AXIS Capital Holdings Ltd. (AXS) has priced a $500 million offering of senior notes last Thursday. The 5.875% senior notes are due 2020. The notes were offered by its indirect, wholly owned subsidiary, AXIS Specialty Finance LLC. The company intends to use the proceeds for general corporate purposes.
 
A.M. Best Co. has assigned a debt rating of “bbb+” to the senior notes. The senior notes are fully and unconditionally guaranteed by AXIS Capital. The outlook assigned is “stable”.
 
Barclays Capital Inc. (BCS), Deutsche Bank Securities Inc. of Deutsche Bank (DB) and Wells Fargo Securities LLC of Wells Fargo and Company (WFC) were the joint book-running managers for the offering.
 
Last week, AXIS Capital also provided its preliminary loss estimates from the earthquake in Chile and the European Windstorm Xynthia. The company announced that it expects to incur net losses between $60 million and $125 million for the earthquake and $10 million − $20 million from Windstorm Xynthia. The net loss estimates are provided on a pre-tax basis and net of reinstatement premiums.
 
Estimate Revision Trend 
 
Following the announcement of initial losses, 5 of the 10 analysts covering the stock have lowered their estimates for the first quarter of 2010, while none made any upward revisions. For the full year, 6 analysts have revised the estimate downward and none made any upward revisions in the last 7 days.
 
Currently, the Zacks Consensus Estimate for the first quarter and the full year 2010 are operating earnings of 78 cents and $4.20 per share, respectively.
 
However, in terms of earnings surprises, we noticed that earnings exceeded estimates in each of the last 3 consecutive quarters, with a four-quarter average of 16.9%. This implies that AXIS Capital has surpassed the Zacks Consensus Estimate by 16.9% over that period.
 
The downside potential for the estimate for the first quarter, essentially a proxy for future earnings surprises, currently stands at 33.3% while that for the full year is 7.1%.
 
Bermuda-based AXIS Capital is a global provider of specialty lines insurance and treaty reinsurance. The company was incorporated in 2001. Its operating subsidiaries have been assigned a rating of “A+” (Strong) by Standard & Poor’s and “A” (Excellent) by A.M. Best. AXIS Capital has been assigned a senior unsecured debt rating of A- (stable) by Standard & Poor’s and “Baa1″ (stable) by Moody’s Investors Service (MCO).
Read the full analyst report on “AXS”
Read the full analyst report on “DB”
Read the full analyst report on “WFC”
Read the full analyst report on “BCS”
Read the full analyst report on “MCO”
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