European insurers came under renewed pressure as investors reassessed the impact on the sector of what may be weeks of war waged by US-led forces against Afghanistan's Taliban.
Zurich Financial Services finished 4.3 per cent lower at SFr335, after a low of SFr299.50, as the group scrapped its 2001 profit target, blaming a doubling of losses related to the September 11th attacks in the US and weak markets generally.
The profits warning was the third this year from the group, which is Europe's third largest insurer. It is bound to raise questions once again about the future of Mr Rolf Hueppi as chairman and chief executive. The shares have fallen 66.5 per cent from the year's high of SFr1,000 set on January 4th, raising increasingly strident questions about the management.
Zurich yesterday raised its estimate for losses from the September 11th attacks to $700 million-$900 million, from an earlier $400 million. It also warned it was likely to be hurt by lower capital gains and investment income, along with reduced earnings from businesses closely linked to equity markets and the general economic slowdown.
Concerns that the strikes against Afghanistan could unleash further terrorist reprisals sent French insurers lower. Axa fell 2.2 per cent to €22.44 but AGF recovered from a low of €49.65 to close 0.9 per cent higher at €52.30 on the view that further terrorist outrages could hurt corporate profits.
Goldman Sachs, meanwhile, reduced its 2001-2003 earnings forecasts for the European insurance sector to reflect the changed environment in the aftermath of the terrorist attacks in the US.
Among generally weak banks, Germany's HypoVereinsbank took a knock on concerns over its exposure to the troubled Swissair group and German media companies. The shares fell 5.8 per cent to €30.95. Analysts tended to dismiss a rumour that Hypo was Swissair's biggest creditor.
