AXIS Capital Holdings Limited (AXS - Analyst Report) reported fourth-quarter 2012 operating loss of 23 cents per share, narrower than the Zacks Consensus Estimate of a loss of $1.18. Results declined substantially from 53 cents earned in the year-ago quarter. Operating loss was $28 million in the quarter, comparing unfavorably with an operating income of $67 million in the year-ago period.
Losses from Hurricane Sandy offset the strong performance across the sectors, inducing weaker numbers in the quarter.
Including net realized investment gains of $29.5 million, or 25 cents per share and foreign exchange loss of $20.4 million, or 18 cents per share, the company reported net loss of $18.5 million, or 16 cents per share. This compares unfavorably with a profit of $80.0 million or 63 cents per share in the prior-year quarter.
The year-ago quarter included net realized investment loss of $3.4 million or 3 cents per share and foreign exchange gains of $16.5 million or 13 cents per share.
Quarterly Operational Performance
Gross premiums written in the quarter increased 13% year over year to $752 million.
Net premiums earned in the reported quarter were $856 million, up 1.1% year over year.
Net investment income dipped 15.1% year over year to $86.86 million, largely driven by alternative investments.
Total revenue grossed $975.5 billion in the quarter, improving 3.1% from the year-ago quarter. The top line comfortably surpassed the Zacks Consensus Estimate of $928 million.
Total expenses in the quarter were $997.3 million, escalating 17.4% year over year, largely due to higher net losses and loss expenses, and general and administrative expenses.
The company reported underwriting loss of $74.3 million in the quarter compared with a profit of $15.1 million in the year-ago quarter. The combined ratio deteriorated 1150 basis points to 112.2% in the quarter.
Full Year Highlights
Operating income of $3.41 per share surpassed the Zacks Consensus Estimate of $2.45. It also reversed the loss of $1.26 per share incurred in 2011.
Including net realized investment gains of 94 cents per share and foreign exchange loss of 24 cents per share, the company reported net income of $3.41 per share, much ahead of 7 cents reported in 2011.
Lower losses from natural catastrophe and weather events aided the improvement.
Total revenue grossed $3.9 billion in 2011, increasing nearly 2.6% from 2011. The top line comfortably surpassed the Zacks Consensus Estimate of $3.8 billion.
Underwriting income of $263.1 million reversed the loss of 327.2 million in 2011. The combined ratio improved 1610 basis points to 112.2% in 2011.
Quarterly Segment Update
Insurance Segment: Gross premiums written in the quarter under review improved 11% year over year to $580 million based on new initiatives in the global professional lines business outside the U.S. and improvements in the U.S. excess and surplus umbrella market, which complemented liability line.
Net premiums earned augmented 3% year over year to $382 million on the back of improving accident & health, and property businesses.
The fourth quarter incurred underwriting loss of $46 million, compared with profit of $22 million.
The combined ratio for the quarter deteriorated 1810 basis points to 112.2%.
Reinsurance Segment: Gross premiums written in the quarter improved 18.6% year over year to $172 million, largely due to repositioning of the catastrophe reinsurance portfolio.
Net premiums earned declined 0.4% in the quarter to $473 million.
The segment had an underwriting loss of $28.3 million in the quarter, wider than the year-ago loss of $7.2 million.
The combined ratio deteriorated 450 basis points to 106% in the quarter.
AXIS Capital exited 2012 with cash and cash equivalents of $0.85 billion, declining from $1.08 billion at 2011 end.
Total capitalization as of Dec 31, 2012, was $6.8 billion, including $1.0 billion of long-term debt and $0.5 billion of preferred equity.
Book value per share was $42.97 as of Dec 31, 2012, up 13% year over year.
Return on equity was 8.2% in 2012 compared with (3.1%) in 2011.
Net cash flow from operations was $1.1 billion in 2012 compared with 1.2 billion in 2011.
Share Repurchase and Dividend
On Dec 31, 2012, the board approved a new share buyback program worth $750 million.
On Feb 4, 2013, the company had approximately $750 million remaining under its authorization.
The board declared a dividend of 25 cents in the quarter, illustrating a year-over-year increase of 25%.
Results at few other Property and Casualty Insurer
RLI Corporation (RLI - Analyst Report) reported fourth-quarter 2012 operating earnings of 89 cents per share. The result surpassed the Zacks Consensus Estimate of 44 cents by 107%, but missed the year-ago level of $1.13 by 32.1%. Lower underwriting results largely attributed the year-over-year downfall.
Chubb Corp. (CB - Analyst Report) reported the fourth-quarter operating earnings of 16 cents per share, significantly ahead of the Zacks Consensus Estimate of a loss of 46 cents per share. Earnings were down substantially by 90% year over year. The quarter’s results suffered from an $882 million before tax loss due to Superstorm Sandy.
Selective Insurance Group Inc. (SIGI - Snapshot Report) reported a loss of 4 cents, narrower than the Zacks Consensus Estimate of a loss of 14 cents.
AXIS Capital currently carries a Zacks Rank #3 (Hold).