You cannot perform a replace in the PIVOT
area of the query so you will need to perform it in a subquery:
select SIMULATION, [USSIC Aviation], [Avemco Aviation], [Property], [Life]
from
(
select SIMULATION, replace(PRODUCT,'_',' ') Product, value
from CM.CorrelationData
where Product_Description='UW'
) d
pivot
(
min(Value)
for PRODUCT in ([USSIC Aviation], [Avemco Aviation], [Property], [Life])
) piv