10 Insurance Stocks With Significant Exposure To The Catastrophe In Japan

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 modelling 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.

This post originally appeared at The Street.


PartnerRe(PRE_) is a large global reinsurance player that has reported the highest losses, on a nominal basis, so far this year due to catastrophes.

The company reported in November 2010 that Australia and New Zealand losses made up about 28 per cent of the company's overall catastrophe limits, according to SNL.

In a press release PartnerRe pre announced $180 million to $240 million in first quarter catastrophe losses. Morgan Stanley(MS_) estimates losses for the first quarter could be $325 million.

Analysts Gregory Locraft, Kai Pan and Scott Thomas project that PartnerRe's first quarter EPS could be 69 cents a share, down from consensus of 96 cents a share. Under Morgan Stanley's estimates of total cat losses for all first quarter events, PartnerRe has the greatest exposure.

Stock is down about $2 since Thursday. Shares fell from $77 to about $75.


ACE(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 Group

XL 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 realised 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 Re

Everest 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 Hathaway

Warren 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.

These aren't the only insurance stocks in hot water.

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