AXIS Capital (AXS)

Global specialty insurer AXIS Capital Holdings Limited (NYSE:AXS) reported revenue ahead of Wall Streets expectations in Q4 CY2025, with sales up 9.8% year on year to $1.73 billion. Its non-GAAP profit of $3.25 per share was 4.2% above analysts’ consensus estimates.

Company Overview

Founded in the aftermath of the 9/11 attacks when insurance capacity was scarce, AXIS Capital Holdings Limited (NYSE:AXS) is a global specialty insurer and reinsurer that provides coverage for complex risks across property, liability, professional lines, cyber, and other specialty markets.

This is a cyclical industry, and the sector benefits when there is 'hard market', characterized by strong premium rate increases that outpace loss and cost inflation, resulting in robust underwriting margins. The opposite is true in a 'soft market'. Interest rates also matter, as they determine the yields earned on fixed-income portfolios. The primary headwind remains the immense and concentrated exposure to large-scale catastrophe losses, as the growing impact of climate change challenges traditional risk models and creates significant earnings volatility. Additionally, they face the risk of adverse prior-year reserve development, where claims prove more costly than anticipated, while the eventual influx of new capital from alternative sources threatens to soften the market and compress future returns.

AXIS Capital's main competitors include other global specialty insurers and reinsurers such as Chubb Limited (NYSE:CB), American International Group (NYSE:AIG), Arch Capital Group (NASDAQ:ACGL), and Everest Group (NYSE:EG), as well as Lloyd's of London syndicates and Munich Re (ETR:MUV2).

Insurers earn revenue three ways. The core insurance business itself, often called underwriting and represented in the income statement as premiums earned, is one way. Investment income from investing the “float” (premiums collected upfront not yet paid out as claims) in assets such as fixed-income assets and equities is the second way. Fees from various sources such as policy administration, annuities, or other value-added services is the third. Unfortunately, AXIS Capital’s 6.7% annualized revenue growth over the last five years was mediocre. This fell short of our benchmark for the insurance sector and is a poor baseline for our analysis.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. AXIS Capital’s annualized revenue growth of 6.8% over the last two years aligns with its five-year trend, suggesting its demand was consistently weak. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, AXIS Capital reported year-on-year revenue growth of 9.8%, and its $1.73 billion of revenue exceeded Wall Street’s estimates by 2.7%.

Net premiums earned made up 89.2% of the company’s total revenue during the last five years, meaning AXIS Capital barely relies on non-insurance activities to drive its overall growth.

Markets consistently prioritize net premiums earned growth over investment and fee income, recognizing its superior quality as a core indicator of the company’s underwriting success and market penetration.

When insurers sell policies, they protect themselves from extremely large losses or an outsized accumulation of losses with reinsurance (insurance for insurance companies). Net premiums earned are therefore net of what’s ceded to reinsurers as a risk mitigation and transfer strategy.

AXIS Capital’s net premiums earned has grown at a 5.5% annualized rate over the last five years, worse than the broader insurance industry and slower than its total revenue.

When analyzing AXIS Capital’s net premiums earned over the last two years, we can paint a similar picture as it recorded an annual growth rate of 6%. This performance was similar to its total revenue.

AXIS Capital’s net premiums earned came in at $1.53 billion this quarter, up a hearty 11% year on year and topping Wall Street Consensus estimates by 3%.

Revenue growth is one major determinant of business quality, and the efficiency of operations is another. For insurance companies, we look at the combined ratio rather than the operating expenses and margins that define sectors such as consumer, tech, and industrials.

The combined ratio is:

• The costs of underwriting (salaries, commissions, overhead) + what an insurer pays out in claims, all divided by net premiums earned

If a company boasts a combined ratio under 100%, it is underwriting profitably. If above 100%, it is losing money on its core operations of selling insurance policies.

Given the calculation, a lower expense ratio is better. Over the last five years, AXIS Capital’s combined ratio has swelled by 19 percentage points, going from 97.5% to 90.6%. It has also improved by 9.3 percentage points on a two-year basis, showing its expenses have consistently grown at a slower rate than revenue. This typically signals prudent management.

