Axis Capital (AXS) Up 11.7% Since Last Earnings Report: Can It Continue?

It has been about a month since Axis Capital (AXS) last reported its earnings. Shares have risen about 11.7% in that time, outperforming the S&P 500.

Will the recent positive trend continue until its next earnings release or is Axis Capital headed for a decline? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at the company’s most recent earnings report in order to better understand the important catalysts.

AXIS Capital’s earnings exceeded in the first quarter, premiums increased y/y

AXIS Capital Holdings Limited reported first-quarter 2024 operating earnings of $2.57 per share, surpassing the Zacks Consensus Estimate by 1.2%. The financial result increased by 10.3% year on year.

The insurer’s performance reflects higher premiums earned, lower catastrophe losses, improved fixed-maturity portfolio revenues and growth in underwriting revenues.

Quarterly operational update

Total operating revenues of $1.4 billion missed the Zacks Consensus Estimate by 2.8%. However, revenues increased 5% year-over-year due to higher net earned premiums, net investment income and other insurance income.

Net investment income increased 25% year over year to $167 million, primarily attributable to an increase in fixed maturity portfolio income due to increased yields. Our estimate was $164.8 million.

Total costs for the quarter increased 0.7% year-over-year to $1.15 billion, attributable to higher net losses and loss costs, acquisition costs, interest and financing costs and reorganization expenses. According to our estimates, it was USD 1.1 billion.

Pre-tax and weather-related losses, net of reinsurance, were $20 million. This compares favorably with the year-ago loss of $38 million. AXIS Capital’s insurance revenue of $145.6 million increased 4.5% year-over-year. Our estimate was $141.5 million. The combined ratio deteriorated 20 basis points (bps) to 91.1.

Segment results

Insurance: Gross premiums written increased 11.2% year-over-year to $1.5 billion, primarily attributable to increases in all lines of business except cyber lines, which declined in the quarter primarily due to premium adjustments and premium reductions related to program activities. According to our estimates, it was USD 1.6 billion. Net premiums earned increased 12.4% year over year to $917.9 million. Our estimate was $954.5 million.
Insurance revenues of $122.9 million increased 19% year-over-year. Our estimate was $231 million. The combined index improved by 70 bps to 86.6.

Reinsurance: Gross written premium increased 11.8% year-over-year to $1 billion. The improvement was due to an increase of $139 million attributable to all current specialty lines of business, primarily related to new business and the timing of significant contract renewals. This was partially compensated by a reduction in the number of drain lines. Our estimate was $943.8 million. Net premiums earned decreased 17.8% year-over-year to $340 million. Our estimate was $352.1 million. Insurance revenues of $22.6 million declined 37% year-over-year. According to our estimates, the loss amounted to USD 89.5 million. The combined ratio deteriorated by 440 bps year-on-year to 95.8.

The story continues

Financial update

AXIS Capital ended the first quarter with cash and cash equivalents of $1.14 billion, an increase of 20% compared to the end of 2023. At the end of the quarter, debt stood at $1.3 billion, an increase of 0.02% compared to the level at the end of 2023. As of March 31, 2024, book value per share increased 5.7% from year-end 2023 to $57.13, driven by net income, partially offset by declared common stock dividends and unrealized investment losses. The annualized rate of return on average core capital was 32.1% in the first quarter, an increase of 1,590 basis points year over year.

Capital deployment

As of March 31, 2024, AXIS Capital had remaining authorization of $38 million under the board-approved common stock repurchase program through December 31, 2024.

How have estimates changed since then?

Over the last month, investors have seen a downward trend in estimate revisions.

VGM results

At the moment, Axis Capital has an average Growth Score of C, although it lags slightly behind its Momentum Score of D. However, the stock is rated A for Value, putting it in the top 20% for this investment strategy.

Overall, the stock has a Total VGM Score of B. If you’re not focused on one strategy, this score should interest you.

Perspectives

Estimates for this company are generally on a downward trend, and the magnitude of these revisions indicates a downward shift. Notably, Axis Capital carries a Zacks Rank #3 (Hold). We expect a linear rate of return on the stock over the next few months.

Industry player performance

Axis Capital is part of the Zacks Property and Casualty Insurance industry. Over the past month, Cincinnati Financial (CINF), a stock in the same industry, has gained 0%. More than a month ago, the company published its results for the quarter ended March 2024.

Cincinnati Financial reported revenue of $2.32 billion in its most recently reported quarter, representing a year-over-year change of +8.8%. EPS of $1.72 for the same period compared to $0.89 a year ago.

Cincinnati Financial is expected to report earnings per share of $1.10 for the current quarter, which would represent a year-over-year change of -9.1%. Over the past 30 days, the Zacks Consensus Estimate has moved +2.1%.

Cincinnati Financial carries a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Rating of C.

Want the latest recommendations from Zacks Investment Research? Today you can download the top 7 stocks for the next 30 days. Click to get this free report

Axis Capital Holdings Limited (AXS): Free Stock Analysis Report

Cincinnati Financial Corporation (CINF): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research