AXIS Capital Holdings Limited (AXS) guided first quarter 2011 preliminary losses from natural catastrophes to be between $275 million-$315 million, pre-tax and net of reinstatement premiums. The total amount comprises $185 million-$215 million attributable to the New Zealand earthquake and $90 million-$100 million for the Australian floods and Cyclone Yasi.
AXIS Capital expects the losses will mainly impact the reinsurance segment of the company. The company also estimates net impact from the New Zealand earthquake to the insurance segment not to exceed $20 million due to reinsurance coverage limiting net retentions in the segment.
AXIS Capital presently expects these preliminary loss estimates to translate into expected insured market losses for the New Zealand Earthquake in the range of $8 billion to $12 billion and more than $6 billion for the loss events in Australia.
AXIS Capital is also in the early stage of estimating losses related to the recent earthquake and tsunami in Japan. Property catastrophe modeling agencies estimates the industry to suffer losses between $12 million-$35 billion.
AXIS Capital expects its losses in the reinsurance segment not to exceed 1.3% of the total industry loss and net impact to its insurance segment not to be more than $25 million due to reinsurance coverage limiting net retentions in the segment.
AXIS Capital suffered huge catastrophe losses in the 2010, largely due to major earthquakes in Chile and New Zealand. The combined ratio deteriorated by 810 basis points to 85.6% in the fourth quarter while it deteriorated 940 basis points to 88.7% in 2010.
ACE Limited (ACE), which competes with Axis Capital, guided first quarter 2011 preliminary net after-tax losses from natural catastrophes to be $210 million, including reinstatement premiums. The total amount comprises $115 million attributable to the New Zealand earthquake, $80 million for the Australian floods and Cyclone Yasi, and $15 million for the U.S. winter storms.
Besides, ACE Limited estimates net after-tax losses from the recent Japanese earthquake to range between $200 million and $250 million.
We maintain our long-term “Neutral” recommendation on AXIS Capital. The quantitative Zacks #3 Rank (short term Hold rating) for the company indicates no clear directional pressure on the stock over the near term.
Headquartered in Pembroke, Bermuda, AXIS Capital is a global provider of specialty lines of insurance and treaty reinsurance.
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