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QBE today advised that a statement of its position on 17
September 2001 (copy attached and which is also available on QBE's
website at www.qbe.com) remains unchanged. QBE is concerned that
some of its shareholders are selling their shares based on rumour
and speculation.
QBE remains well capitalised: the Company's capital after this
disaster (and allowing for our best estimate of the net loss after
tax in the region of A$250 million) is still well in excess of
APRA's new minimum capital requirement at 1.32 times and
shareholders' funds are around A$2 billion.
Mr Frank O'Halloran, QBE's Chief Executive Officer, said "It is
important for shareholders to realise that our statement of last
Monday has not changed. QBE understands its obligations under the
Stock Exchange listing rules and will make an announcement if the
position does change."
Reinsurance protections are in place for the potential of further
catastrophes in 2001 and our prudential margins at 30 June 2001
remain unchanged.
In response to a number of market rumours, shareholders should
note that QBE has approached its provisioning for this disaster on a
prudent and conservative basis, and in particular:
1. QBE's aviation liabilities for the three aircraft that crashed
into the World Trade Centre and the Pentagon have been reserved to
our maximum claim exposure. The fourth aircraft, which crashed in a
non-urban area and is therefore likely to have lower claims, has
been conservatively provided for.
2. QBE's potential exposure to personal accident claims has also
been conservatively estimated and any deterioration in our estimates
is regarded as minimal.
3. The vast majority of our reinsurance recoveries from this
event are with the world's largest and highly rated reinsurers.
4. Each of the 108 syndicates at Lloyd's is a separate business
with separate "shareholders' funds", which are required to meet the
stringent risk based capital requirements of Lloyd's. QBE manages
and invests in 7 of these syndicates. For the 2000 underwriting
year, QBE provided 55% of the capacity written by its syndicates and
for 2001 underwriting year it provided 72% for those syndicates. QBE
has reviewed the claims provisions for the 7 syndicates managed by
QBE and we are satisfied that adequate provision has been made.
QBE's share of the net losses from this tragedy is estimated at less
than A$100 million after tax.
5. The other 101 syndicates which are stand alone businesses are
responsible for their own losses through their own premium trust
funds, their own reinsurance protections and their own
"shareholders' funds" held at Lloyd's which, in total, QBE believes
are well in excess of the likely net cost of this disaster. Lloyd's
has a central guarantee fund and a central guarantee fund
reinsurance protection for deficiencies of any syndicate.
Mr O'Halloran confirmed that "QBE's businesses around the world
were ahead of plan prior to this tragic disaster. We have a strong
team of professionals with a great track record and commitment. We
are confident of our future".
Contact: Ruth Chuter, Tel: 61 2 9375 4402
20 September, 2001 | 
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