It has been about a month since the last earnings report for Axis Capital (AXS). Shares have lost about 5.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Axis Capital due for a breakout? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent catalysts for Axis Capital Holdings Limited before we dive into how investors and analysts have reacted as of late.
AXIS Capital Q2 Earnings Miss Estimates on Higher Catastrophe Losses
AXIS Capital Holdings posted second-quarter 2026 operating income of $2.84 per share, which missed the Zacks Consensus Estimate of $3.23 and fell 12.1% year over year.
The quarterly results reflected higher net premiums earned and continued premium growth. However, higher catastrophe losses, lower net investment income and increased operating expenses weighed on performance.
AXS’ Quarterly Operational Update
Total operating revenues of $1.7 billion marginally missed the Zacks Consensus Estimate by 1%. The top line rose 7.4% year over year on higher premiums earned.
Net premiums written decreased 1.8% to $1.6 billion, reflecting lower premiums in the Reinsurance segment, partially offset by growth in the Insurance segment.
Net investment income decreased 3% year over year to $181.6 million, due to lower income from alternative investments and cash. The Zacks Consensus Estimate was pegged at $208.7 million.
Total expenses in the reported quarter increased 6.2% year over year to $1.4 billion due to higher net losses and loss expenses, acquisition costs and reorganization expenses. Our estimate was pegged at $1.4 billion.
Pre-tax catastrophe and weather-related losses, net of reinsurance, totaled $152 million, including $95 million from natural catastrophes. The remaining $57 million was attributable to weather-related events.
AXIS Capital’s underwriting income of $142.9 million decreased 24.5% year over year. The combined ratio deteriorated to 93.1 in the second quarter from 88.9 a year ago, reflecting higher catastrophe and weather-related losses. The Zacks Consensus Estimate was pegged at 93.2. Our estimate was 93.8.
Segment Results
Insurance: Gross premiums written improved 15.3% year over year to $2.2 billion. Our estimate was $2.1 billion. Net premiums earned increased 14.9% year over year to $1.2 billion, driven by premium growth across most business lines. Our estimate was $1.1 billion.
Underwriting income of $119.4 million decreased 21.3% year over year. The combined ratio deteriorated 470 basis points to 90. The Zacks Consensus Estimate for the combined ratio was pegged at 89.7.
Reinsurance: Gross premiums written decreased 24.7% year over year to $439.5 million, mainly due to lower renewals and portfolio optimization compared to our estimate of $554.9 million. Net premiums earned declined 8% year over year to $331.8 million. Our estimate was pinned at $399.5 million.
Underwriting income of $23.6 million decreased 37.3% year over year. The combined ratio deteriorated 250 basis points to 94.5. The Zacks Consensus Estimate for the combined ratio was pegged at 94.1.
AXS’ Financial Update
AXIS Capital exited the second quarter with cash and cash equivalents of $780 million, down 4.9% from the 2025-end level. Debt remained essentially unchanged at $1.32 billion.
Shareholders' equity increased 2.3% from the 2025-end level to $6.5 billion.
Book value per diluted common share was $79.01, up from $78.19 as of Dec. 31, 2025.
Annualized operating return on average common equity (operating ROACE) was 14.3%, down from 19% a year ago.
Capital Deployment
AXIS Capital returned $84 million to common shareholders in the second quarter, including $52 million in share repurchases and $32 million in dividends. The company also declared a quarterly dividend of 44 cents per common share.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -11.57% due to these changes.
VGM Scores
At this time, Axis Capital has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock has a score of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Axis Capital has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Axis Capital Holdings Limited (AXS): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).