Asia Times: Businesses in Australia keep their cool


	September 13, 2001	atimes.com

Oceania

Businesses in Australia keep their cool

QBE Insurance Group Ltd has said that although it will be exposed to the terrorist attacks in the United States through several portfolios, its position is protected. "QBE's initial views are that the exposures are substantially protected by way of reinsurance," the group said.

QBE's chief executive Frank O'Halloran said that the insurance giant had made an initial review of all its portfolios with exposure to the disaster in the United States. "Our very preliminary estimates are that the potential loss to QBE after reinsurance recoveries is likely to be within the allowance for large catastrophes included in our 2001 plans," he said.

O'Halloran added that the group has recently put in place derivative collars for the majority of its equity portfolios in the US, UK, Australian and European markets. "These collars are designed to substantially mitigate any unrealized losses from our investments in global equity markets," he said. "Total realized and unrealized gains on all group investments to today's date for 2001 are positive."

Financial service giant AMP Ltd said that all its US-based employees were safe and accounted for after the terrorist attacks. "None of AMP's American facilities or properties have been impacted by these events," AMP said.

However AMP also warned that if equity markets and the UK market remains at the current levels for the rest of 2001, the group's investment returns will be negatively impacted. "Initially world equity markets have reacted sharply to these events," AMP said. "Should equity markets, and the UK market in particular, remain at this level for the rest of 2001, it will negatively impact our investment returns."

AMP said that it has frozen unit pricing in all products impacted by international capital markets until it is satisfied the markets are stabilized and trading normally. "This will protect our customers from any unwarranted impact in the short term," the company said. "A long-term downturn in world markets would reduce the operating revenues of our global asset manager Henderson Global Investors and indirectly, to a lesser extent, our financial services businesses." AMP said that management will address this situation through cost control and other initiatives to minimize impact on profitabilty.

Property company Westfield Holdings Ltd has said that the destruction of New York's World Trade Center, for which it held a retail lease, was not expected to have a major impact on the group.

"Westfield America Trust's investment in the retail component of the World Trade Center is fully insured for both capital and loss of income," the group said. "The insurance cover includes acts of terrorism. The loss of the World Trade Center is not expected to have a material impact on the distribution of Westfield America Trust. It is also expected that Westfield Holdings' earnings will not be materially affected."

Westfield Holdings said that it was "shocked" by the terrorist attacks. Hijacked planes struck the twin towers, where Westfield had 10 staff working, which later collapsed. Westfield said that one of the New York based executives has yet to be accounted for. The remaining Westfield staff there are safe and unharmed. "The thoughts of all at Westfield are with their missing colleague and his family, and with the many thousands of victims and their families who have been affected by these events," the group said. "The company is continuing to monitor developments and will be working closely with authorities to gather as much information as possible as the situation is brought under control."

Westfield America sealed an US$800 million deal in July with the Port Authority of New York and New Jersey to lease the retail component of the twin towers for 99 years. Westfield Holdings was responsible for the management, leasing and development of the retail component of the center, The Mall. Westfield's net leasehold covers approximately 427,000 square feet. There are 75 specialty stores, restaurants and service retailers, and the company had planned to brand it Westfield Shoppingtown World Trade Center.

The Mall had one of the highest producing sales volumes in America with sales in excess of US$900 per square foot. It served 40,000 office workers, 150,000 daily visitors and was an important business and tourism hub. Westfield shares, which were placed in a trading halt ahead of its statement, were down 8.52 percent, or A$1.50, to A$16.10 by late morning.

(Asia Times Online/Asia Pulse)