6 Reasons Why You Should Hold AXIS Capital In Your Portfolio

AXIS Capital Holdings Limited (NYSE:AXS) is a global provider of specialty lines insurance and treaty reinsurance. Shares of this Zacks Rank #3 (Hold) property and casualty insurer have rallied 12.8% year to date, outperforming the industry’s growth of 0.3%.

Though the stock has seen the Zacks Consensus Estimate for 2018 earnings being revised downward, the same for 2019 moved north over the last 60 days. While the current-year consensus mark moved south by 3.4%, the same for 2019 has been raised 6.2%. This upward estimate revision buoys analysts’ confidence in the stock.

AXIS Capital continues to build on its Specialty Insurance, Reinsurance and Accident and Health to pave way for long-term growth.

Let’s focus on the factors that make AXIS Capital a stock to hold on to for greater returns.

Improving Top Line: Last few years saw the top-line rise at AXIS Capital, witnessing a five-year CAGR of 3.2% owing to increased net premium earned and higher investment income. The company remains focused on strengthening casualty and professional lines in the insurance segment, and motor and reinsurance in particular.

Compelling Inorganic Growth Story: Strategic buyouts helped AXIS Capital ramp up its premium growth. The buyout of Novae Group plc for $605 million in cash places the acquirer within the top 10 insurers’ bracket at Lloyd while Aviabel’s acquisition boosts its existing airline business. The company targets costs savings of $60 million from Novae Group’s purchase.

Efforts to Capitalize on Opportunities: AXIS Healthcare, a subsidiary of AXIS Capital, launched a new coverage line to protect hospitals against losses from pandemics and subsequently, forayed into the nursing home professional liability market. The launch of Harrington Re, co-sponsored by AXIS Capital and Blackstone (NYSE:BX) will help AXIS Capital with a broad range of third-party capital capability to develop customized solutions for clients and brokers. Such initiatives bear testimony to the company’s strategic business plan to drive the growth profile.

Intelligent Capital Management: Over the past five years, AXIS Capital has returned to shareholders in excess of 100% of aggregate operating income through dividends and share repurchases. The company’s dividend witnessed a four-year CAGR of nearly 12%. Going forward, the company intends to pay back at least 200% of its six months operating earnings to investors.

Growth Projections: The Zacks Consensus Estimate for current-year earnings per share is pegged at $6.4.32, representing a year-over-year surge of 237.1%.

For 2019, the Zacks Consensus Estimate for earnings per share stands at $4.80, reflecting a year-over-year increase of 11%.

AXIS Capital has expected long-term earnings per share growth of 8.5%.

Underpriced: Looking at the company’s price-to-book ratio — the best multiple for valuing insurers because of large variations in their earnings results from one quarter to the next — shares are underpriced at the current level. The company has a trailing 12-month P/B ratio of 1.03, falling below the industry average of 1.42.

Stocks to Consider

Some better-ranked property and casualty insurance stocks are Alleghany Corporation (NYSE:Y) , Everest Re Group, Ltd. (NYSE:RE) and Heritage Insurance Holdings, Inc. (NYSE:HRTG) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here

Alleghany provides property and casualty reinsurance and insurance products in the United States and internationally. It came up with an average four-quarter beat of 5.16%.

Everest Re provides reinsurance and insurance products. It pulled off an average four-quarter positive earnings surprise of 10.86%.

Heritage Insurance provides personal and commercial residential insurance products. It delivered an average four-quarter beat of 14.66%.

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