AXIS Capital (AXS) Provides Preliminary 2023 Financial Results

AXIS Capital Holdings Limited AXS unveiled preliminary financial results for the year ended Dec 31, 2023. The insurer has also revealed the conclusion of the review of prior-year reserves that was declared earlier.

This Zacks Rank #3 (Hold) insurer expects to report net income available to shareholders of $346 million, or $4.02 per diluted common share, and operating income of $486 million, or $5.65 per diluted common share, for the year ended Dec 31, 2023.

For the year ended Dec 31, 2023, AXIS Capital projects an increase in gross premiums written of $142 million, or 2%, and the current accident year combined ratio of 91.8% compared with 96.3% in the prior year.

AXS anticipates book value per diluted common share of $54.06 for the year ended Dec 31, 2023, representing an increase of 15.1% over the past 12 months.

Axis Capital bolstered its prior year reserves in the fourth quarter of 2023 by $425 million, pre-tax ($361 million, post-tax) on the back of its insurance and reinsurance segments in liability lines and professional lines primarily related to 2019 and earlier accident years. This amount is equivalent to 4.5% of net loss reserves as of Sep 30, 2023.

Vince Tizzio, president and CEO of AXIS Capital, stated, "Axis Capital delivered strong underlying performance in 2023 and it is believed that the company is on a clear trajectory to become a specialty underwriting leader. In 2023, the company generated consistent premium growth with double-digit increases across the vast majority of the specialty insurance lines, and further improved and streamlined the operating model.”

AXS has been witnessing an increase in its top line over a considerable period of time on the back of higher net premiums earned and improved net investment income. Repositioning of the portfolio, carried out over the past three years, will continue to drive its performance. Its stronger book of businesses has less inherent volatility. The company has brought down PMLs, decreased limits and exited or reduced its participation in underperforming businesses while pushing for higher rates across the board.
At the same time, it is focused on driving growth in its most attractive lines. In the Insurance segment, with respect to property, AXIS Capital continues to witness favorable market conditions in each of the platforms. AXS expects disciplined pricing to persist in both insurance and reinsurance in 2023. The company expects positive conditions to sustain into 2024 across all of the property lines.

AXIS Capital is a major specialty insurer and global reinsurer, aiming for leadership in specialty risks. The company thus remains focused on growth in Marine Cargo, Cyber and Renewable Energy, which is likely to provide a strong double-digit return on equity (ROE) opportunities. The company’s combined insurance and reinsurance portfolios have witnessed average rate increases in the double digits.

AXIS Capital’s ROE determines its growth potential. The company’s annualized operating return on average common equity was 18.4% in the first nine months of 2023, which expanded 820 basis points year over year. The increase was primarily driven by an improvement in underwriting income and net investment income and a decrease in average common shareholder's equity. It was partially offset by income tax expense and an increase in corporate expenses. ROE is a profitability measure that shows how efficiently the company is utilizing shareholders’ money.

Shares of AXIS Capital have gained 1.2% in the past year compared with the industry’s growth of 7.6%. Operational excellence and a solid capital position should help shares bounce back.

 

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Stocks to Consider

Some better-ranked stocks from the property and casualty insurance industry are Cincinnati Financial Corporation CINF, American Financial Group, Inc. AFG and The Travelers Companies, Inc. TRV. Cincinnati Financial sports a Zacks Rank #1 (Strong Buy), and American Financial and The Travelers carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Cincinnati Financial surpassed earnings estimates in three of the last four quarters and missed in one, the average being 38.33%. Over the past six months, CINF has gained 9.9%.

The Zacks Consensus Estimate for CINF’s 2024 earnings per share is pegged at $6.06, indicating a year-over-year increase of 8.19%.

The Zacks Consensus Estimate for American Financial’s 2024 earnings per share is pegged at $11.51, indicating a year-over-year increase of 9.3%. Over the past six months, AFG has lost 1.6%.

The Zacks Consensus Estimate for AFG’s 2024 revenues is pegged at $8.04 billion, indicating a year-over-year increase of 10.2%.

The Zacks Consensus Estimate for The Travelers’s 2024 earnings per share is pegged at $19.88, indicating a year-over-year increase of 15.1%. Over the past six months, TRV has gained 22.6%.

The Zacks Consensus Estimate for TRV’s 2024 revenues is pegged at $50.25 billion, indicating a year-over-year increase of 8.6%.

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

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