International Insurance Stocks Plunge for

September 13, 2001

The day after the Sept. 11 terrorist attacks on the U.S, insurance stocks fell significantly in international trading. The DJ Stoxx insurance index reportedly fell to a three-year low at 8:27 a.m. EDT, following a 13 percent drop on Tuesday. In addition, AXA and Zurich Financial suffered decreases of more than 6 percent.

According to Reuters, claims may be filed for New York’s twin World Trade Center towers, which were constructed nearly 30 years ago at a cost of $750 million. It was also indicated that a possibility exists that United Airlines and American Airlines, owners of the aircrafts that were hijacked, could also file claims. U.S. insurers and leading international insurers and reinsurers will most likely share the losses.

Germany’s Munich Re, the world’s largest reinsurer, reportedly estimated its liabilities at up to $906.6 million, which would significantly hurt profits. Munich Re was also quoted as stating that while claims could be considerable, this would not threaten the company’s financial stability. Swiss Re, however, stated it was too soon to determine what its potential losses might be. Swiss Re added its expectation that it would have adequate reserves to cover any potential claims.

Munich Re shares fell 4.7 percent by 9:10 a.m. EDT, while Swiss Re shares were down 6.9 percent.

In addition, shares of France’s AXA, Zurich Re, and Germany’s Allianz were down 7.3 percent, 5.6 percent and 8.6 percent, respectively.

A spokesman for one of the U.K.’s largest insurers, CGNU Plc, noted that while it had had exited the U.S. property/casualty market in 2000, the company could have some exposure with respect to the airlines which owned the planes involved in the attacks. CGNU shares lost four pence while Royal & Sun Alliance lost nearly one percent. A spokesman for RSA indicated it would take some days to assess the impact of the attacks.

Dutch insurers ING Groep, Aegon and Fortis, indicated it was too early to calculate the cost the cost of life insurance claims, especially in light of the fact that a definitive total number of victims has not yet been determined.

In Germany, key auto and insurance stocks with exposure in the U.S. fell dramatically on Wednesday.

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

Australia’s QBE Insurance Group Ltd., the largest player in the London-based Lloyd’s market, was down 12 percent in morning trade. QBE’s shares later experienced a slight recovery, standing at A$9.37.

Compiled from Reuters sources.

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