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AXIS Capital (AXS) Q3 Earnings Top, Underwriting Improves
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AXIS Capital Holdings Limited (AXS - Free Report) posted third-quarter 2023 operating income of $2.34 per share, beating the Zacks Consensus Estimate by 25.8%. The bottom line increased from 3 cents in the year-ago quarter.
The insurer’s results reflected higher net investment income, increased underwriting income, improved combined ratio and lower expense.
Quarterly Operational Update
Total operating revenues of $1.5 billion beat the Zacks Consensus Estimate by 3.3%. The top line rose 37.6% year over year on higher net investment income and higher premiums earned.
Axis Capital Holdings Limited Price, Consensus and EPS Surprise
Net premiums written decreased 6% to $1 billion, attributable to a 65% decline in the Reinsurance segment, partially offset by a 14% increase in the Insurance segment. Our estimate was $1.4 billion.
Net investment income increased 75% year over year to $154 million, primarily driven by higher income from the fixed maturities portfolio due to increased yields. Our estimate was $122.3 million.
Total expenses in the quarter under review decreased 0.5% year over year to $1.2 billion due to lower net losses and loss expenses. Our estimate for the same was also $1.2 billion.
Pre-tax catastrophe and weather-related losses and net of reinsurance were $42 million, primarily attributable to Maui wildfires, Hurricane Idalia and other weather-related events. The loss was narrower than the year-ago loss of $212 million.
AXIS Capital’s underwriting income of $147 million rebounded from the year-ago loss of $29 million.
The combined ratio improved 1160 basis points (bps) to 92.7. The Zacks Consensus Estimate was pegged at 94. Our estimate was 95.
Segment Results
Insurance: Gross premiums written improved 10.6% year over year to $1.5 billion, driven by increases in property, liability, and marine and aviation lines due to favorable rate changes and new business, and accident and health lines mainly due to new business, partially offset by decreases in cyber lines. Our estimate was $1.6. billion. Net premiums earned increased 13.2% year over year to $885.7 million. Our estimate was $956.9 million.
Underwriting income of $104.6 million increased more than six-fold year over year. The combined ratio improved 980 bps to 88.2. The Zacks Consensus Estimate for combined ratio was pegged at 78.
Reinsurance: Gross premiums written increased 15% year over year to $448.3 million, driven by increases in liability, and credit and surety lines due to new business and increased line sizes, and professional lines, largely driven by new business. Our estimate was $492.6 million.
Net premiums earned decreased 13.1% year over year to $436.8 million. Our estimate was $356.7 million.
Underwriting income of $42.4 million rebounded from the year-ago loss of $44.8 million. The combined ratio improved 1640 bps year over year to 92.7. The Zacks Consensus Estimate for combined ratio was pegged at 169.
Financial Update
AXIS Capital exited the third quarter with cash and cash equivalents of $1.3 billion, up 7.9% from the 2022 end level.
Debt was $1.3 billion at quarter-end, up 0.1% from the 2022-end level.
Book value per share increased 9% from 2022 end to $51.17 as of Sep 30, 2023, driven by net income, partially offset by net unrealized investment losses reported in accumulated other comprehensive income (loss), and common share dividends declared.
Annualized operating return on average common equity was 18% in the third quarter, which expanded 1500 bps year over year.
Capital Deployment
As of Sep 30, 2023, AXIS Capital had $100 million remaining authorization under the board-authorized share repurchase program for common share repurchases through Dec 31, 2023.
The Travelers Companies (TRV - Free Report) reported third-quarter 2023 core income of $1.95 per share, which missed the Zacks Consensus Estimate by 33.4%. The bottom line decreased 11.4% year over year, primarily attributable to higher catastrophe losses and net unfavorable prior-year reserve development. Travelers’ total revenues increased 14% from the year-ago quarter to $10.6 billion, primarily driven by higher premiums. The top-line figure beat the Zacks Consensus Estimate by 1.3%.
Net written premiums increased 14% year over year to a record $10.4 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $9.4 billion. Travelers witnessed an underwriting gain of $868 million, up 43% year over year, driven by record net earned premiums of $9.7 billion and a consolidated underlying combined ratio, which improved by 90.6%.
The Progressive Corporation’s (PGR - Free Report) third-quarter 2023 earnings per share of $2.09 beat the Zacks Consensus Estimate of $1.71. The bottom line improved more than fourfold year over year. Net premiums written were $15.6 billion in the quarter, which grew 20% from $13 billion a year ago and beat our estimate of $14.2 billion.
Net premiums earned grew 20% to $14.9 billion, beating our estimate of $13.6 billion and the Zacks Consensus Estimate of $14.8 billion. Net realized losses on securities were $149 million, narrower than a loss of $216.4 million in the year-ago quarter. The combined ratio — the percentage of premiums paid out as claims and expenses — improved 680 bps from the prior-year quarter’s level to 92.4.
RLI Corp. (RLI - Free Report) reported third-quarter 2023 operating earnings of 61 cents per share, beating the Zacks Consensus Estimate by 510%. The bottom line improved 22% from the prior-year quarter. Operating revenues for the reported quarter were $350.4 million, up 12.1% year over year, driven by 9.2% higher net premiums earned and 50.3% higher net investment income. The top line, however, missed the Zacks Consensus Estimate by 7.2%.
Gross premiums written increased 11.3% year over year to $449.3 million. Underwriting income of $4.2 million decreased 52.3%, primarily due to Hawaiian wildfire losses. The combined ratio deteriorated 170 basis points year over year to 98.7. Our estimate was 90.8.
