AXIS Capital Holdings Limited (AXS) estimates preliminary losses from the earthquake and tsunami in Japan at $285 million, net of tax, reinsurance recoveries and reinstatement premiums.

The company stated that the catastrophe losses will primarily impact the reinsurance segment. Even though the segment reported underwriting profit in 2010, the results were significantly lower than 2009 levels. Combined ratio deteriorated 1550 basis points from 2009. We expect the first quarter results of the segment to be weighed upon by cat losses stemming from the natural disasters in the first three months of 2011. 

Also, AXIS Capital stated that the losses to the insurance segment will be limited to $25 million given reinsurance coverage limiting net retentions in the segment.

ACE Limited (ACE), which competes with AXIS Capital estimates net after-tax losses from the recent Japanese earthquake to range between $200 million and $250 million.

Earlier AXIS Capital guided first quarter 2011 preliminary losses from the New Zealand earthquake, Australian floods and Cyclone Yasi 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 currently estimates that total insured losses to the industry, excluding losses assumed by the Japanese government, will be in the range of $30-$35 billion.

AXIS Capital suffered huge catastrophe losses in 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.

We maintain our long-term Underperfom” 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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