AXIS Capital (AXS) Q1 Earnings Miss Estimates, Down Y/Y

AXIS Capital Holdings Limited (NYSE:AXS) reported first-quarter 2019 operating income of $1.24 per share, missing the Zacks Consensus Estimate by 11.4%. Moreover, the bottom line declined 15.1% year over year, mainly due to lower revenues.

Operational Update

Operating revenues of about $1.2 billion lagged the Zacks Consensus Estimate by 1.6%. Also, the top line dipped 2.1% year over year.

Gross premiums written declined 3% year over year to about $2.6 billion, largely driven by a 3% decrease each in Insurance and Reinsurance segments.

Net investment income increased 6.2% year over year to nearly $107 million.

Total expenses in the quarter under review declined 3% year over year to $1.2 billion, courtesy of the reduced foreign exchange losses and the amortization of value of the business acquired.

AXIS Capital’s underwriting income totaled $778.2 million, down 45.9% year over year. Combined ratio expanded 610 basis points (bps) to 96.9%.

In the quarter under consideration, pre-tax cost savings of $17 million — $69 million on an annualized basis — related to the company’s transformation initiative and the integration of Novae have been recognized.

Axis Capital Holdings Limited Price, Consensus and EPS Surprise

Segmental Results

Insurance: Gross premiums written fell 3.4% year over year to $851.1 million due to non-renewals and timing differences. However, the same was offset by a rise in liability and professional lines, driven by new business and marine lines plus favorable rate changes across the portfolio to some extent.
Net premiums earned declined 4% year over year to $556.7 million.

Underwriting income of $209 million plunged 69.9% year over year. Combined ratio expanded 850 bps to 96.6%.

Reinsurance: Gross premiums written in the first quarter were down 3% year over year to $173 million, primarily due to motor, credit and surety plus property lines on account of non-renewals. However, the metric was to some extent offset by a rise in catastrophe, accident and health, and liability lines supported by new business.

Net premiums earned slid 1.7% year over year to $577.5 million.

Underwriting income of $56.9 million significantly decreased 23.4% year over year. Combined ratio expanded 260 bps year over year to 91%.

Financial Standing

AXIS Capital exited the first quarter with cash and cash equivalents of $1.2 billion, down 6.6% from 2018-end level.

Senior notes were $1.3 billion, inching up by 0.1% from 2018 end.

Book value per share increased 5.8% year over year to $52.84 as of Mar 31, 2019 compared with the figure as of Dec 31, 2018.

Operating return on equity totaled 9.5% at the end of the first quarter compared with 10.8% in the year-ago period.

Dividend Update

The company announced a dividend of 40 cents per share in the reported quarter. Over the past year, total dividends declared amounted to $1.58 per share.

Zacks Rank

AXIS Capital 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

Among other players from the insurance industry having reported first-quarter earnings so far, the bottom-line figures of The Travelers Companies, Inc. (NYSE:TRV) , Cincinnati Financial Corporation (NASDAQ:CINF) and The Progressive Corporation (NYSE:PGR) beat the respective Zacks Consensus Estimate.

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