AXIS Capital’s combined ratio came in at 93.9% this quarter, falling short of analysts’ expectations by 280 basis points (100 basis points = 1 percentage point). This result was in line with the same quarter last year.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

AXIS Capital’s full-year EPS flipped from negative to positive over the last five years. This is a good sign and shows it’s at an inflection point.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

AXIS Capital’s EPS grew at an unimpressive 14.8% compounded annual growth rate over the last two years. On the bright side, this performance was higher than its 6.8% annualized revenue growth and tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into AXIS Capital’s earnings to better understand the drivers of its performance. While we mentioned earlier that AXIS Capital’s combined ratio was flat this quarter, a two-year view shows its margin has improvedwhile its share count has shrunk 9.9%. These are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

In Q4, AXIS Capital reported adjusted EPS of $3.25, up from $2.97 in the same quarter last year. This print beat analysts’ estimates by 4.2%. Over the next 12 months, Wall Street expects AXIS Capital’s full-year EPS of $12.96 to grow 2.5%.

Insurance companies are balance sheet businesses, collecting premiums upfront and paying out claims over time. The float – premiums collected but not yet paid out – are invested, creating an asset base supported by a liability structure. Book value captures this dynamic by measuring:

• Assets (investment portfolio, cash, reinsurance recoverables) - liabilities (claim reserves, debt, future policy benefits)

BVPS is essentially the residual value for shareholders.

We therefore consider BVPS very important to track for insurers and a metric that sheds light on business quality. While other (and more commonly known) per-share metrics like EPS can sometimes be lumpy due to reserve releases or one-time items and can be managed or skewed while still following accounting rules, BVPS reflects long-term capital growth and is harder to manipulate.

AXIS Capital’s BVPS grew at a mediocre 6.5% annual clip over the last five years. However, BVPS growth has accelerated recently, growing by 18.2% annually over the last two years from $55.26 to $77.20 per share.

Over the next 12 months, Consensus estimates call for AXIS Capital’s BVPS to grow by 14% to $76.74, solid growth rate.

The debt-to-equity ratio is a widely used measure to assess a company's balance sheet health. A higher ratio means that a business aggressively financed its growth with debt. This can result in higher earnings (if the borrowed funds are invested profitably) but also increases risk.

If debt levels are too high, there could be difficulties in meeting obligations, especially during economic downturns or periods of rising interest rates if the debt has variable-rate payments.

AXIS Capital currently has $1.43 billion of debt and $6.36 billion of shareholder's equity on its balance sheet, and over the past four quarters, has averaged a debt-to-equity ratio of 0.2×. We think this is safe and raises no red flags. In general, we’re comfortable with any ratio below 1.0× for an insurance business. Anything below 0.5× is a bonus.

Return on equity (ROE) serves as a comprehensive measure of an insurer's performance, showing how efficiently it converts shareholder capital into profits. Strong ROE performance typically translates to better returns for investors through a combination of earnings retention, share repurchases, and dividend distributions.

Over the last five years, AXIS Capital has averaged an ROE of 15.4%, healthy for a company operating in a sector where the average shakes out around 12.5% and those putting up 20%+ are greatly admired. This is a bright spot for AXIS Capital.

We were impressed by how significantly AXIS Capital blew past analysts’ net premiums earned expectations this quarter. We were also glad its revenue outperformed Wall Street’s estimates. Overall, we think this was a solid quarter with some key areas of upside. The stock remained flat at $103.78 immediately following the results.

Updated: January 28, 2026 at 5:34 PM EST

Before deciding whether to buy AXIS Capital or pass, we urge investors to consider business quality, valuation, and the latest quarterly results.

AXIS Capital doesn’t top our investment wishlist, but we understand that it’s not a bad business. Although its revenue growth was mediocre over the last five years, its growth over the next 12 months is expected to be higher. And while AXIS Capital’s projected EPS for the next year is lacking, its improving combined ratio shows the business has become more productive. On top of that, its astounding EPS growth over the last five years shows its profits are trickling down to shareholders.

AXIS Capital’s P/B ratio based on the next 12 months is 1.2x. This valuation multiple is fair, but we don’t have much faith in the company. We're pretty confident there are more exciting stocks to buy at the moment.

Wall Street analysts have a consensus one-year price target of $120.91 on the company (compared to the current share price of $103.78).