It has been about a month since the last earnings report for Axis Capital (AXS Quick QuoteAXS - Free Report) . Shares have lost about 0.5% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Axis Capital due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

AXIS Capital's  Q1 Earnings Beat on Solid Underwriting

AXIS Capital Holdings Limited posted first-quarter 2022 operating income of $2.09 per share, beating the Zacks Consensus Estimate by 20.1%. The bottom line increased two-fold year over year.

The insurer’s results reflect higher net premiums earned as well as increased underwriting income and improved combined ratio. It was offset by a decrease in net investment income and higher expenses.

Quarterly Operational Update  

Total operating revenues of $1.3 billion missed the Zacks Consensus Estimate by 2.6%. The top line however rose 11% year over year on higher net premiums earned and other insurance-related income. It was partially offset by lower net investment income. Net investment income decreased 20.2% year over year to $91 million, primarily attributable to lower gains from other investments.

Total expenses in the quarter under review increased 0.8% year over year to $1.1 billion, attributable to higher net losses and loss expenses, acquisition costs, increased general and administrative expenses, higher interest expense and financing costs and amortization of intangible assets.

Pre-tax catastrophe and weather-related losses, net of reinsurance, were $60 million, primarily attributable to the Russia-Ukraine war, Eastern Australia floods, and other weather-related events. This compares favorably with the year-ago loss of $110 million. AXIS Capital’s underwriting income of $138.8 million increased more than threefold year over year. The combined ratio improved 750 basis points (bps) to 91.4.

Segment Results

Insurance: Gross premiums written improved 20.3% year over year to $1.3 billion, primarily attributable to increases in professional lines, liability, and property lines driven by new business and favorable rate changes.

Net premiums earned increased 22.2% year over year to $752.8 million.
Underwriting income of $94.4 million increased more than two-fold year over year. The combined ratio improved 630 bps to 87.5.

Reinsurance: Gross premiums written decreased 8.7% year over year to $1.3 billion, primarily attributable to decreases in catastrophe, motor, and property lines due to non-renewals and decreased line sizes. It was partially offset by increases in accident and health, and credit and surety lines driven by new business. The timing of renewals contributed to the increase in accident and health lines.

Net premiums earned increased 3.7% year over year to $505.4 million.
Underwriting income of $44.4 million surged 31-fold year over year. The combined ratio improved 770 bps year over year to 92.5.

Financial Update

AXIS Capital exited the first quarter with cash and cash equivalents of $1.7 billion, up 29.5% over the level from 2021 end. Debts were $1.3 billion at quarter-end, up 0.02% from the 2021-end level.

Book value per share decreased 6.8% from 2021 end to $51.97 as of Mar 31, 2022, due to net unrealized losses reported in other comprehensive income and common share dividends declared. It was partially offset by net income generated.

Annualized return on equity was 12% in the first quarter, which expanded 210 bps year over year.

Dividend Update

AXIS Capital announced a dividend of 43 cents per share in the reported quarter.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month.

The consensus estimate has shifted -13.45% due to these changes.

VGM Scores

Currently, Axis Capital has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Axis Capital has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

Performance of an Industry Player

Axis Capital belongs to the Zacks Insurance - Property and Casualty industry. Another stock from the same industry, Travelers (TRV Quick QuoteTRV - Free Report) , has gained 0.2% over the past month. More than a month has passed since the company reported results for the quarter ended March 2022.

Travelers reported revenues of $8.83 billion in the last reported quarter, representing a year-over-year change of +6.8%. EPS of $4.22 for the same period compares with $2.73 a year ago.

For the current quarter, Travelers is expected to post earnings of $2.04 per share, indicating a change of -40.9% from the year-ago quarter. The Zacks Consensus Estimate has changed -3.9% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Travelers. Also, the stock has a VGM Score of A.