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AXIS Capital (AXS) Q2 Earnings Beat, Fall Y/Y on Cat Loss
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AXIS Capital Holdings Limited (AXS - Free Report) reported second-quarter 2016 earnings per share of 51 cents beat the beating the Zacks Consensus Estimate by 45%. However, earnings plunged 45.2% year over year.
The quarter suffered due to losses from catastrophe events.
AXIS Capital’s net income more than doubled year over year to $1.20 per share.
Operational Update
Operating revenues of about $1.04 billion missed the Zacks Consensus Estimate of $1.08. However, revenues inched up 1% year on year.
Gross premiums written improved 11% year over year to $1.3 billion driven by 26% growth in the Reinsurance segment and 3% increase in Insurance. Net investment income increased 3% to $92 million fueled by changes in the fair value of alternative investments.
Total expense in the quarter decreased 2.4% year over year to $924.5 million.
AXIS Capital’s underwriting income plunged 83% year over year to $9.9 million. Combined ratio deteriorated 530 basis points (bps) to 102.2%. Catastrophe and weather-related pre-tax net losses, net of reinstatement premiums, of $104 million (Insurance segment incurred $41 million and Reinsurance segment incurred $63 million) stemming from Fort McMurray wildfires, U.S. weather-related events, Japanese and Ecuadorian earthquakes and European floods weighed on the underwriting results.
Segment Result
Insurance Segment: Gross premiums written increased 3% year over year attributable to new business in property lines. However, lower premiums in professional lines due to the exit from retail insurance operations in Australia were partial dampeners.
Net premiums earned decreased 3% year over year and 1% on a constant currency basis attributable to lower premiums written in marine and professional lines, as well as increases in professional lines' ceded reinsurance programs. Nonetheless, higher premiums written in recent periods, primarily in accident and health lines, limited the downside.
Underwriting loss of $11 million compares unfavorably with breakeven underwriting results in the year-ago quarter. Combined ratio deteriorated 240 basis points to 102.5%. Huge catastrophe loss stemming from the U.S. weather events, the Japanese earthquake and the Fort McMurray wildfires accounted for the unfavorable results.
Reinsurance Segment: Gross premiums written in the quarter surged 26% year over year to $536 million, largely due to a higher number of premiums written in liability, professional and catastrophe lines.
Net premiums earned increased by 17% year over year. Underwriting income decreased 22%. Combined ratio deteriorated 670 bps year over year. The unfavorable results were due to catastrophe losses stemming from Fort McMurray wildfires, the Japanese and Ecuadorian earthquakes, U.S. weather events and European floods.
Financial Update
AXIS Capital exited the quarter with cash and cash equivalents of $793 million, down 19.7% from the 2015-end level.
Cash flow from operations declined 47% to $77 million.
As of Jun 30, 2016, book value per share was $57.62, up 11% year over year.
Operating return on equity was 3.6% compared with 7% in the year-ago quarter.
Share Repurchase and Dividend Update
The company repurchased $127 million worth shares in the quarter taking the year-to-date total to $263 million. The company has $500 million remaining authorization under the common shares’ repurchase program which continues up to Dec 2016. The company declared dividend of 35 cents per common share. Zacks Rank
AXIS Capital presently carries a Zacks Rank #3 (Hold). Shares gained 0.09% in after- market trading hours reflecting the outperformance. We wait to see how the stock fares in the following trading sessions.
The bottom line at The Travelers Companies, Inc. (TRV - Free Report) and First American Financial Corporation (FAF - Free Report) beat their respective Zacks Consensus Estimate, while earnings of RLI Corp. (RLI - Free Report) missed the same.
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AXIS Capital (AXS) Q2 Earnings Beat, Fall Y/Y on Cat Loss
AXIS Capital Holdings Limited (AXS - Free Report) reported second-quarter 2016 earnings per share of 51 cents beat the beating the Zacks Consensus Estimate by 45%. However, earnings plunged 45.2% year over year.
The quarter suffered due to losses from catastrophe events.
AXIS Capital’s net income more than doubled year over year to $1.20 per share.
Operational Update
Operating revenues of about $1.04 billion missed the Zacks Consensus Estimate of $1.08. However, revenues inched up 1% year on year.
Gross premiums written improved 11% year over year to $1.3 billion driven by 26% growth in the Reinsurance segment and 3% increase in Insurance. Net investment income increased 3% to $92 million fueled by changes in the fair value of alternative investments.
Total expense in the quarter decreased 2.4% year over year to $924.5 million.
AXIS Capital’s underwriting income plunged 83% year over year to $9.9 million. Combined ratio deteriorated 530 basis points (bps) to 102.2%. Catastrophe and weather-related pre-tax net losses, net of reinstatement premiums, of $104 million (Insurance segment incurred $41 million and Reinsurance segment incurred $63 million) stemming from Fort McMurray wildfires, U.S. weather-related events, Japanese and Ecuadorian earthquakes and European floods weighed on the underwriting results.
Segment Result
Insurance Segment: Gross premiums written increased 3% year over year attributable to new business in property lines. However, lower premiums in professional lines due to the exit from retail insurance operations in Australia were partial dampeners.
Net premiums earned decreased 3% year over year and 1% on a constant currency basis attributable to lower premiums written in marine and professional lines, as well as increases in professional lines' ceded reinsurance programs. Nonetheless, higher premiums written in recent periods, primarily in accident and health lines, limited the downside.
Underwriting loss of $11 million compares unfavorably with breakeven underwriting results in the year-ago quarter. Combined ratio deteriorated 240 basis points to 102.5%. Huge catastrophe loss stemming from the U.S. weather events, the Japanese earthquake and the Fort McMurray wildfires accounted for the unfavorable results.
Reinsurance Segment: Gross premiums written in the quarter surged 26% year over year to $536 million, largely due to a higher number of premiums written in liability, professional and catastrophe lines.
Net premiums earned increased by 17% year over year. Underwriting income decreased 22%. Combined ratio deteriorated 670 bps year over year. The unfavorable results were due to catastrophe losses stemming from Fort McMurray wildfires, the Japanese and Ecuadorian earthquakes, U.S. weather events and European floods.
Financial Update
AXIS Capital exited the quarter with cash and cash equivalents of $793 million, down 19.7% from the 2015-end level.
Cash flow from operations declined 47% to $77 million.
As of Jun 30, 2016, book value per share was $57.62, up 11% year over year.
Operating return on equity was 3.6% compared with 7% in the year-ago quarter.
Share Repurchase and Dividend Update
The company repurchased $127 million worth shares in the quarter taking the year-to-date total to $263 million. The company has $500 million remaining authorization under the common shares’ repurchase program which continues up to Dec 2016. The company declared dividend of 35 cents per common share.
Zacks Rank
AXIS Capital presently carries a Zacks Rank #3 (Hold). Shares gained 0.09% in after- market trading hours reflecting the outperformance. We wait to see how the stock fares in the following trading sessions.
AXIS CAP HLDGS Price, Consensus and EPS Surprise
AXIS CAP HLDGS Price, Consensus and EPS Surprise | AXIS CAP HLDGS Quote
Performance by Other P&C Insurers
The bottom line at The Travelers Companies, Inc. (TRV - Free Report) and First American Financial Corporation (FAF - Free Report) beat their respective Zacks Consensus Estimate, while earnings of RLI Corp. (RLI - Free Report) missed the same.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>