QBE Reports 2005 Profits Up 27% to $806 Million

February 23, 2006

The directors of Australia’s QBE Insurance Group Limited announced that net profit after tax for the 2005 financial year increased by 27 percent to A$1.091 billion (US$806 million). Profit before tax was up 37 percent to A$1.523 billion (US$1.125 billion). Diluted earnings per share increased from A109.1 cents to A130.8 cents (US 80.6 cents to 96.67 cents).

QBE’s bulletin noted: “The insurance profit before tax increased by 39 percent to A$1.288 billion [US$952 million], or 17.4 percent of net earned premium compared with 13.7 percent last year, despite net claims from large catastrophes of A$515 million [US$380.6 million] compared with A$320 million [US$236.5 million] last year. Gross written premium was up 7 percent to A$9.408 billion [US$6.95 billion) and net earned premium was up 9 percent to A$7.386 billion (US$5.46 billion]. Growth in premium income was less than target due to the higher Australian dollar, overall premium rates reducing more than anticipated during the year and increased competition.”

QBE’s CEO Frank O’Halloran commented: “The substantial increase in net profit after tax and the improvement in insurance margins were significant achievements considering the insurance industry experienced its worst year on record for catastrophe losses. Overall premium rates for the Group are expected to increase by around 4 percent in 2006, with higher premium rates for certain catastrophe exposed classes more than offsetting slight reductions for other business, particularly liability insurance. Subject to unforeseen circumstances, we expect an insurance profit margin of between 16 percent – 17 percent for 2006 and net earned premium to grow by around 12.5 percent. We also expect net profit after tax and diluted earnings per share to increase by more than 10 percent.”

The full report can be obtained on the Company’s Website at: http://www.qbe.com.au

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