QBE is attempting to raise at least $500 million through a share placement to meet new challenges stemming from its losses following the September 11 US terrorist attacks.

The placement, announced this morning by CEO Frank O’Halloran as trading in QBE shares was halted for two days, is expected to cost $5.50 a share and is at present open only to institutional investors. The offering will be thrown open to non-institutional shareholders in two days.

The announcement comes hot on the heels of calls from major investment analysts for a capital-raising (see earlier story below). Trading in QBE shares has been suspended until Thursday, when the institutional allocations will have been completed.

Mr O’Halloran also confirmed that QBE still expects its losses from the September 11 attacks to be no more than $250 million. He took an upbeat approach in his announcement of the share placement, saying the company’s major shareholders have “expressed the desire to see QBE continue the acquisition and other initiatives of the past 18 months and to participate in the growth opportunities from premium rate increases that have already commenced and will continue as a result of the terrorist attacks”.

Apart from giving QBE “an appropriate level of capital” to grab the growth opportunities from rate increases, the proceeds from the capital-raising will also be used to purchase additional capacity for QBE-managed syndicates at Lloyd’s. It will also enable the company to improve its ratings by lowering its debt/equity ratio.

The level of private shareholder placement will be decided after the institutions complete their deals on Thursday. A prospectus is likely to be in the hands of shareholders on October 24 and the offer will close on November 20.