QBE (ASX:QBE) share price falls on Greensill update

The QBE (ASX: QBE) share price has dropped 2.1% today after the insurer clarified its exposure to the now insolvent Greensill Capital.

| More on:
falling asx share price represented by girl falling asleep at her computer

Image source: Getty Images

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.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of August 16th 2021

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.

More on Share Market News