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AXIS Capital (AXS) Q1 Earnings & Revenues Miss Estimates

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AXIS Capital Holdings Limited (AXS - Free Report) reported first-quarter 2017 earnings of 59 cents per share that missed the Zacks Consensus Estimate by 27%. Also, earnings declined 45% from the year-ago quarter.

The company had to bear the impact of the Ogden rate change in the U.K., executive severance and retirement costs, and an impairment of an equity-method investment alongside high catastrophe and weather-related losses in the quarter.

AXIS Capital’s net income plummeted 85% year over year to 6 cents per share.

Operational Update

Operating revenues of about $1.04 billion lagged the Zacks Consensus Estimate of $1.07 billion. However, revenues increased 15% year over year.

Gross premiums written declined 2% year over year to approximately $1.9 billion due to 7% lower premiums written in reinsurance segment. However, a 4% increase in premiums written in Insurance segment limited the downside.

Net investment income more than doubled to $98.7 million.

Total expense in the quarter increased 17% year over year to $992.3 million.

AXIS Capital’s underwriting income plunged 83% year over year to $16.4 million. Combined ratio deteriorated 1020 basis points (bps) to 102.1%. Catastrophe and weather-related pre-tax net losses widened to $35 million from $14 million in the year-ago quarter.

Axis Capital Holdings Limited Price, Consensus and EPS Surprise

 

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

Segment Result

Insurance Segment: Gross premiums written increased 6% year over year owing to new business in accident, and health & professional lines.

Net premiums earned increased 5% year over year on premium growth in accident and health lines, as well as property lines.

Underwriting income of $6 million declined 23% from the year-ago quarter. Combined ratio deteriorated 110 bps to 97.2%.

Reinsurance Segment: Gross premiums written in the quarter decreased 7% year over year to $1.2 billion, largely due to a lower level of premiums written on a multi-year basis.

Net premiums earned improved 4% year over year on premium growth in agriculture, liability, motor, and catastrophe lines.

Underwriting income of $3 million declined from $82 million in the year-ago quarter. Combined ratio deteriorated 1620 bps year over year to 98.5%.

Financial Update

AXIS Capital exited the quarter with cash and cash equivalents of $1.2 billion, up 12% from the 2016-end level.

Cash used in operation was $36 million as against $14 million used in the year-ago quarter.

As of Mar 31, 2017, diluted book value per share was $58.89, up 5% year over year.

Operating return on equity was 4% compared with 7.7% in year-ago quarter.

Share Repurchase and Dividend Update

The company repurchased 2.2 million shares for $151 million shares. AXIS Capital has $836 million remaining authorization under the common shares’ repurchase program up to Dec 2017.

The company declared a dividend of 38 cents per common share.

Zacks Rank

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

Performance of Other P&C Insurers

Among the other players from the insurance industry that have reported their first-quarter earnings so far, Chubb Limited (CB - Free Report) beat the Zacks Consensus Estimate but RLI Corp. (RLI - Free Report) and The Progressive Corporation (PGR - Free Report) missed expectations.

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