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Earnings momentum for Axis Capital Holdings Limited (AXS - Analyst Report) has advanced in the past week following strong third quarter results, including 61.4% positive earnings surprise. Moreover, with a price-to-book (P/B) ratio of just 0.87, this Zacks #2 Rank (Buy) insurance and reinsurance provider is a true value pick.

Strong Third Quarter

On October 31, Axis Capital reported third quarter 2012 operating earnings of $1.63 per share, which was 61.4% above the Zacks Consensus Estimate of $1.01 and 120.3% better than the year-ago result of 74 cents.

The quarter experienced a low level of catastrophe and large loss activity. Also, strong equity markets and the subsequent return from investments had a positive impact. Share buybacks boosted the bottom line.

Total revenue grossed $1.02 billion in the quarter, improving 7.4% from the year-ago quarter. The top line comfortably surpassed the Zacks Consensus Estimate by 4%.

Net premiums earned in the reported quarter were $862 million, up 3.7% year over year. Net investment income more than doubled to $103.6 million, largely driven by alternative investments.

Underwriting profit of $337 million in the quarter rebounded from a loss of $342 million in the year-ago quarter. The combined ratio improved 2550 basis points to 90.8%.

During the third quarter, AXIS Capital spent $179 million to buy back 5.2 million shares.

Return on equity was 15.2% in the quarter, compared with 7.8% in the year-ago quarter.

Positive Earnings Estimate Revisions

Following the solid quarter, the Zacks Consensus Estimate for 2012 increased 2.5% to $4.15 in the past 7 days, representing a year-over-year increase of approximately 429.7%. For 2013, the Zacks Consensus Estimate has moved higher by 2.7% to $3.80 over the same time frame.

Attractive Valuation

Along with a very attractive P/B multiple, Axis Capital has a price-to-earnings (P/E) ratio as low as 8.91 (a P/B ratio under 3.0 and P/E ratio below 15.0 indicate value).

Moreover, the company has a 1-year return on equity (ROE) of 8.6%, higher than its peer group average of 7.6%.

Headquartered in Pembroke, Bermuda, and founded in 2001, AXIS Capital Holdings Limited is a global provider of specialty lines insurance and treaty reinsurance. With a market capitalization of $4.3 billion and 1,100 full time employees, the company operates in Bermuda, the U.S., Singapore, Europe, Canada, Australia and Latin America. It competes with ACE Limited (ACE) and Swiss Re Ltd (SSREY) among others.

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