NEW YORK ( TheStreet) -- Several insurer and reinsurance companies have seen their stock declines, while others have seen share increases since Friday depending in their exposure the earthquake in Japan. Although the full impact of these loses is still unknown, rough estimates by Jefferies International price the insured losses for the industry at $10 billion. Catastrophe modeling firm AIR Worldwide estimates damages could be between $15 billion and $35 billion. Although it is too early to know the exact estimates, credit rating agencies Moody's and Standard & Poor's have said that U.S., Bermudian and European insurers and reinsurers balance sheets are likely take a large hit due exposure in Japan even though Japanese insurance companies will bear the brunt of the losses. "The events in Japan -- even though it is too early to estimate the damage - could wipe out a year of earnings," said Standard & Poor's Financial Services analyst Dennis Sugrue. "The first quarter is going to look pretty grim," said James Eck, vice president senior credit officer, at Moody's. "It will include losses from the Japan earthquake, the Australian floods and the New Zealand earthquake." Eck adds that share repurchases are also likely to not to return until after the 2011 Atlantic Hurricane Season. While, some insurers may get slammed in the first quarter, some analysts also see it as an opportunity for investors looking for longer term plays to pick up shares at a discount. Here are the 10 insurers and reinsurers listed on the NYSE and Nasdaq with exposure to the earthquake in Japan that analysts and investors are watching.
ACEACE ( ACE) has seen about a 30 cent decrease in share value since Thursday. The reinsurer increased its limits purchased for Japan earthquake risks by $225 million for the period between July 2010 and June 2011, raising its exposure to catastrophe exposure from the earthquake, according to SNL. ACE has announced $75 million to $90 million in pre-tax catastrophe losses from Australia flooding, but the firm has not yet offered an estimate on New Zealand or Japan. Morgan Stanley estimates that ACE could see total cat losses of $144 million for the first quarter of 2011. Analysts forecast an EPS for the first quarter of 1.86 versus a consensus of $1.75. Sandler O'Neill analyst Paul Newsome believes the string of catastrophes has presented an opportunity for investors to buy the stock. "We would generally use weakness related to this catastrophe event as an opportunity to buy U.S.-focused insurance companies. We currently have BUY ratings on ACE and XL, which are likely to take losses but also benefit from any resulting price increases in the property-catastrophe reinsurance market," said Newsome in a note. Newsome says ACE is a buy and has a price target of $75.
XL GroupXL Group ( XL) has seen shares fall about 10 cents since Thursday. The reinsurer announced $70 million to $85 million in pre-tax catastrophe losses from the New Zealand earthquake and has offered a pre-tax loss estimate from Australia flooding of $100 million to $120 million, with about $75 million to $95 million of which are expected to be realized in the first quarter. Sandler O'Neill analyst Paul Newsome believes that the catastrophe has given investors an opportunity to buy shares, and is rating the company a buy with a price target of $27. "We are reducing our 2011 operating EPS estimate to $2.15 from $2.25 to reflect losses from the New Zealand earthquake; this compares to consensus of $2.13," said Newsome in a note. Morgan Stanley analysts estimate that XL could report total cat losses of 166 million for the first quarter. They estimate the insurer will report an EPS of 49 cents compared to a consensus of 38 cents.
Everest ReEverest Re Group ( RE) has seen shares drop from $86 a share on Thursday to just about $82. Moody's warns that Everest Re, along with several other reinsurers such as Munich Re, Swiss Re, SCOR, Hannover Re, Berkshire Hathaway> ( BRK.B), PartnerRe are likely to face, "the highest losses on a nominal basis." Morgan Stanley analysts estimate that total first quarter catastrophe losses for the insurer could be $204 million.
