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Bear of the Day

We are downgrading AXIS Capital's (AXS) to Underperform as we expect the company to suffer majorly from catastrophic losses. We also believe that near-term results will remain curtailed, given the current stress in the overall economy and the soft pricing environment.

Though rate increases and growth opportunities have resulted in increased premiums in the Reinsurance segment, significant growth in the Insurance segment remains elusive.

Our six-month target price of $31.00 equates to 27.0x our earnings estimate for 2011. This implies a total negative return of 6.3% for the period when combined with the annual dividend of $0.92. This is consistent with our long-term Underperform recommendation on the stock.

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