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AXIS Capital (AXS) Q3 Earnings Beat Estimates, Surge Y/Y
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AXIS Capital Holdings Limited (AXS - Free Report) reported third-quarter 2016 earnings per share of $1.78 that beat the Zacks Consensus Estimate by 63.3%. Also, earnings skyrocketed 249% from the year-ago quarter driven by improved year-over-year results at AXIS Insurance, AXIS Re and AXIS Accident & Health businesses.
AXIS Capital’s net income declined 21.6% year over year to $1.96 per share.
Operational Update
Operating revenues of about $1.05 billion missed the Zacks Consensus Estimate of $1.08 billion. However, revenues increased 9.4% year over year.
Gross premiums written grew 2.5% year over year to approximately $960 million on the back of 11.3% growth in the Insurance segment. However, a 13.7% decrease in reinsurance segment partially offset the upside. Net investment income soared nearly 156% to $117 million fueled by changes in the fair value of alternative investments.
Total expense in the quarter decreased 5.9% year over year to $864.1 million.
AXIS Capital’s underwriting income surged 84.9% year over year to $103.9 million. Combined ratio improved 400 basis points (bps) to 92.6%. Catastrophe and weather-related pre-tax net losses, narrowed 48.8% year over year to $22 million.
Segment Result
Insurance Segment: Gross premiums written increased 11.3% year over year owing to new business in accident, and health & property lines.
Net premiums earned remained flat year over year but inched up 1% 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 $25.2 million surged 265.3% from the year-ago quarter. Combined ratio improved 420 bps to 94.4%.
Reinsurance Segment: Gross premiums written in the quarter decreased 13.7% year over year to $284.5 million, largely driven by the professional and liability lines wherein the restructuring of several large quota share treaties affected the timing of premium recognition.
Net premiums earned rose 3.1% year over year owing to solid premium growth in liability, marine and other, as well as the catastrophe lines. Also, the impact of favorable premium adjustments on the credit and surety lines drove the upside. Underwriting income jumped 59.7% year over year to $78.8 million. Combined ratio improved 460 bps year over year to 85.1%.
Financial Update
AXIS Capital exited the quarter with cash and cash equivalents of $848.2 million, down 14.2% from the 2015-end level.
Cash flow from operations plunged 65.4% to $203 million.
As of Sep 30, 2016, diluted book value per share was $59.77, up 11% year over year.
Operating return on equity was 12% compared with 3.9% in the year-ago quarter.
Share Repurchase and Dividend Update
The company repurchased $126 million worth shares in the quarter. The company has $375 million remaining authorization under the common shares’ repurchase program up to Dec 2016. The company declared dividend of 35 cents per common share.
Among the other players from the same space that have reported their third-quarter earnings so far, the bottom line at Progressive Corp.(PGR - Free Report) and The Travelers Companies Inc. (TRV - Free Report) beat their respective Zacks Consensus Estimate, while RLI Corp. (RLI - Free Report) missed the same.
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AXIS Capital (AXS) Q3 Earnings Beat Estimates, Surge Y/Y
AXIS Capital Holdings Limited (AXS - Free Report) reported third-quarter 2016 earnings per share of $1.78 that beat the Zacks Consensus Estimate by 63.3%. Also, earnings skyrocketed 249% from the year-ago quarter driven by improved year-over-year results at AXIS Insurance, AXIS Re and AXIS Accident & Health businesses.
AXIS Capital’s net income declined 21.6% year over year to $1.96 per share.
Operational Update
Operating revenues of about $1.05 billion missed the Zacks Consensus Estimate of $1.08 billion. However, revenues increased 9.4% year over year.
Gross premiums written grew 2.5% year over year to approximately $960 million on the back of 11.3% growth in the Insurance segment. However, a 13.7% decrease in reinsurance segment partially offset the upside. Net investment income soared nearly 156% to $117 million fueled by changes in the fair value of alternative investments.
Total expense in the quarter decreased 5.9% year over year to $864.1 million.
AXIS Capital’s underwriting income surged 84.9% year over year to $103.9 million. Combined ratio improved 400 basis points (bps) to 92.6%. Catastrophe and weather-related pre-tax net losses, narrowed 48.8% year over year to $22 million.
Segment Result
Insurance Segment: Gross premiums written increased 11.3% year over year owing to new business in accident, and health & property lines.
Net premiums earned remained flat year over year but inched up 1% 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 $25.2 million surged 265.3% from the year-ago quarter. Combined ratio improved 420 bps to 94.4%.
Reinsurance Segment: Gross premiums written in the quarter decreased 13.7% year over year to $284.5 million, largely driven by the professional and liability lines wherein the restructuring of several large quota share treaties affected the timing of premium recognition.
Net premiums earned rose 3.1% year over year owing to solid premium growth in liability, marine and other, as well as the catastrophe lines. Also, the impact of favorable premium adjustments on the credit and surety lines drove the upside. Underwriting income jumped 59.7% year over year to $78.8 million. Combined ratio improved 460 bps year over year to 85.1%.
Financial Update
AXIS Capital exited the quarter with cash and cash equivalents of $848.2 million, down 14.2% from the 2015-end level.
Cash flow from operations plunged 65.4% to $203 million.
As of Sep 30, 2016, diluted book value per share was $59.77, up 11% year over year.
Operating return on equity was 12% compared with 3.9% in the year-ago quarter.
Share Repurchase and Dividend Update
The company repurchased $126 million worth shares in the quarter. The company has $375 million remaining authorization under the common shares’ repurchase program up to Dec 2016. The company declared dividend of 35 cents per common share.
AXIS CAP HLDGS Price, Consensus and EPS Surprise
AXIS CAP HLDGS Price, Consensus and EPS Surprise | AXIS CAP HLDGS 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 third-quarter earnings so far, the bottom line at Progressive Corp.(PGR - Free Report) and The Travelers Companies Inc. (TRV - Free Report) beat their respective Zacks Consensus Estimate, while RLI Corp. (RLI - Free Report) missed the same.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>