It has been about a month since the last earnings report for Axis Capital (AXS). Shares have added about 3.8% 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 its most recent earnings report in order to get a better handle on the important drivers.
AXIS Capital Q4 Earnings Top Estimates on Solid Underwriting
AXIS Capital posted fourth-quarter 2024 operating income of $2.97 per share, which beat the Zacks Consensus Estimate by 10.8%. The bottom line increased 1% year over year. The insurer’s results reflected improved net investment income and higher premiums, offset by higher expenses.
Total operating revenues of $1.6 billion missed the Zacks Consensus Estimate by 2.8%. The top line rose 6.7% year over year on higher net investment income and higher premiums earned.
Net premiums written increased 14% to $1.2 billion, attributable to a 9% increase in the Insurance segment and a 64% surge in the Reinsurance segment.
Net investment income increased 5% year over year to $195.8 million, driven by income from fixed maturities portfolio due to increased yields, partially offset by lower returns on alternative investments. The Zacks Consensus Estimate was pegged at $190 million. Our estimate was $188.7 million.
Total expenses in the quarter under review increased 38.4% year over year to $1.2 billion due to higher general and administrative expenses, acquisition costs and foreign exchange gains. Our estimate was pegged at $1.3 billion.
Catastrophe and weather-related losses and net of reinsurance were $64 million, attributable to Hurricane Helene and other weather-related events.
AXIS Capital’s underwriting income was $129.5 million against a loss of $274 million in the year-ago quarter. The combined ratio improved 3040 basis points (bps) to 94.2%. The Zacks Consensus Estimate was pegged at 92%. Our estimate was 93.4%.
Insurance: Gross premiums written improved 7.4% year over year to $1.7 billion, driven by increases in property, accident and health, and credit and political risk lines on new business, partially offset by a decrease in cyber lines. Our estimate and the Zacks Consensus Estimate were both pegged at $1.1. billion.
Net premiums earned increased 11.9% year over year to $1 billion. Our estimate was $1 billion.
Underwriting income was $0.1 million versus a loss of $0.6 million incurred in the year ago quarter. The combined ratio deteriorated 220 bps to 90.4%. The Zacks Consensus Estimate for combined ratio was pegged at 87%.
Reinsurance: Gross premiums written increased 36.9% year over year to $275 million, driven by accident and health lines on new business, motor, accident and health, and professional lines. Our estimate was $179.5 million. Net premiums earned increased 0.7% year over year to $351 million. Our estimate was $413.7 million and the Zacks Consensus Estimate was $372 million.
Underwriting income was $0.4 million versus a loss of $212.4 million in the year-ago quarter. The combined ratio improved 7190 bps year over year to 90.9%. The Zacks Consensus Estimate for combined ratio was pegged at 118%.
Total operating revenues of $6.1 billion missed the Zacks Consensus Estimate by 2.8%. However, the top line rose 6.6% year over year on higher net investment income and higher premiums earned.
Net premiums written increased 13% to $5.8 billion, driven by 13% in the Insurance segment and an increase of 12% in the Reinsurance segment.
AXIS Capital’s underwriting income of $571.5 million increased more than three-fold year over year. Combined ratio of 92.3% improved 760 bps.
AXIS Capital exited 2024 with cash and cash equivalents of $2.1 billion, doubled from the 2023-end level. Debt was $1.3 billion at quarter-end, up 0.1% from the 2023-end level.
Book value per share increased 20.4% from 2023-end to $65.27 as of Dec. 30, 2024.
Annualized operating return on average common equity was 18% in 2024, which expanded 760 bps year over year.
AXS returned $350 million to shareholders in 2024, including share repurchases of $200 million and dividends of $150 million. The insurer had $200 million of remaining authorization as on Dec. 31, 2024.
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -8.84% due to these changes.
At this time, Axis Capital has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Axis Capital has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Axis Capital belongs to the Zacks Insurance - Property and Casualty industry. Another stock from the same industry, W.R. Berkley (WRB), has gained 4.8% over the past month. More than a month has passed since the company reported results for the quarter ended December 2024.
W.R. Berkley reported revenues of $3.51 billion in the last reported quarter, representing a year-over-year change of +9.2%. EPS of $1.13 for the same period compares with $0.97 a year ago.
W.R. Berkley is expected to post earnings of $1.07 per share for the current quarter, representing a year-over-year change of +2.9%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.3%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for W.R. Berkley. Also, the stock has a VGM Score of B.
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This article originally published on Zacks Investment Research (zacks.com).
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