Once again the brunt of the stockmarket attention is on insurers and other financial stocks.
Just as after the Queensland floods and the two Christchurch earthquakes saw these shares sold off in an initial reaction; this bigger disaster will see another bout of nervousness around the globe.
Japanese authorities yesterday revised the magnitude of the earthquake to 9.0 from 8.8, the Japan Meteorological Agency said Sunday.
In magnitude terms, the upgrade placed the quake in equal fourth on a US. Geographical Survey list, tied with the 1952 Kamchatka quake in Russia and after the 1960 quake in Chile with 9.5, the Alaska quake in 1964 with 9.2 and the Sumatra (Aceh) quake in 2004 with 9.1.
In Australia today, watch the share price in QBE as a guide as it is a big global reinsurer, with a significant presence in the Lloyds market in London which should also be monitored if you are interested.
But much of Japanese business and individuals don’t carry earthquake insurance and one risk management group has suggested the level of risk carried could be around 15% to 17% of the total losses, which is far less than the proportion of the losses from the second Christchurch quake.
Risk consultants, AIR Worldwide estimates insured property losses will likely be between $US14.5 billion and $US34.6 billion.
"Search and rescue efforts are still underway and damage assessment has only just begun, while considerable uncertainty still remains in the parameters that define the event," the company said in a statement overnight. Sunday.
But that doesn’t include the effects of the tsunami.
AIR said that when that is calculated, will result in a "significant" increase in the damage estimate. An update will be issued overnight Monday.
"AIR’s loss estimates reflect insured shake and fire-following damage to onshore residential and commercial buildings and contents, and to properties in AIR’s agricultural line of business," the company’s statement said.
But while the cost remains unknown, Air Worldwide reckons the area of the country most directly affected by the quake has about $US300 billion of insured property.
And an additional $US400 billion of insured property lies in areas that were less impacted but likely still sustained costly damage, according to Jayanta Guin, senior vice president of research and modeling at AIR, who spoke to the Wall Street Journal.
QBE shares closed down half a cent or 9c at $17.17 on Friday afternoon.
Its shares, and those of IAG (steady on $3.47) and Suncorp (up 2c at $8.19) should also be checked to see the reaction after trading opens.
Shares in big Japanese insurers such as Dai Ichi, which is buying the listed Tower group) should also be monitored, especially if you are a shareholder in Tower.
Until we know the extent of the losses, all insurers here and offshore, plus many major Japanese banks and brokers (such as Nomura, Mizuho and MFG) and some of the big US banks (Goldman Sachs, JPMorgan, Bank of America) and big Europeans such as Paribas, Soc Gen, will have to be watched because there will nervousness about possible losses.
Big US and European insurers and reinsurers were hit on Friday.
French reinsurer, Scor lost 5.2% of its value, while the giants, Munich Re, Swiss Re and Hannover Re fell between 3.5% to 5.3% in value on Friday. In the US, insurers such as Aflac, fell 0.3% despite the fact that 75% of Aflac’s revenue comes from Japan.
Other insurance companies, including Aspen Insurance Holdings, Everest Reinsurance Group, XL Group and Hartford Financial Services were also down in New York.
America’s biggest reinsurance group is located inside Berkshire Hathaway, the Warren Buffett company. Berkshire shares rose 0.2% with American analysts claiming the pictures meant the damage bill would not be large. The shares fell 1.3% in early trading, but recovered.
After the news of the weekend with the trail of damage left by the tsunami and the problems at Fukushima, plus the prospects of a week of power rationing and plants being shut for several days, those estimates will be unwound and new, higher ones worked out.
And according to early estimates from Standard & Poor’s worldwide catastrophe losses in the first quarter of 2011 could set a new record, as losses from the Japanese earthquake and subsequent tsunamis are tallied.
The floods in Brisbane and the rest of Australia, plus cyclone Yasi could see damage bills of well over $A6 billion and insured losses of up to three quarters of that amount, according to some estimates.
"Insured losses from last month’s New Zealand earthquake are currently estimated at $10 billion, and still rising.
"Insured losses from unrest in North Africa and the Middle East are also still being calculated, with the tab at $8 billion to $10 billion and also rising.
"Taken together with at least several billion of dollars of insured losses from the series of winter storms that hit many parts of the United States, and an array of other events, worldwide catastrophe losses could top $US30 billion in the first quarter of 2011.
"This compares with preliminary est