Berkshire HathawayWarren Buffett's Berkshire Hathaway ( BRK.B) has exposure to the earthquake in Japan through its reinsurance company, Gereral Re. It is not known how catastrophic losses will be tied to the company. "Berkshire did take some significant losses in Australia and New Zealand, so chances are losses from the earthquake could be along the same lines. We will have to wait," said SNL analyst Tom Mason. Berkshire Hathaway reported $661 million in catastrophe losses as a result of earthquakes in Chile and New Zealand. Those losses also included storms in the U.S, Europe, and Australia. Since Friday Berkshire's stock has fallen by about $2.00. The stock was a little over $86 on Thursday and is now in $83.81. That, of course, has not stopped the company from being acquisitive. Berkshire announced the$9.7 billion acquisition of Lubrizol Corp ( LZ) Monday.
Axis CapitalAXIS Capital Holdings Ltd. ( AXS) has seen shares slip by about $1.00 since Thursday on exposure to the earthquake in Japan. AXIS calculated that its maximum net exposure to a Japanese quake with a 50-year return period -- and an industry exposure of $20 billion -- would be approximately $203 million, according to SNL analyst Tom Mason. Morgan Stanley analysts estimate that total catastrophe losses for the insurer's first quarter could be $239 million. Analysts at Morgan Stanley also cut the insurers first quarter EPS to 6 cents from a consensus of 81 cents a share.
Transatlantic HoldingsTransatlantic Holdings ( TRH) shares have declined from $50.50 to about $47.50 since Thursday. The insurer announced that approximately $200 million in catastrophe losses would apply in the first quarter of 2011 for the Australia floods and New Zealand earthquake. The insurer has an estimated probable net catastrophe loss of $273 million from Japanese earthquake risk events, according to SNL data. Morgan Stanley analysts estimate that total catastrophe losses for the first quarter of 2011 could be $123 million. Morgan Stanley expects an EPS of 49 cents for the first quarter, compared to a consensus of 93 cents.
Arch CapitalArch Capital Group ( ACGL) shares popped from $89 to $91 a share since Thursday. The insurer announced that the company's 2011 first quarter results will be negatively impacted by the New Zealand earthquake in the range of $35 million to $70 million. Arch said in a press release that it is currently assessing its exposures to the recent earthquake and tsunami that struck Japan. "While considerable uncertainty remains, as of January 1, 2011, the Company's modeled exposures for property losses arising from an earthquake in Japan were net probable maximum pre-tax losses of (a) approximately $60 million for a 1-in-100 year return period," the statement said. Morgan Stanley estimates that total catastrophe exposure that the insurer will report for the first quarter of 2011 could be $101 million. The analysts at the firm expect an EPS for the first quarter of 98 cents compared with the consensus of $1.52.
RenaissanceReRenaissanceRe Holdings ( RNR) has risen from $64.80 to $65.40 since Thursday. The company reported in its fourth quarter earnings that estimated net claims and claims expenses associated with the New Zealand earthquake was $128.1 million, an increase of $54.5 million from its previous estimate. There was no estimate on potential losses from Japan on its website. Morgan Stanley analysts expect the company to report total first quarter losses of $216 million. The analysts also forecast that the company's first quarter EPS will be 22 cents compared to a consensus of $1.20.
American International GroupAmerican International Group ( AIG) is likely to see losses from its property and casualty commercial business, Chartis. AIG is currently assessing losses but has not reached any figure. "We are working on assessing insured losses but it will take time for insurers to be able to assess the full magnitude of the event," said AIG spokesperson Mark Herr. "We have activated our emergency response teams and call centers, and are fully committed to assisting customers in dealing with this disaster." SNL estimates that American International Group could face net losses of $356 million on a return period of 100 years. AIG's Chartis recorded a catastrophe loss in the fourth quarter of 2010 of $139 million, according to its 10K. Chartis also faces more losses after recently purchasing the remaining shares of Fuji Fire and Marine Insurance Co. for 47 billion yen ($571 million) to bolster its Japanese insurance business. AIG's stock has been volatile over the past week, but has actually seen an increase from $35 to $37. >>To see these stocks in action, visit the 10 Insurance Stocks Shaken By Catastrophes portfolio on Stockpickr.
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