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Axis Capital (AXS) Up 3.7% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Axis Capital (AXS - Free Report) . Shares have added about 3.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Axis Capital due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
AXIS Capital Q2 Earnings Beat on Solid Underwriting
AXIS Capital Holdings Limited posted second-quarter 2024 operating income of $2.93 per share, beating the Zacks Consensus Estimate by 16.2%. The bottom line increased 31.4% year over year. The quarterly results of AXS reflected improved underwriting income across both segments, income from fixed maturities portfolio, an increase in property, credit and political risk, and accident and health lines, as well as lower expenses.
Quarterly Operational Update
Total operating revenues of $1.5 billion beat the Zacks Consensus Estimate by 2.8%. The top line, however, rose 6.8% year over year on higher net investment income and net premiums earned. Net premiums written increased 9% to $1.6 billion, driven by a rise of 17% in the Insurance segment, partially offset by an 11% decline in the Reinsurance segment.
Net investment income jumped 40% year over year to $191 million, primarily attributable to income from fixed maturities portfolio due to increased yields. The Zacks Consensus Estimate for the metric was pegged at $172.3 million. Our estimate was $168.6 million.
Total expenses in the quarter under review decreased 0.1% year over year to $1.2 billion due to lower general and administrative expenses. Our estimate for the same was $1.1 billion. Pre-tax catastrophe and weather-related losses and net of reinsurance were $47 million, wider than the year-ago loss of $32 million, primarily attributable to the Red Sea Conflict.
AXIS Capital’s underwriting income of $161 million increased 8.5% year over year. Our estimate was $143.6 million. The combined ratio improved 110 basis points (bps) to 90.4%. The Zacks Consensus Estimate was pegged at 94.5. Our estimate was 89.5.
Segment Results
Insurance: Gross premiums written improved 7.7% year over year to $1.8 billion, primarily attributable to an increase in property, credit and political risk, as well as accident and health lines due to new business, and marine and aviation lines owing to premium adjustments. It was partially offset by a decrease in cyber lines, principally due to a reduction in premiums associated with program business, and liability lines owing to underwriting actions taken to reposition the portfolio.
Net premiums earned increased 13.7% year over year to $958.2 million. Underwriting income of $115.6 million increased 0.9% year over year. The combined ratio deteriorated 150 bps to 87.9. The Zacks Consensus Estimate for the combined ratio was pegged at 86.5.
Reinsurance: Gross premiums written increased 4.3% year over year to $626.1 million. The increase was primarily attributable to new business, improved line sizes and the timing of renewals, partially offset by a decrease in premium adjustments and a decline in credit and surety lines due to the timing of renewals of significant contracts.
Net premiums written decreased 18.1% year over year to $346.2 million. Underwriting income of $45.5 million increased 34.5% year over year. The combined ratio improved 400 bps year over year to 89.3. The Zacks Consensus Estimate for the combined ratio was pegged at 117.7.
Financial Update
AXIS Capital exited the second quarter with cash and cash equivalents of $1.2 billion, up 14.5% from the 2023-end level. Debts were $1.3 billion at quarter-end, which remained flat from the 2023-end level.
Book value per share increased 9.7% from the 2023-end level to $59.23 as of Jun 30, 2024. Annualized operating return on average common equity was 19.9% in the second quarter, which expanded 270 bps year over year.
Capital Deployment
As of Jun 30, 2024, AXIS Capital had $300 million remaining authorization under the board-authorized share repurchase program for common share repurchases.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
Currently, Axis Capital has an average Growth Score of C, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Axis Capital has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Axis Capital is part of the Zacks Insurance - Property and Casualty industry. Over the past month, RLI Corp. (RLI - Free Report) , a stock from the same industry, has gained 1.3%. The company reported its results for the quarter ended June 2024 more than a month ago.
RLI Corp. reported revenues of $413.03 million in the last reported quarter, representing a year-over-year change of +17.7%. EPS of $1.72 for the same period compares with $1.16 a year ago.
RLI Corp. is expected to post earnings of $0.92 per share for the current quarter, representing a year-over-year change of +50.8%. Over the last 30 days, the Zacks Consensus Estimate has changed -3.7%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for RLI Corp. Also, the stock has a VGM Score of D.
