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AXIS Capital's (AXS) Q1 Earnings Miss, Revenues Fall Y/Y

AXIS Capital Holdings Limited AXS reported first-quarter 2020 operating loss of $1.94 per share, wider than the Zacks Consensus Estimate of a loss of $1.92 per share. Notably, the company had reported operating income of $1.24 per share in the prior-year quarter.

The company’s results were impacted by lower revenues and higher costs.The COVID-19 pandemic affected the results as well.

Operational Update

First-quarter operating revenues amounted to nearly $1.2 billion, down 6% year over year. The downside can primarily be attributed to lower premiums and decline in net investment income.

Gross premiums written plunged 5.9% year over year to $2.4 billion on account of14% fall in Reinsurance segment.

Net investment income declined 13.2% year over year to nearly $93.1 million.

Total expenses in the quarter under review increased more than 10% year over year to $1.3 billion, attributable to higher net losses and loss expenses,and interest expense and financing costs.

AXIS Capital incurred underwriting loss of $196.8 million, which compared against the prior-year quarter’s underwriting income of $77.8 million. Combined ratio deteriorated 2290 basis points (bps) to 119.8%.

Segment Results

Insurance: Gross premiums written improved 10.5% year over year to $940.7 million owing to strong growth in professional lines, liability, property and marine lines, which benefited by new business and favorable rate changes.

Net premiums earned inched up 1% year over year to $562.1 million.

Underwriting loss was $122.6 million against year-ago quarter’s income of $20.9 million. Combined ratio deteriorated 2530 bps to 121.9%.

Reinsurance: Gross premiums written in the first quarter declined 14% year over year to $1.5 billion, primarily owing to catastrophe, credit and surety, and property lines, which were impacted by non-renewals and lower line sizes.

Net premiums earned declined8.8% year over year to $526.6 million.

The company reported underwriting loss of $74.1 million against the year-ago quarter’s income of $56.9 million. Combined ratio deteriorated 2130 bps year over year to 112.3%.

Financial Update

AXIS Capital exited the first quarter with cash and cash equivalents of $756 million, down 39.1% over the level at 2019 end.

Book value per share declined 5.8% year over year to $49.78 as of Mar 31, 2020.

Dividend Update

Concurrent with the earnings release, AXIS Capital announced a dividend of 41 cents per share in first-quarter 2020.

Zacks Rank& Performance of Other Insurers

AXIS Capital carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Among other insurance industry players, which have reported first-quarter earnings so far, the bottom lines of Chubb Limited CB and First American Financial Corporation FAF outpaced the Zacks Consensus Estimate, while that of Globe Life Inc. GL matched the same.

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Axis Capital Holdings Limited (AXS): Free Stock Analysis Report
 
First American Financial Corporation (FAF): Free Stock Analysis Report
 
Chubb Limited (CB): Free Stock Analysis Report
 
Globe Life Inc. (GL): Free Stock Analysis Report
 
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