A massive Japanese earthquake may have less of an impact on insurers than first feared, analysts said on Friday, although their reassuring estimates only partially calmed nervous investors.

The quake off Japan's northeastern coast triggered a 10-meter tsunami that swept away ships, houses and farms and put Pacific basin countries on alert.

But industry consultants and risk experts said a persistent state of under-insurance in the Japanese market means insured losses are likely to be a small fraction of the total economic losses, as was the case in the Kobe quake in 1995. Insured losses then were only about 3 percent of economic losses.

The total insured loss could be around $15 billion, equity analysts covering the industry said, enough to force some earnings misses, but not to inflict such serious financial hardship on the sector that it would be forced to raise prices after years of declines.

Last year, analysts polled by Reuters said a natural catastrophe would need to cause an insured loss of over $40 billion to lift prices across the market.

The very near-term reaction is that it's another annoying loss, but without any significant pricing impact on the other side of it, said Joy Ferneyhough of Espirito Santo bank in London, who said industry contacts she spoke to on Friday expect an insured loss of between $10 billion and $15 billion.

Analysts at stockbroker Jefferies International penciled in a loss of $10 billion, while their counterparts at JP Morgan said the hit to European reinsurers could be as little as $1 billion to $2 billion.

Standard & Poor's equity analysts took a slightly more aggressive tack, though, forecasting losses in excess of $15 billion. Combined with claims from an earthquake in New Zealand and unrest in the Middle East, S&P said there may be enough fuel to spark something of a rise in rates.

S&P said catastrophe losses worldwide for the first quarter are on track to top $30 billion, against $37 billion in losses for all of 2010.

WAIT AND SEE

The insurance impact of the quake will be mitigated by the Japanese state's role in picking up quake losses to households, while damage to businesses so far appears manageable, the analysts said, stressing their estimates were only preliminary.

The hit to insurers will also be limited by a low take-up of insurance by Japanese households and businesses relative to western countries, according to industry consultants Axco.

Many large corporations only insure their property on an indemnity basis and do not buy loss of profits or earthquake coverage, whilst many small to medium-sized enterprises are completely uninsured, Axco said, also noting many firms canceled quake coverage starting in 2007 to save money.

Insurers and reinsurance companies said it was too early to provide reliable forecasts of the quake's impact.

It is absolutely impossible to give you any clue of what that would mean to us, Nikolaus von Bomhard, chief executive of Munich Re , the world's No. 1 reinsurer, told an analyst conference.

American International Group , whose Chartis unit is the largest foreign property insurer in Japan, said it could not yet predict when it will be able to make a loss estimate.

Risk modeling firms are expected to publish initial estimates in the next few days, giving the first scientific guesses as to how the insurance sector will be affected.

Robert Muir-Wood, the chief research officer of risk modeler RMS, told Reuters Insider that $10 billion estimates were plausible but that it would be days until a proper figure was available. Muir-Wood also suggested the ratio of insured loss to economic loss would be higher this time than with Kobe, though it was not yet clear how much.

RMS competitor Air Worldwide, in its first post-event report, said less than a fifth of Japanese had earthquake insurance but that residential buildings in the quake area were generally resistant to shaking anyway.

SHARES MIXED, EARNINGS PRESSURED

Shares in the European insurance sector fell steeply, with reinsurers, which typically have the greatest exposure to major natural catastrophes, taking the brunt of it.

The top three global players -- Munich Re, Swiss Re and Hannover Re -- closed down by between 3.5 and 4.3 percent, while the Stoxx 600 European insurance index <.SXIP> was off 2.2 percent.

In the United States, shares with actual or presumed exposure to Japan fell sharply at the open but pared those losses. AIG and ACE Ltd , the two most exposed U.S. insurers, actually closed higher.

Shares in Aflac Inc , a major disability insurer in Japan, opened 2.6 percent lower but pared losses to end down 0.3 percent after chief executive Daniel Amos said its financial exposure was rather limited.

The broader S&P insurance index <.GSPINSC> rose 0.6 percent.

We would generally use weakness related to this catastrophe event as an opportunity to buy U.S.-focused insurance companies, brokerage Sandler O'Neill said in a research note.

Analysts said some reinsurers, which have already had to pick up the bill this year for flooding and cyclones in Australia as well as last month's earthquake in New Zealand, were now in danger of missing profit forecasts for the year.

It is now a near-certainty that assuming normalized developments for the rest of the year, this will be another year of above-average nat-cat losses for reinsurers, and earnings downgrades would be likely for 2011, sector-watchers at Credit Suisse said in a research note.

Financial investors could lose millions in investments through catastrophe bond transactions with more than $1 billion in exposure to Japanese earthquakes. Ratings agency Standard & Poor's on Friday said it had kept its ratings unchanged on six such bonds, but that it was monitoring the situation.

Cat bonds are issued by reinsurers, such as Munich Re and Scor, seeking collateralized protection from investors, as opposed to the traditional reinsurance market.

(Additional reporting by Simon Jessop, Lorraine Turner and Tricia Wright in London, Christoph Steitz and Jonathan Gould in Frankfurt, Katie Reid in Zurich and Brenton Cordeiro in Bangalore; Editing by David Cowell, Jane Merriman and Bernard Orr)

Japan Quake