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AXIS Capital's Growth Initiatives Impress; Competition a Drag


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On Sep 23, 2016, we issued an updated research report on AXIS Capital Holdings Limited (AXS - Analyst Report) .

AXIS Capital continues to benefit from new business opportunities across its lines of business and also makes the most of the scopes available worldwide. These, in turn, help the insurer deliver growth in premiums.

AXIS Capital remains focused on augmenting its portfolio mix, and improving underwriting profitability. The insurer also strives to strengthen its casualty and professional lines in the insurance segment, particularly motor and reinsurance.

These apart, it undertakes strategic initiatives to accelerate growth.

The Zacks Rank #3 (Hold) property and casualty (P&C) insurer engages in effective capital deployment on the back of its operational strength, thereby enhancing shareholders’ value. These initiatives not only help it to retain investor confidence but also attract potential investors to the stock.

However, AXIS Capital is a P&C insurer and hence, remains exposed to catastrophe events. As a result, its underwriting results remain volatile.

Also, escalating expenses are a concern. To this end, the company intends to lower expenses by $50 million to $60 million by the end of 2017. Increasing competition in the reinsurance industry can also decelerate growth and lower profitability for AXIS Capital.

In the absence on any near-term catalysts fueling growth, the Zacks Consensus Estimate has been revised downward over the last 60 days.

Nonetheless, AXIS Capital continues fortify its Specialty Insurance, Reinsurance, and Accident and Health in expectations of long-term growth. The expected long-term earnings growth is currently pegged at 8.5%

Stocks to Consider

Some better-ranked insurers are National Interstate Corporation (NATL - Snapshot Report) , Erie Indemnity Company (ERIE - Snapshot Report) and Cincinnati Financial Corp. (CINF - Analyst Report) . While National Interstate and Erie Indemnity sport Zacks Rank #1 (Strong Buy), Cincinnati Financial carries Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Erie Indemnity, which provides sales, underwriting, and policy issuance services for the policyholders on behalf of the Erie Insurance Exchange, has witnessed upward revision in the Zacks Consensus Estimate for 2016 but downward revision in the same for 2017 over the last 60 days.

National Interstate, a specialty P&C insurance provider, has witnessed upward revision in the Zacks Consensus Estimate over the last 60 days for both 2016 and 2017.

Cincinnati Financial, a property casualty insurer, has witnessed upward revision in the Zacks Consensus Estimate over the last 60 days for both 2016 and 2017.

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