QBE.

Pessimism about the global insurer continued to drive QBE shares sharply lower on Tuesday. Photo: Bloomberg

More than $5 billion has been wiped off QBE's market value in two days, as investors punish the company for repeatedly disappointing and analysts warn that further pain could follow this week's profit downgrade.

In another blow to the insurer, Moody's on Tuesday downgraded its credit to Baa2, two notches above the rating it gives ''junk'' or speculative assets. It cited a weaker outlook for profits and higher debts.

Pessimism about the global insurer continued to drive QBE shares sharply lower on Tuesday, taking the total fall in its shares since it forecast a $US250 million loss this year on Monday, to 30 per cent.

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The shares plunged 9.8 per cent to $10.82 and its market capitalisation fell by more than $1 billion, weighing on the benchmark ASX 200 for the second day in a row.

The fall came as analysts at CIMB, Bell Potter and Macquarie downgraded their recommendations, amid predictions QBE may be forced to reveal more bad news from its troubled US operations.

Even investors without QBE shares could be affected, as fund managers said the dramatic slump was undermining sentiment and, after Qantas' woes, raised the prospect of more earnings downgrades in months to come.

On Monday QBE revealed $US600 million in write-downs in its US businesses and said profits would remain under pressure for 2014, sparking the sharpest fall in its share price in 12 years.

Broking analysts on Tuesday predicted it might have more skeletons in its closet and some said its US problems were unlikely to be resolved in the near future.

Bell Potter analyst T.S Lim said responding to the US challenges threatened to tie up management for much of next year instead of focusing on more promising parts of the company, such as its Australian business.

''My greatest fear is that they are going to be distracted by US issues,'' Mr Lim said.

While the violent market response to QBE's woes is partly because it will pay lower dividends, investors' trust in management has also been shaken. It was the third profit downgrade from chief executive John Neal in 12 months. ''This is a management credibility issue,'' Mr Lim said.

In a note to clients, Citi analyst Nigel Pittaway said QBE's position in America still looked ''suspect''. He said he would not rule out the closure of part of its US business.

Moody's ratings cut was the second this year and some analysts think Standard & Poor's may make a similar move. S&P, which has an A+ rating on QBE, would not comment.

Fund managers say the severity of the plunge is also eroding investor sentiment more broadly.

John Abernethy of Clime Asset Management said QBE's woes, coupled with downgrades from Qantas last week and WorleyParsons in November, suggested earnings forecasts would be cut in the new year.

''We've had a substantial rally in the market without earnings growth,'' he said. ''The only real growth we're seeing is in banks, but the banks' growth is going to be about 5 per cent.''

While QBE's overseas expansion has made it a global insurer, the share price plunge puts its $13.2 billion market value close to that of domestic-focused Insurance Australia Group at $12 billion and makes it smaller than Suncorp.