QBE’s share price has been hammered by private and institutional investors alike since it announced yesterday afternoon that it has a big exposure to the New York disaster.

More than $1.3 billion was wiped off its value immediately after MD Frank O’Halloran announced the losses it will experience from the US terrorist attacks will wipe out most of its expected 2001 profit. Mr O’Halloran, who was in London when the attacks took place, returned to Australia on Sunday and reported the bad news to the ASX after an unscheduled board meeting. 

The Australian Financial Review said Salomon Smith Barney, Merrill Lynch and CFSB were among the big sellers.

In his statement to the ASX, Mr O’Halloran said its review of its exposures “indicates that a substantial part of QBE’s expected profit for 2001 could be utilised by this tragic event”.

Speaking to the media yesterday, he said QBE’s Lloyd’s underwriter Limit – the market’s largest underwriter – accounts for about a third of the company’s exposure.

“The classes of business which we have reviewed as likely to be affected include aviation war, aviation liability, property, business, interruption, loss of rent, contents, fine art, loss of security documents, personal accident, workers’ compensation, loss of money, credit card, trade credit, performance bonds, motor, E&O. D&O, general liability, professional liability, travel, cancellation of sporting events, property catastrophe, property excess of loss, personal accident catastrophe and workers’ compensation catastrophe.

“The extensive reinsurance protections in place are now considered most likely to be insufficient to cover aviation liability and personal accident claims from this event.”

Mr O’Halloran said QBE didn’t expect “a disaster of this magnitude” despite “all our years of careful risk management and our profit record”.

He was careful to make the point that this isn’t a total disaster for QBE. Shareholders’ funds are around $2 billion and the underlying business and balance sheet remain strong.