The QBE (ASX: QBE) share price has dropped 2.1% today after the insurer clarified its exposure to the now insolvent Greensill Capital.
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The QBE Insurance Group Ltd (ASX: QBE) share price is slipping today after the company clarified its exposure to the now insolvent Greensill Capital.
At the time of writing, QBE Insurance is trading down 2.1% to $9.57 per share.
QBE shines a light on Greensill exposure
The Greensill saga has implicated many entities – as the once $9 billion valued supply-chain financier becomes insolvent and faces liquidation.
As previously reported, Greensill’s business of providing funds to suppliers awaiting accounts receivable to purchasing businesses came under pressure when COVID-19 hit. After becoming heavily weighted to a handful of clients, cracks quickly propagated when these loanees could not repay their debts.
Prior to the collapse, debts would be collateralised by Greensill and sold onto investors. For protection, Greensill took out debt insurance policies to cover losses in the event of fallout. Consequently, insurers have found themselves caught in the turmoil.
QBE Insurance had been speculated to be one of three insurers who provided credit insurance to Greensill. However, the insurance group has today clarified it has no credit exposure to Greensill entities.
The clarification comes after Insurance Australia Group Ltd (ASX: IAG) cleared the air two weeks ago, regarding its dealings with the insolvent entity.
Floods put more stress on QBE share price
It appears there are more pressing concerns for QBE and other Australian insurers today.
As Sydney is battered by torrential rainfall, causing the area’s worst floods in 60 years, insurers are being inundated with flood claims. IAG alone has already received more than 2,100 claims involving property damage, as reported by Reuters.
The recent force of nature adds to what has been a tumultuous 18 months for insurance providers. Only last year, insurers were hit by more than $700 million in damages incurred by catastrophic bushfires. More recently, insurers have been battling in the courts to avoid an estimated $10 billion in COVID-related liabilities.
Despite testing times, the QBE share price has increased by 17% over the past year. The insurer’s market capitalisation is currently around $14.43 billion at the time of writing.
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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.