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AXIS Capital (AXS) Q4 Earnings Beat, Revenues Miss; Up Y/Y

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AXIS Capital Holdings LimitedAXS reported fourth-quarter 2016 earnings per share of $1.14 that beat the Zacks Consensus Estimate of 93 cents by 23%. Also, earnings declined 7.3% from the year-ago quarter.

AXIS Capital's net income declined 6.5% year over year to $1.48 per share.

Operational Update

Operating revenues of about $1.02 billion missed the Zacks Consensus Estimate of $1.06 billion. However, revenues increased 1.2% year over year.

Gross premiums written declined 8.6% year over year to approximately $730 million due to 0.8% lower premiums written in the Insurance segment and 34% decrease in reinsurance segment.

Net investment income soared nearly 20.9% to $95.5 million, fueled by changes in the fair value of alternative investments.

Total expense in the quarter increased 3.4% year over year to $852.3 million.

AXIS Capital's underwriting income decreased 25% year over year to $66.3 million. Combined ratio deteriorated 510 basis points (bps) to 96.7%. Catastrophe and weather-related pre-tax net losses widened to $204 million from $100 million in the year-ago quarter.

2016 Highlights

Operating earnings of $4.48 per share increased 11.4% year over year. Operating revenues improved 2.6% over 2016 to $4 billion.

Segment Result

Insurance Segment : Gross premiums written increased 1% year over year owing to new business in accident, and health & property lines.

Net premiums earned remained flat year over year. Nonetheless, the metric inched up 2% on a constant currency basis driven by growth in premiums written, mainly in accident and health lines, offset by an increase in professional lines' ceded reinsurance programs.

Underwriting income of $6 million plummeted 76% from the year-ago quarter. Combined ratio deteriorated 410 bps to 98.6%.

Reinsurance Segment : Gross premiums written in the quarter decreased 34% year over year to $123 million, largely due to lower level of premiums written on a multi-year basis.

Net premiums earned were flat year over year as increase in gross premiums written was offset by the impact of the retrocessional cover with Harrington Re Ltd. as well as an increase in premiums ceded in the company's catastrophe and property lines.

Underwriting income jumped 4.8% year over year to $60 million. Combined ratio deteriorated 440 bps year over year to 87.6%.

Financial Update

AXIS Capital exited the quarter with cash and cash equivalents of $1.2 billion, up 5.7% from the 2015-end level.

Cash flow from operations plunged 48% to $407 million.

As of Dec 31, 2016, diluted book value per share was $58.27, up 8% year over year.

Operating return on equity was 7.9% in 2016 compared with 7.7% in 2015.

Share Repurchase and Dividend Update

The company repurchased 10.5 million shares in 2016. The board of directors approved a share repurchase program of $1, effective through Dec 31, 2017. AXIS Capital had $975 million remaining authorization under the common shares' repurchase program up to Dec 2016.

The company declared dividend of $1.43 per common share.

During 2016, AXIS Capital paid back $644 million, or 157% of operating income, to its shareholders via dividends and share repurchases. Share count was lowered by 11%.

The board of directors approved a share repurchase program of $1, effective through Dec 31, 2017.

Axis Capital Holdings Limited Price, Consensus and EPS Surprise

Axis Capital Holdings Limited Price, Consensus and EPS Surprise | Axis Capital Holdings Limited Quote

Zacks Rank

AXIS Capital presently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank stocks here .

Performance of Other P&C Insurers

Among the other players from the same space that have reported their fourth-quarter earnings so far, the bottom line at Progressive Corp. PGR and The Travelers Companies Inc.. TRV and RLI Corp. RLI beat their respective Zacks Consensus Estimate.

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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.


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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