Australian insurer QBE last week moved to allay investor fears about its exposure to the damage caused by the US terrorist attacks.
QBE, the largest insurer at Lloyd's, with a market share of approximately 8%, told investors its net exposure to the attacks would not exceed AUS$250m (£84.2m) after tax and that it had no plans to raise capital.
A ratings downgrade from Standard & Poor's and rumours that it did not have sufficient capital to handle its exposure to the terrorist attacks sparked fears that QBE may run into trouble like HIH and pushed its shareprice to a six-year low of AUS$3.35 (£1.12) last Thursday.
The Australian Stock Exchange intervened to suspend trade in the shares and, after QBE had clarified its situation, the share price recovered 52% last Friday to AUS$5.09 (£1.70).
Chief executive of the Australian Prudential Regulatory Authority, Graeme Thompson, said QBE's situation was very different to that of collapsed insurer HIH.
“Here we have a company (QBE) with a sizeable exposure to a particular, very unusual event,” he said. “We're confident it has done a very thorough assessment of its potential exposures to this event. And having worked through all of that, the company's position remains sound.”
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