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AXIS Capital (AXS) Q2 Earnings Top Estimates, Revenues Up Y/Y
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AXIS Capital Holdings Limited (AXS - Free Report) reported second-quarter 2018 operating profit of $1.27 per share, surpassing the Zacks Consensus Estimate by 6.7%. However, the bottom line declined 3.1% year over year.
Axis Capital Holdings Limited Price, Consensus and EPS Surprise
Premiums improved substantially in the reported period. The encouraging quarterly performance reflects the benefits of portfolio optimization initiatives and an earnings potential. Also, acquisition of Novae Group contributed to this upside. Insurance segment also delivered a stellar performance. However, Reinsurance segment was soft in the quarter and expenses increased year over year.
Operational Update
Operating revenues of about $1.3 billion missed the Zacks Consensus Estimate by 13.5%. However, the top line rose nearly 19.2% year over year.
Gross premiums written improved 21% year over year to about $1.7 billion, largely driven by the acquisition of Novae Group and a 4% increase in the Reinsurance segment.
Net investment income gained 3.7% year over year to nearly $102 million.
Total expense in the quarter under review rose 14.6% year over year to $1.2 billion, attributable to higher net loss and loss expenses, acquisition costs, general and administrative expenses, foreign exchange loss as well as higher interest expense plus financing costs. The period also incurred Transaction and reorganization expenses, amortization of value of business acquired and amortization of intangibles, all of which, were absent in the prior-year quarter.
AXIS Capital reported underwriting income of $115.7 million, having more than doubled year over year. Combined ratio improved 450 basis points (bps) to 93.1%.
AXIS Capital is on track to deliver savings of $100 million by year-end 2020, leveraging Novae integration and transformation efforts. Hence, the company estimates to incur cumulative pre-tax reorganization expenses of $100 million, of which, $48 million has already been incurred since the third quarter 2017.
Segment Results
Insurance: Gross premiums written surged 34.3% year over year to $1 billion owing to better performing property, professional lines and marine lines associated with Novae buyout.
Net premiums earned increased 38.3% year over year.
Underwriting income of $56.5 million rebounded from the year-ago loss of $2.9 million. Combined ratio improved 1040 bps to 90.4%.
Reinsurance: Gross premiums written in the second quarter increased 4.4% year over year to $624 million, largely on the back of premiums from catastrophe plus marine and aviation lines associated with the Novae acquisition.
Net premiums earned increased 7.9% year over year.
Underwriting income of $59.2 million dipped 1% year over year. Combined ratio deteriorated 100 bps year over year to 90.7%.
Financial Update
AXIS Capital exited the quarter with cash and cash equivalents of $1.5 billion, up 11.9% over the level at 2017 end.
Notes payable and debt were $1.4 billion, almost flat with 2017-end level.
Book value per share decreased 12.9% year over year to $53.59 as of Jun 30, 2018.
Operating return on equity expanded 90 basis points year over year to 9.5%.
Dividend Update
The company announced a dividend of 39 cents per share in the reported quarter.
The bottom line of The Progressive Corporation (PGR - Free Report) and RLI Corp. (RLI - Free Report) surpassed the respective Zacks Consensus Estimate while The Travelers Companies, Inc.’s (TRV - Free Report) earnings lagged the estimates during the second quarter of 2018.
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AXIS Capital (AXS) Q2 Earnings Top Estimates, Revenues Up Y/Y
AXIS Capital Holdings Limited (AXS - Free Report) reported second-quarter 2018 operating profit of $1.27 per share, surpassing the Zacks Consensus Estimate by 6.7%. However, the bottom line declined 3.1% year over year.
Axis Capital Holdings Limited Price, Consensus and EPS Surprise
Axis Capital Holdings Limited Price, Consensus and EPS Surprise | Axis Capital Holdings Limited Quote
Premiums improved substantially in the reported period. The encouraging quarterly performance reflects the benefits of portfolio optimization initiatives and an earnings potential. Also, acquisition of Novae Group contributed to this upside. Insurance segment also delivered a stellar performance. However, Reinsurance segment was soft in the quarter and expenses increased year over year.
Operational Update
Operating revenues of about $1.3 billion missed the Zacks Consensus Estimate by 13.5%. However, the top line rose nearly 19.2% year over year.
Gross premiums written improved 21% year over year to about $1.7 billion, largely driven by the acquisition of Novae Group and a 4% increase in the Reinsurance segment.
Net investment income gained 3.7% year over year to nearly $102 million.
Total expense in the quarter under review rose 14.6% year over year to $1.2 billion, attributable to higher net loss and loss expenses, acquisition costs, general and administrative expenses, foreign exchange loss as well as higher interest expense plus financing costs. The period also incurred Transaction and reorganization expenses, amortization of value of business acquired and amortization of intangibles, all of which, were absent in the prior-year quarter.
AXIS Capital reported underwriting income of $115.7 million, having more than doubled year over year. Combined ratio improved 450 basis points (bps) to 93.1%.
AXIS Capital is on track to deliver savings of $100 million by year-end 2020, leveraging Novae integration and transformation efforts. Hence, the company estimates to incur cumulative pre-tax reorganization expenses of $100 million, of which, $48 million has already been incurred since the third quarter 2017.
Segment Results
Insurance: Gross premiums written surged 34.3% year over year to $1 billion owing to better performing property, professional lines and marine lines associated with Novae buyout.
Net premiums earned increased 38.3% year over year.
Underwriting income of $56.5 million rebounded from the year-ago loss of $2.9 million. Combined ratio improved 1040 bps to 90.4%.
Reinsurance: Gross premiums written in the second quarter increased 4.4% year over year to $624 million, largely on the back of premiums from catastrophe plus marine and aviation lines associated with the Novae acquisition.
Net premiums earned increased 7.9% year over year.
Underwriting income of $59.2 million dipped 1% year over year. Combined ratio deteriorated 100 bps year over year to 90.7%.
Financial Update
AXIS Capital exited the quarter with cash and cash equivalents of $1.5 billion, up 11.9% over the level at 2017 end.
Notes payable and debt were $1.4 billion, almost flat with 2017-end level.
Book value per share decreased 12.9% year over year to $53.59 as of Jun 30, 2018.
Operating return on equity expanded 90 basis points year over year to 9.5%.
Dividend Update
The company announced a dividend of 39 cents per share in the reported quarter.
Zacks Rank
AXIS Capital carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
The bottom line of The Progressive Corporation (PGR - Free Report) and RLI Corp. (RLI - Free Report) surpassed the respective Zacks Consensus Estimate while The Travelers Companies, Inc.’s (TRV - Free Report) earnings lagged the estimates during the second quarter of 2018.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>