Earnings Report: QBE Group

Selected earnings highlights in US dollars from Australia’s QBE Group for the first six months of 2012 are as follows:
1st Half 2012 1st Half 2011
Gross premiums written ———— $9.233 bn $8.942 bn
Net premiums earned ————— $7.359 bn $6.778 bn
Net after tax profit ——————— $760 mn $673 mn
Underwriting profit ——————– $522 mn $291 mn
*Net investment income ————- $436 mn $471 mn
** Net investment income ———– $247 mn $186 mn
1st half combined operating ratio (COR) – 92.9 percent (95.7 percent in 1st half 2011)
* Return on policyholders’ funds
** Return on shareholders’ funds

The report described the first half of 2012 as generating a “solid insurance profit of $958 million,” which it said “benefited from the reduced level of natural catastrophes and a lower attritional claims ratio as the impact of premium rate increases begin to emerge.

“Claims provisions were upgraded for underperforming and run-off portfolios and crop business in North America and to offset the adverse impact of the widening gap between inflation assumptions and lower risk-free interest rates used to discount outstanding claims, particularly for long-tail classes of business.

QBE also said: “Premium growth was on target, benefiting from the acquisitions completed last year and a higher than expected increase in premium rates. The underwriting results for our operating divisions reflected the benefit of a lower level of catastrophe claims, in part due to a reduced frequency and severity of catastrophe losses compared with 2011, but also reflecting our actions to reduce exposures in catastrophe-exposed areas.

“Investment return for the half year was excellent despite the continuing volatility in investment markets, with investment income ahead of target and yields exceeding benchmarks. The cautious management of our many investment portfolios enabled us to take advantage of opportunities to lock in gains and reposition the portfolios to reduce our exposure to market volatility.

“Our underwriting improvement plans are focused on eliminating underperforming business and reducing exposure to some catastrophe-exposed portfolios. These portfolio improvement initiatives combined with average premium rate increases of 5 percent on renewed business, the significant allowance of 10.5 percent of net earned premium in our projections for large individual risk and catastrophe claims and improved market conditions will benefit the full year underwriting result.”

Source: QBE Group

Topics Profit Loss