On Jun 13, 2014, we issued an updated research report on
AXIS Capital Holding Limited
AXIS Capital's first-quarter earnings lagged the Zacks Consensus
Estimate and deteriorated year over year. This Zacks Rank #4 (Sell)
property and casualty insurer fell short of expectations in three
of the last four quarters.
Escalating expenses have been restricting margin expansion at AXIS
Capital. As expenses rose largely due to higher net losses and loss
expenses, general and administrative expenses, higher acquisition
costs as well as increase in interest expense and financing costs,
operating margin contracted 620 basis points. If the magnitude of
increase in revenues fails to exceed the magnitude of increase in
expenses, operation margin expansion will be affected going
The insurer also suffered due to the prevailing weak interest rate
that weighed on investment results. Net investment income decreased
due to weak results at hedge funds.
With respect to estimate revisions, the Zacks Consensus Estimate
for 2014 and 2015 decreased as most of the estimates were lowered
over the last 60 days. With 8 of 10 estimates moving south, the
Zacks Consensus Estimate for 2014 was dragged down 4.3% to $4.41.
The same for 2015 now stands at $4.66, down 3.5% as 7 of 10
estimates moved south.
Nonetheless, new business opportunities across AXIS Capital's lines
of business and geography have helped it to achieve growth in
premium writings. The top line has been growing on the strength of
higher premiums. The commencement of Lloyds franchise for the new
AXIS syndicate 1686 marked another milestone in the expansion of
its global underwriting platform.
Through continued dividend hikes and share repurchases, AXIS
Capital remains committed to enhance its shareholders' value. The
approval of 8% dividend hike last December marked the 10th
consecutive year of payout increase with a yield better than the
sector's. With respect to buybacks, the company repurchased $216
million till April and was left with $550 million remaining under
Other Stocks to Consider
Some better-ranked property and casualty insurers worth reckoning
W.R. Berkley Corporation
AmTrust Financial Services, Inc
Aspen Insurance Holdings Ltd.
). All these stocks sport a Zacks Rank #1 (Strong Buy).
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BERKLEY (WR) CP (WRB): Free Stock Analysis
AXIS CAP HLDGS (AXS): Free Stock Analysis
AMTRUST FIN SVC (AFSI): Free Stock Analysis
ASPEN INS HLDGS (AHL): Free Stock Analysis
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