AXIS Capital Holdings Limited (AXS) estimates second quarter results to be adversely affected by $90-$105 million, net of reinsurance coverage, tax and reinstatement premiums, owing to the June earthquake in New Zealand and the series of severe weather events in the U.S. in April and May.
AXIS Capital expects the net financial impact of the New Zealand earthquake to be $30-$35 million while the same from severe weather events in the U.S. during the second quarter is estimated to be $60-70 million.
AXIS Capital expects the industry loss at around $3 billion owing to the New Zealand earthquake and $16 billion owing to severe weather events in the U.S. Additionally, the company estimates the industry loss from the New Zealand earthquake that occurred in the first quarter to have increased to $15 billion and the loss owing to the Japan earthquake and tsunami to have decreased to $25-$30 billion. On the other hand, the catastrophes in Australia in the first quarter would lead to a loss of $6 billion.
AXIS Capital has a substantial exposure to losses resulting from natural disasters, man-made catastrophes and other catastrophic events. The company suffered huge catastrophe losses in the first quarter, which led to an operating loss per share, wider than the Zacks Consensus Estimate. Catastrophe losses, net of reinstatement premiums, totaled $577 million in the first quarter. The combined ratio deteriorated substantially to 161.3% from 98.3% in the year-ago quarter.
The Zacks Consensus Estimate for second-quarter 2011 is 89 cents per share. For full years 2011 and 2012, the Zacks Consensus Estimates are, respectively, a loss of 47 cents per share and profit of $4.08 per share.
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. It competes with ACE Limited (ACE).
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