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AXIS Capital Holdings Limited (AXS - Analyst Report) reported third-quarter 2013 net operating income of $1.74 per share, which was substantially above the Zacks Consensus Estimate of $1.17. Earnings improved 6.7% year over year.

A sturdy top line, largely driven by higher premium aided the outperformance. A lower share count also added to the upside.

Including net realized investment loss of $4.4 million or 4 cents per share and foreign exchange loss of $55.2 million or 49 cents per share, AXIS Capital reported net income of $137 million or $1.21 per share. This compares unfavorably with a profit of $223 million or $1.82 per share in the prior-year quarter.

Quarterly Operational Performance

Gross premiums written by AXIS Capital in the quarter improved 6.7% year over year to $904.8 million, aided by a 8.5% improvement in insurance segment and 3.8% in the reinsurance segment.

Net premiums earned in the reported quarter were $945 million, up 9.6% year over year.

Net investment income of AXIS Capital slid 0.2% year over year to $103.4 million.

Total revenue of AXIS Capital grossed $1.04 billion in the quarter, improving 2.6% from the year-ago quarter. The top line comfortably surpassed the Zacks Consensus Estimate of $1.03 billion.

Total expenses in the quarter were $888 million, escalating 14.5% year over year, largely due to higher net losses and loss expenses, acquisition costs and general and administrative expenses.

Underwriting income of AXIS Capital declined 1.2% year over year to $153.1 million in the quarter. The combined ratio deteriorated 100 basis points to 86.3% in the quarter.

Pre-tax net cat losses, net of reinstatement premiums, were $51 million.

Quarterly Segment Update

Insurance Segment: Gross premiums written in the quarter under review improved 9% year over year to $575 million, driven by solid performance at professional and liability lines of business with accident & health line of business and property aiding the upside.

Net premiums earned augmented 12% year over year to $448 million on the back of expansion in accident & health, and property businesses.

Underwriting loss incurred was $89 million, up 17% year over year. Combined ratio for the quarter improved 70 basis points to 80.4%.

Reinsurance Segment: Gross premiums written in the quarter increased 4% year over year to $330 million, largely driven by improved performance in professional lines of businesses as well as the agriculture line.

Net premiums earned improved 7% in the quarter to $497 million, driven by an expansion in the agriculture line of business.

Underwriting income declined 19% year over year to $64 million in the quarter. Combined ratio improved 400 basis points to 83.1% in the quarter.

Financial Position

AXIS Capital exited 2012 with cash and cash equivalents of $1.1 billion, up 30% from 2012 end level.

Total capitalization as of Sep 30, 2013, was $6.8 billion, including $1.0 billion of long-term debt and $0.6 billion of preferred equity.

Book value per share was $44.60 as of Sep 30, 2013, up 2% year over year.

AXIS Capital’s return on equity was 15.6% in the reported quarter down from 15.2% in the year-ago quarter.

AXIS Capital’s net cash flow from operations was $432 million, up 2% year over year.

Results Elsewhere

Allied World Assurance Company Holdings, AG (AWH - Snapshot Report) reported its third-quarter 2013 operating net income of $2.93 per share, surpassing the Zacks Consensus Estimate by 37.5%. The results also surged 35.6% from the year-ago quarter results.

Montpelier Re Holdings Ltd. (MRH - Analyst Report) reported third-quarter 2013 operating net income of $1.38 per share, beating the Zacks Consensus Estimate of 74 cents by a significant 86%. Earnings also surged 62% from 85 cents per share earned in the year-ago quarter.

Cincinnati Financial Corp. (CINF - Analyst Report) reported third quarter 2013 operating earnings of 70 cents per share, significantly exceeding the Zacks Consensus Estimate of 55 cents per share. Earnings also grew 9.4% year over year.

Zacks Rank

AXIS Capital currently carries a Zacks Rank #2 (Buy).

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