AXIS Capital Well Poised For Growth On Strategic Initiatives

On May 17, we issued an updated research report on AXIS Capital Holdings Limited (NYSE:AXS) .

In the first quarter of 2016, the property and casualty insurer delivered operating earnings that beat the Zacks Consensus Estimate on higher premiums and a net favorable prior-year reserve development. However, revenues decreased. Underwriting results too were weak. Going by the surprise trend, the company delivered positive surprises in two of the last four quarters.

AXIS Capital remains focused on strengthening its Specialty Insurance, Reinsurance, as well as Accident and Health businesses. Also, the insurer always undertakes strategic initiatives that would help it to grow. The company already started underwriting operations in China that will concentrate on the treaty reinsurance business in Lloyd's China. Recently, the insurer’s subsidiary AXIS Healthcare forayed into the nursing home professional liability market. The company has also been expanding capabilities for AXIS Ventures, its third-party capital vehicle.

All these initiatives point to its strategic business plan that would help it to write more business. The company had $80 million in new business in the first quarter of 2016.

Backed byits operational strength, the company maintains its focus on effective capital deployment that also includes shareholder-friendly moves like dividend hike and share buybacks. In the final quarter of 2015,the company declared a 21% hike in its quarterly dividend and increased its share repurchase authorization to $750 million. The company presently has $625 million authorization remaining under the common shares repurchase program.

However, exposure to catastrophe losses and competition, escalating expenses and dependence on a limited number of brokers for revenues remain as headwinds. Also, a weak interest rate environment and a volatile equity market continue to weigh on investment results.

The Zacks Consensus Estimate is currently pegged at $4.08 per share for 2016 and $4.53 for 2017, translating to a year-over-year increase of 1.6% and 10.9% respectively.

Currently, the insurer carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space are Alleghany Corporation (NYSE:Y) , Cincinnati Financial Corp. (NASDAQ:CINF) and Markel Corp. (NYSE:MKL) . Each of these stocks sports a Zacks Rank #1 (Strong Buy).

CINCINNATI FINL (CINF): Free Stock Analysis Report

AXIS CAP HLDGS (AXS): Free Stock Analysis Report

MARKEL CORP (MKL): Free Stock Analysis Report

ALLEGHANY CORP (Y): Free Stock Analysis Report

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