AXIS Capital Retained at Neutral - Analyst Blog
We retain our Neutral recommendation on
AXIS Capital Holdings Ltd
) as the positives are dwarfed by the company's exposure to
catastrophe losses, a competitive market and foreign currency
fluctuations. The property and casualty insurer carries a Zacks
Rank #3 (Hold).
Why the Reiteration?
Counting on the positives, new business opportunities across AXIS Capital's lines of business and geography have helped the company achieve growth in premium writings. The company noted improved pricing scenario in the insurance market extending across classes and geographies, and expects the development to continue going forward. AXIS Capital expects gross premiums written to increase in 2013, given that favorable pricing momentum sustains in the primary insurance market.
Riding on the back of increasing premiums, the top line showed continued improvements. This coupled with lower expenses helped the company maintain continued margin expansion.
AXIS Capital continues to boost its shareholder value through share buybacks and dividend hikes. The dividend of $0.25 per share currently yields 2.30%, positioning AXIS Capital better than other industry majors such as ProAssurance Corp . ( PRA ) with a dividend yield of 2.14%; State Auto Financial Corp . ( STFC ) with a dividend yield of 2.09%; and Everest Re Group Ltd . ( RE ) with a yield of 1.32%.
The company expects to return an amount closer to 100% of its
earnings in 2013, in the form of regular dividends and share
repurchases. With a solid financial position, we expect the
company to continue paying back shareholders, thereby retaining
investor confidence in the stock.
However, AXIS Capital is highly exposed to losses resulting from natural disasters, man-made catastrophes and other catastrophic events. This in turn weighs on its underwriting results. Exposure to catastrophe activities will always remain a concern because of the uncertainty of occurrence as well as the magnitude of impact.
Increasing competition in the insurance industry can also result in slow growth and lower profitability for AXIS Capital. Moreover, its operational results are subject to risks of currency fluctuations.
AXIS CAP HLDGS (AXS): Free Stock Analysis Report
PROASSURANCE CP (PRA): Free Stock Analysis Report
EVEREST RE LTD (RE): Free Stock Analysis Report
STATE AUTO FINL (STFC): Free Stock Analysis Report
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