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AXIS Capital's (AXS) Q4 Earnings Beat, Revenues Fall Y/Y

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AXIS Capital Holdings Limited (AXS - Free Report) incurred fourth-quarter 2020 operating loss of 20 cents per share, narrower than the Zacks Consensus Estimate of an operating loss of 40 cents. The bottom line deteriorated from the year-ago quarter’s operating income of 5 cents per share.

The company’s results reflect higher gross premiums written and lower expenses, which were offset by soft performance of the Reinsurance segment.

Axis Capital Holdings Limited Price, Consensus and EPS Surprise

  Axis Capital Holdings Limited Price, Consensus and EPS Surprise

Full-Year Highlights

In 2020, AXIS Capital delivered operating loss of $2.08 per share, narrower than the Zacks Consensus Estimate of operating loss of $2.28 per share. Moreover, the bottom line  declined from the year-ago quarter’s operating income of $2.52 per share.

Total operating revenues of $4.7 billion missed the consensus mark by 0.6% and also decreased 6.8% year over year.

Quarterly Operational Update

Operating revenues of about $1.2 billion decreased 7.8% year over year.

Gross premiums written improved 6.9% year over year to about $1.3 billion, largely driven by a 14.8% increase in the Insurance segment, which was offset by 18.6% decrease in the Reinsurance segment.

Net investment income decreased 6.8% year over year to nearly $109.5 million, primarily due to a decrease in yields.

Total expenses in the quarter under review decreased 3.8% year over year to $1.3 billion, attributable to lower net losses and loss expenses, acquisition costs, interest expense and financing costs plus amortization of intangible assets, reorganization expenses and amortization of value of business acquired.

AXIS Capital incurred underwriting loss of $325.5 million against the prior-year quarter’s income of $28.5 million. Combined ratio deteriorated 700 basis points (bps) to 109.6%.

Segment Results

Insurance: Gross premiums written improved 14.8% year over year to $1.1 billion owing to increases in professional lines, liability and property lines driven by new business and favorable rate changes, and an increase in credit and political risk due to premium adjustments.

Net premiums earned inched up 5.4% year over year to $589.8 million.
Underwriting loss totaled $66 million in contrast to the year-ago quarter’s income of $29 million. Combined ratio deteriorated 1640 bps to 11.3%.

Reinsurance: Gross premiums written in the fourth quarter decreased 18.6% year over year to $244 million, primarily attributable to decreases in motor, accident and health, agriculture and engineering lines due to timing differences and the non-renewal of certain contracts. These decreases were partially offset by increases in liability and professional lines due to premium adjustments primarily related to favorable market conditions.

Net premiums earned declined 18.8% year over year to $497.6 million.
Underwriting loss of $14.8 million was significantly narrower than the year-ago quarter’s loss of $78.9 million. Combined ratio improved 1120 bps year over year to 102.3%.

Financial Update

AXIS Capital exited 2020 with cash and cash equivalents of $902.8 million, down 27.2% over the level at 2019 end.

Debts were $1.3 billion at 2020 end, down 27.6% from 2019-end level.

Book value per share increased 1% year over year to $55.09 as of Dec 31, 2020.

Operating return on equity totaled (1.4%) in the fourth quarter compared to 0.4% in the year-ago period.

Dividend Update

The company announced a dividend of 42 cents per share in the reported quarter, which represents an increase of 2.4% and is the 17th consecutive year the insurer has increased dividends since its initial public offering in 2003. Over the past year, total dividends declared amounted to $1.65 per share.

Zacks Rank

AXIS Capital currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

Fourth-quarter earnings of The Progressive Corporation (PGR - Free Report) , W.R. Berkley Corporation (WRB - Free Report) , and Brown & Brown (BRO - Free Report) beat the respective Zacks Consensus Estimate.

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