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AXIS Capital (AXS) Q3 Earnings Top, Underwriting Improves
AXIS Capital Holdings Limited (AXS - Free Report) posted third-quarter 2023 operating income of $2.34 per share, beating the Zacks Consensus Estimate by 25.8%. The bottom line increased from 3 cents in the year-ago quarter.
The insurer’s results reflected higher net investment income, increased underwriting income, improved combined ratio and lower expense.
Quarterly Operational Update
Total operating revenues of $1.5 billion beat the Zacks Consensus Estimate by 3.3%. The top line rose 37.6% year over year on higher net investment income and higher premiums earned.
Axis Capital Holdings Limited Price, Consensus and EPS Surprise
Axis Capital Holdings Limited price-consensus-eps-surprise-chart | Axis Capital Holdings Limited Quote
Net premiums written decreased 6% to $1 billion, attributable to a 65% decline in the Reinsurance segment, partially offset by a 14% increase in the Insurance segment. Our estimate was $1.4 billion.
Net investment income increased 75% year over year to $154 million, primarily driven by higher income from the fixed maturities portfolio due to increased yields. Our estimate was $122.3 million.
Total expenses in the quarter under review decreased 0.5% year over year to $1.2 billion due to lower net losses and loss expenses. Our estimate for the same was also $1.2 billion.
Pre-tax catastrophe and weather-related losses and net of reinsurance were $42 million, primarily attributable to Maui wildfires, Hurricane Idalia and other weather-related events. The loss was narrower than the year-ago loss of $212 million.
AXIS Capital’s underwriting income of $147 million rebounded from the year-ago loss of $29 million.
The combined ratio improved 1160 basis points (bps) to 92.7. The Zacks Consensus Estimate was pegged at 94. Our estimate was 95.
Segment Results
Insurance: Gross premiums written improved 10.6% year over year to $1.5 billion, driven by increases in property, liability, and marine and aviation lines due to favorable rate changes and new business, and accident and health lines mainly due to new business, partially offset by decreases in cyber lines. Our estimate was $1.6. billion. Net premiums earned increased 13.2% year over year to $885.7 million. Our estimate was $956.9 million.
Underwriting income of $104.6 million increased more than six-fold year over year. The combined ratio improved 980 bps to 88.2. The Zacks Consensus Estimate for combined ratio was pegged at 78.
Reinsurance: Gross premiums written increased 15% year over year to $448.3 million, driven by increases in liability, and credit and surety lines due to new business and increased line sizes, and professional lines, largely driven by new business. Our estimate was $492.6 million.
Net premiums earned decreased 13.1% year over year to $436.8 million. Our estimate was $356.7 million.
Underwriting income of $42.4 million rebounded from the year-ago loss of $44.8 million. The combined ratio improved 1640 bps year over year to 92.7. The Zacks Consensus Estimate for combined ratio was pegged at 169.
Financial Update
AXIS Capital exited the third quarter with cash and cash equivalents of $1.3 billion, up 7.9% from the 2022 end level.
Debt was $1.3 billion at quarter-end, up 0.1% from the 2022-end level.
Book value per share increased 9% from 2022 end to $51.17 as of Sep 30, 2023, driven by net income, partially offset by net unrealized investment losses reported in accumulated other comprehensive income (loss), and common share dividends declared.
Annualized operating return on average common equity was 18% in the third quarter, which expanded 1500 bps year over year.
Capital Deployment
As of Sep 30, 2023, AXIS Capital had $100 million remaining authorization under the board-authorized share repurchase program for common share repurchases through Dec 31, 2023.
Zacks Rank
AXIS Capital currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
The Travelers Companies (TRV - Free Report) reported third-quarter 2023 core income of $1.95 per share, which missed the Zacks Consensus Estimate by 33.4%. The bottom line decreased 11.4% year over year, primarily attributable to higher catastrophe losses and net unfavorable prior-year reserve development. Travelers’ total revenues increased 14% from the year-ago quarter to $10.6 billion, primarily driven by higher premiums. The top-line figure beat the Zacks Consensus Estimate by 1.3%.
Net written premiums increased 14% year over year to a record $10.4 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $9.4 billion. Travelers witnessed an underwriting gain of $868 million, up 43% year over year, driven by record net earned premiums of $9.7 billion and a consolidated underlying combined ratio, which improved by 90.6%.
The Progressive Corporation’s (PGR - Free Report) third-quarter 2023 earnings per share of $2.09 beat the Zacks Consensus Estimate of $1.71. The bottom line improved more than fourfold year over year. Net premiums written were $15.6 billion in the quarter, which grew 20% from $13 billion a year ago and beat our estimate of $14.2 billion.
Net premiums earned grew 20% to $14.9 billion, beating our estimate of $13.6 billion and the Zacks Consensus Estimate of $14.8 billion. Net realized losses on securities were $149 million, narrower than a loss of $216.4 million in the year-ago quarter. The combined ratio — the percentage of premiums paid out as claims and expenses — improved 680 bps from the prior-year quarter’s level to 92.4.
RLI Corp. (RLI - Free Report) reported third-quarter 2023 operating earnings of 61 cents per share, beating the Zacks Consensus Estimate by 510%. The bottom line improved 22% from the prior-year quarter. Operating revenues for the reported quarter were $350.4 million, up 12.1% year over year, driven by 9.2% higher net premiums earned and 50.3% higher net investment income. The top line, however, missed the Zacks Consensus Estimate by 7.2%.
Gross premiums written increased 11.3% year over year to $449.3 million. Underwriting income of $4.2 million decreased 52.3%, primarily due to Hawaiian wildfire losses. The combined ratio deteriorated 170 basis points year over year to 98.7. Our estimate was 90.8.