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Why Is Axis Capital (AXS) Down 5.7% Since Last Earnings Report?

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A month has gone by since the last earnings report for Axis Capital (AXS - Free Report) . Shares have lost about 5.7% 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's Q1 Earnings Beat, Revenues Rise Y/Y

AXIS Capital posted first-quarter 2023 operating income of $2.33 per share, beating the Zacks Consensus Estimate by 23.2%. The bottom line increased 11.5% year over year.

The insurer’s results reflected higher net investment income as well as increased underwriting income and improved combined ratio. It was offset by higher expenses.

Quarterly Operational Update   

Total operating revenues of $1.3 billion missed the Zacks Consensus Estimate by 6.7%. The top line however rose 0.6% year over year on higher net investment income.

Net investment income increased 47.2% year over year to $134 million, primarily attributable to an increase in income from fixed maturities due to increased yields.

Total expenses in the quarter under review increased 1.9% year over year to $1.14 billion, attributable to higher interest expense and financing costs.

Pre-tax catastrophe and weather-related losses, and net of reinsurance were $38 million, primarily attributable to New Zealand floods, Cyclone Gabrielle and other weather-related events. This compares favorably with the year-ago loss of $60 million.

AXIS Capital’s underwriting income of $139.4 million increased 0.4% year over year. The combined ratio improved 50 basis points (bps) to 90.9.

Segment Results

Insurance: Gross premiums written improved 6.7% year over year to $1.5 billion, primarily attributable to increases in property, liability and cyber lines due to favorable rate changes and new business and accident and health lines. It was partially offset by a decrease in professional lines due to changing market dynamics. Net premiums earned increased 8.5% year over year to $816.4 million.

Underwriting income of $103.3 million increased 9.5% year over year. The combined ratio improved 20 bps to 87.3.

Reinsurance: Gross premiums written decreased 26.1% year over year to $966.3 million. The decrease was primarily due to exit from catastrophe and property lines of business in June 2022, non-renewals of marine business and the exit from the aviation business effective Jan 1, 2023, non-renewals of U.S. regional multi-line business and decrease in accident and health lines. It was partially offset by an increase in credit and surety lines driven by new business.

Net premiums earned decreased 18.1% year over year to $413.7 million.

Underwriting income of $36 million decreased 18.9% year over year. The combined ratio improved 110 bps year over year to 91.4.

Financial Update

AXIS Capital exited the first quarter with cash and cash equivalents of $816.9 million, up 8.7% over the level from 2022 end.

Debts were $1.3 billion at quarter-end, up 0.02% from the 2022-end level.

Book value per share increased 7.2% from 2022 end to $50.31 as of Mar 31, 2023, driven by net income and net unrealized gains reported in other comprehensive income (loss). It was partially offset by common share dividends declared.

Annualized return on average common equity was 16.2% in the first quarter, which expanded 420 bps year over year.

Capital Deployment

As of Mar 31, 2023, AXIS Capital had $100 million of remaining authorization under board-authorized share repurchase program for common share repurchases through Dec 31, 2023.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

The consensus estimate has shifted -11.82% due to these changes.

VGM Scores

Currently, Axis Capital has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.


Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Axis Capital has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

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