J.P. Morgan Reduces Axis Capital Holdings Estimates due to Gryphon Loss (AXS)

Earlier today, J.P. Morgan came out with a note reducing estimates for Axis Capital Holdings, Ltd. (NYSE: AXS) for Gryphon losses. J.P. Morgan remains Neutral on AXS, with a price target of $36.00.

Due to the weather-related losses of Maersk Oil's Gryphon floating production storage and offloading vessel in the North Sea in early February, J.P. Morgan is increasing the 1Q catastrophe load by $25 mill. The 1Q operating EPS estimates are reduced by $0.23 to a loss of $3.51, and the FY 2011 estimates are reduced by $0.22 to a loss of $0.51.

AXS shares are trading at 1.02x and 0.92x 2011E and 2012E book value per share versus peers trading at 0.94x and 0.88x. The price target of $36.00 reflects residual income analysis based on ROE adjusted for operating and financial risks. AXS shares are more exposed to catastrophe losses than some commercial peers, a risk to capital and earnings. However, the stock could outperform if catastrophes remain benign or reinsurance pricing improves.

At the time of posting, shares of AXS were trading at $36.10.