It has been about a month since the last earnings report for Axis Capital (
AXS Quick Quote AXS - Free Report) . Shares have lost about 4.2% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important drivers.
AXIS Capital Q4 Earnings & Revenues Top Estimates AXIS Capital Holdings Limited posted fourth-quarter 2022 operating income of $1.95 per share, which beat the Zacks Consensus Estimate by about 14.7% and beat our estimate of $1.55. The bottom line dropped 8.5% year over year. The insurer’s results reflected higher net premiums earned, partially offset by a decrease in net investment income and lower expenses. The combined ratio was affected by Winter Storm Elliot, and other weather-related events. Quarterly Operational Update
Total operating revenues of $1.5 billion increased 8.6% year over year on higher net premiums earned and net investment income. The top line beat the consensus estimate as well as our estimate of $1.4 billion. Net investment income decreased 14.8% year over year to $147.1 million.
Total expenses increased 16.3% year over year to $1.4 billion, attributable to net losses and loss expenses, acquisition costs, general and administrative expenses and interest expense and financing costs Pre-tax catastrophe and weather-related losses, net of reinsurance and reinstatement premiums, decreased 15.2% year over year to $64 million. The losses were due to Winter Storm Elliot and other weather-related events. AXIS Capital’s underwriting income was $132 million, down 2.8%. The combined ratio deteriorated 100 basis points (bps) to 94.1. Segment Results Insurance: Gross premiums written improved 12% year over year to $1.4 billion, driven by increases in property and liability lines due to new business and favorable rate changes, and marine and aviation, and accident and health lines due to new business. Net premiums earned increased 15% year over year to $830.5 million. Underwriting income of $123.4 million increased 51.1% year over year. The combined ratio improved 350 bps to 85.2. Pre-tax catastrophe and weather-related losses, net of reinsurance and reinstatement premiums, increased 43.5% year over year to $33 million. Reinsurance: Gross premiums written increased 16.2% year over year to $287.9 million on increases in credit and surety lines driven by increased line sizes and new business, and increases in motor and professional lines associated with favorable market conditions. Net premiums earned decreased 1.1% year over year to $509.6 million. Underwriting income of $8.9 million plunged 83.7%. The combined ratio deteriorated 850 bps year over year to 98.8. Pre-tax catastrophe and weather-related losses, net of reinsurance and reinstatement premiums, decreased 6.2% year over year to $30 million. Full-Year Highlights
Operating income of $5.81 per share beat the Zacks Consensus Estimate of $5.57. The bottom line increased 13.5% year over year. Total operating revenues of $5.6 billion increased 7.8% year over year and beat the estimate of $5.5 billion.
Net premiums written increased 7% to $5.3 billion, driven by a 17% increase in the Insurance segment, partially offset by a 7% decrease in the Reinsurance segment. Underwriting income of $358.9 million was up 35% year over year. The combined ratio improved 170 bps to 95.8%. Financial Update
AXIS Capital exited 2022 with cash and cash equivalents of $1.2 billion, down 10.9% from the 2021 level. Debts were $1.3 billion at year-end, up 0.1% from the 2021-end level. Book value per share decreased 15.7% to $48.31 as of Dec 31, 2022.
Annualized operating return on equity was 11.1% in 2022, up 200 bps year over year. Leverage deteriorated 250 basis points to 22%. How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
Currently, Axis Capital has an average Growth Score of C, though it is lagging a bit 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 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Axis Capital has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.