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Analyst Blog

On May 13, 2013, shares of AXIS Capital Holdings Limited (AXS - Analyst Report) hit a 52-week high of $45.77. The property and casualty insurer reported a strong first quarter, which included a 85.7% positive surprise.

On Apr 25, 2013, AXIS Capital reported first-quarter 2013 net operating income of $1.92 per share, which breezed past the Zacks Consensus Estimate. Earnings surged 79% year over year. Improvement in top line driven by higher premiums and net realized investment gains aided the solid numbers. The quarter marked the third consecutive quarter of positive surprise with an average beat of nearly 71%.

Underwriting performance of AXIS Capital befitted from the absence of any major catastrophe events in the first quarter. Underwriting income increased nearly threefold year over year to $170.8 million, while combined ratio improved 1180 basis points.

Additionally, Fitch Ratings reiterated the Issuer Default Rating (IDR) of A and senior debt rating of ‘A-’ of AXIS Capital. Concurrently, the rating agency affirmed Insurer Financial Strength (IFS) ratings of AXIS Capital's operating subsidiaries at ‘A+.’ Outlook remains stable.

Valuation for AXIS Capital looks attractive. The shares are trading at a discount to the peer group average both on a price-to-book basis (7.3% discount to peer group) and on a forward price-to-earnings basis (36.8% discount to peer group) with return on equity higher than the peer group average (27.2% higher than the peer group average). The year-to-date return from the stock is 31.4%, much above S&P’s return of 14.6%.   

AXIS Capital presently carries a Zacks Rank #1 (Strong Buy). Property and casualty insurers like Hilltop Holdings Inc. (HTH - Analyst Report), Montpelier Re Holdings Ltd. (MRH - Analyst Report) and Platinum Underwriters Holdings Ltd. (PTP - Snapshot Report) among others carry the same Zacks Rank and appear impressive.

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