AIR Worldwide Updates Estimate For Japanese Earthquake And Tsunami

According to Wunderlich Securities, AIR Worldwide has revised its estimate for the Japanese catastrophe at $20-$30 billion. In the report, Wunderlich writes, “The new estimate is at the middle of the range of AIR's initial estimate of $15-$35 billion. The estimates are preliminary and are likely to change as the situation develops. We believe the impact from the high level of catastrophes in the first quarter of 2011, including the Australian floods and the New Zealand and Japanese earthquakes, will be positive for pricing in the property/casualty market as reinsurers demand higher prices to replace capacity lost due to claims and reinsurers adjust loss models to reflect increased risk. We believe the fundamentals of Aspen Insurance Holdings Ltd. AHL ($27.56, Buy) and AXIS Capital Holdings Ltd AXS ($34.92, Buy) will benefit from price increases in the reinsurance market.” The price target for AHL is set at $37, with AXS at $45.