarter, improving 660
basis points from 98.9% in the year-ago quarter.
: Gross premiums in the quarter under review inched down 1% year
over year to $675 million, driven by soft performance at accident
& health line of business, offset by increases in professional
lines, property and liability lines of business.
Net premiums earned increased 7.4% year over year to $386 million
on the back of initiatives undertaken, exposure to new geographies
and rate increases.
The second quarter booked underwriting income of $24 million
increasing 21% from the year-ago quarter.
The combined ratio for the quarter improved 70 basis points to
: Gross premiums written in the quarter declined 6.8% year over
year to $339 million, largely due to lower business by motor and
property lines, partially offset by higher catastrophe premiums.
Net premiums earned slipped 3.3% in the quarter.
The segment had an underwriting profit of $95 million in the
quarter, exhibiting a massive improvement from $8.7 million in the
The combined ratio improved 1870 basis points to 79.5% in the
AXIS Capital exited the quarter with cash and cash equivalents of
$0.873 billion, declining from $1.08 billion reported at the end of
Total capitalization as of June 30, 2012, was $6.7 billion,
including $1.0 billion of long-term debt and $0.5 billion of
Book value per share was $40.55 as of June 30, 2012, up 10% year
Return on equity was 8.7% in the quarter compared with 7.0% in the
Net cash flows from operations were $288 million for the quarter.
Share Repurchase and Dividend
During the second quarter, AXIS Capital spent $90 million to buy
back 2.7 million shares at an average price of $32.03 per share. On
July 30, 2012, the company had approximately $415 million remaining
under its authorization for common share repurchases through
December 31, 2012.
The Board declared a dividend of 24 cents in the quarter,
illustrating a year-over-year increase of 4.3%.
), which competes with AXIS Capital, reported an operating income
of $2.17 per share, breezing past the Zacks Consensus Estimate by
24 cents. Earnings improved 10% from $1.97 earned in the year-ago
quarter. The quarter largely benefited from solid current accident
year underwriting results as well as lower catastrophe losses.
We believe conservative underwriting practices will help the
company remain well capitalized. New business generation and
platform expansion will also aid the company to fuel its top-line
growth. A solid capital position, strong scores with the credit
rating agencies and continued focus on enhancing shareholder value
are among the other positives.
However, a low interest rate environment keeps us on the sidelines.
We retain our Neutral long term recommendation on AXIS Capital. The
quantitative Zacks #3 Rank (short-term Hold rating) for the company
indicates no clear directional pressure on the shares over the near