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Australia's largest insurer, QBE Insurance Group, came off a trading halt on the ASX yesterday to issue a shock profit warning, prompting a hammering of its shares and wiping 20% off its value.
After QBE cited global catastrophes would wipe its profit for calendar year 2011 by 40% to 50%, its shares plunged more than 20%, losing $A2.92 billion ($NZ3.77 billion) in market capitalisation, to trade at $A9.99 after it came off the trading halt.
Forecast insurance profit margins for 2011 was expected to be 11%, but was cut to 7%-7.5%, QBE said in a statement.
Craigs Investment Partners broker Paul Valk said there had been a record number of catastrophic weather-related claims for QBE to deal with during the past year.
"The shock profit warning follows a number of events QBE has had to deal with during the past couple of years," he said.
Three hours after coming off the trading halt, at 12.50pm NZ time, more than 15 million QBE shares of the total 1.11 billion on issue were traded.
Mr Valk said the catastrophic events included flooding in Thailand and West Australia, hailstorms in Melbourne, Japan's earthquake and tsunami and crop-related claims in the United States, because of bad weather.
QBE said its 2012 outlook was "positive" as insurance premium rates increases had been achieved in most markets, including New Zealand, Australia, the US and parts of Europe, Asia and South America.
QBE last year posted a $US1.28 billion ($NZ1.6 billion) profit and Mr Valk said the downgrade was well below market expectations and "had taken analysts by surprise"
When QBE went into the trading halt yesterday, there had been speculation in the finance sector that a recent acquisition was going to investigated by US regulators, Mr Valk said.
However, QBE did not make any comment on the speculation yesterday, which had appeared in The Wall Street Journal.