AXIS Puts Q2 Cat Losses at $90-$105 Million; Updates Q1 Estimates

July 15, 2011

Bermuda-based AXIS Capital Holdings Limited has estimated that the total net financial impact of the June 2011 aftershock in New Zealand and the series of severe weather events that occurred in the U.S. in April and May 2011 are expected to be $90 to $105 million – net of reinsurance coverage, tax and reinstatement premiums.

The Company expects losses from the New Zealand aftershock to be $30 to $35 million. The net financial impact of the severe weather events that occurred in the U.S. during the second quarter is expected to be $60 to $70 million.

AXIS added that it “has reviewed updated information from clients for the first quarter 2011 catastrophes and expects a negative net financial impact of approximately $20 million due to an increase in the aggregate net loss estimates.”

However, AXIS also noted that “favorable developments related to the net loss estimates for the earthquake and tsunami in Japan and the loss events in Australia that occurred during the first quarter are expected to largely offset an increase in the net loss estimate for the New Zealand earthquake that occurred during the first quarter.”

AXIS explained that its loss estimates are primarily based on its “ground-up assessment of individual contracts and treaties in the affected regions and are consistent with the Company’s market position in the respective regions impacted by these catastrophe events. Other information considered in developing net loss estimates includes current industry insured loss estimates, market share analysis, catastrophe modeling analysis and limited information from clients, brokers and loss adjusters.

“The Company currently estimates that industry losses will be $3 billion for the June 2011 aftershock in New Zealand and $16 billion for the severe weather events that occurred in the U.S. during the second quarter of 2011.”

AXIS noted that industry loss estimates related to the New Zealand earthquake in the first quarter of 2011 “have increased to $15 billion and that industry losses related to the Japan earthquake and tsunami have decreased to $25-$30 billion.” Estimates for, industry losses related to the first quarter loss events in Australia indicate that they will be around $6 billion.

Assessing its exposure to these catastrophe events is an ongoing process, AXIS pointed out. “The actual net financial impact of these catastrophe events may differ materially from the Company’s estimates due to the inherent uncertainties of making such estimates, including, but not limited to, the preliminary nature of available information, regulatory requirements, complications associated with claims adjustment in affected regions, variability associated with coverage definition and potential inaccuracies and inadequacies in data provided by clients and brokers.”

Source: AXIS Capital

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