Insurance Stocks Suffer Following Disaster

The disasters had an immediate and devastating effect on international trading. Reuters reported that the DJ Stoxx insurance index reportedly fell to a three-year low, following a 13 percent drop the previous day. In addition, shares of companies such as AXA, Zurich Financial, Munich Re, Swiss Re, CGNU, Royal & Sun Alliance, QBE Insurance Group Ltd. and Allianz all fell to various degrees. In Germany, key auto and insurance stocks with exposure in the U.S. fell dramatically on Sept. 12.

In Asia, insurance shares sold off the day after the U.S. attacks. Asian stock markets experienced triggered suspensions and delays on Sept. 12, and the Malaysian, Taiwanese and Thai markets were closed.

During the same time period, various companies started to trickle in what might be considered at this early stage “guesstimates” as to liabilities.

Munich Re reportedly estimated its liabilities at up to $906.6 million. However, the reinsurance giant stated that while claims could be considerable, this would not threaten the company’s financial stability. Swiss Re stated it expects to have adequate reserves to cover the $730 million in losses it has estimated it may incur from the attacks.

In a much more disturbing development, on Sept. 16, reports began to emerge from BAWe, the German securities watchdog, that a probe had been initiated by that nation’s stock regulators to look into market rumors that Osama bin Laden may have tried to profit from the terrorist attacks from stock trading prior to those events. The AP reported that investigators both in the U.S. and Europe were targeting in particular the stock movements of Munich Re, Swiss Re and AXA. During the week before the attacks, Munich Re shares dropped 4, 5 and 4 percent, respectively, on three consecutive days, and 16 percent on Sept. 11. Munich Re stated on Sept. 16 that its legal department had no knowledge regarding an investigation into short-selling of the company’s shares. Swiss Re and Axa did not release any statements on Sept. 16.

Regulators from 10 to 12 nations, including the U.S., reportedly held a global conference call on Sept. 17 to discuss the possibilities that insiders had placed large bets in the days preceding the terrorist attacks.