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Axis Capital (AXS) Up 3.7% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Axis Capital (AXS - Free Report) . Shares have added about 3.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Axis Capital due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
AXIS Capital Q2 Earnings Beat on Solid Underwriting
AXIS Capital Holdings Limited posted second-quarter 2024 operating income of $2.93 per share, beating the Zacks Consensus Estimate by 16.2%. The bottom line increased 31.4% year over year. The quarterly results of AXS reflected improved underwriting income across both segments, income from fixed maturities portfolio, an increase in property, credit and political risk, and accident and health lines, as well as lower expenses.
Quarterly Operational Update
Total operating revenues of $1.5 billion beat the Zacks Consensus Estimate by 2.8%. The top line, however, rose 6.8% year over year on higher net investment income and net premiums earned. Net premiums written increased 9% to $1.6 billion, driven by a rise of 17% in the Insurance segment, partially offset by an 11% decline in the Reinsurance segment.
Net investment income jumped 40% year over year to $191 million, primarily attributable to income from fixed maturities portfolio due to increased yields. The Zacks Consensus Estimate for the metric was pegged at $172.3 million. Our estimate was $168.6 million.
Total expenses in the quarter under review decreased 0.1% year over year to $1.2 billion due to lower general and administrative expenses. Our estimate for the same was $1.1 billion. Pre-tax catastrophe and weather-related losses and net of reinsurance were $47 million, wider than the year-ago loss of $32 million, primarily attributable to the Red Sea Conflict.
AXIS Capital’s underwriting income of $161 million increased 8.5% year over year. Our estimate was $143.6 million. The combined ratio improved 110 basis points (bps) to 90.4%. The Zacks Consensus Estimate was pegged at 94.5. Our estimate was 89.5.
Segment Results
Insurance: Gross premiums written improved 7.7% year over year to $1.8 billion, primarily attributable to an increase in property, credit and political risk, as well as accident and health lines due to new business, and marine and aviation lines owing to premium adjustments. It was partially offset by a decrease in cyber lines, principally due to a reduction in premiums associated with program business, and liability lines owing to underwriting actions taken to reposition the portfolio.
Net premiums earned increased 13.7% year over year to $958.2 million. Underwriting income of $115.6 million increased 0.9% year over year. The combined ratio deteriorated 150 bps to 87.9. The Zacks Consensus Estimate for the combined ratio was pegged at 86.5.
Reinsurance: Gross premiums written increased 4.3% year over year to $626.1 million. The increase was primarily attributable to new business, improved line sizes and the timing of renewals, partially offset by a decrease in premium adjustments and a decline in credit and surety lines due to the timing of renewals of significant contracts.
Net premiums written decreased 18.1% year over year to $346.2 million. Underwriting income of $45.5 million increased 34.5% year over year. The combined ratio improved 400 bps year over year to 89.3. The Zacks Consensus Estimate for the combined ratio was pegged at 117.7.
Financial Update
AXIS Capital exited the second quarter with cash and cash equivalents of $1.2 billion, up 14.5% from the 2023-end level. Debts were $1.3 billion at quarter-end, which remained flat from the 2023-end level.
Book value per share increased 9.7% from the 2023-end level to $59.23 as of Jun 30, 2024. Annualized operating return on average common equity was 19.9% in the second quarter, which expanded 270 bps year over year.
Capital Deployment
As of Jun 30, 2024, AXIS Capital had $300 million remaining authorization under the board-authorized share repurchase program for common share repurchases.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
Currently, Axis Capital has an average Growth Score of C, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Axis Capital has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Axis Capital is part of the Zacks Insurance - Property and Casualty industry. Over the past month, RLI Corp. (RLI - Free Report) , a stock from the same industry, has gained 1.3%. The company reported its results for the quarter ended June 2024 more than a month ago.
RLI Corp. reported revenues of $413.03 million in the last reported quarter, representing a year-over-year change of +17.7%. EPS of $1.72 for the same period compares with $1.16 a year ago.
RLI Corp. is expected to post earnings of $0.92 per share for the current quarter, representing a year-over-year change of +50.8%. Over the last 30 days, the Zacks Consensus Estimate has changed -3.7%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for RLI Corp. Also, the stock has a VGM Score of D.