QBE 1H Operating Profit up 20% to $452 Million

August 16, 2006

Australia’s QBE Insurance Group posted a A$591 million (US$452 million) operating profit after tax for the half year ended 30 June 2006, a 20 percent increase. The Company said the “increase in profit reflects the benefit of premium growth from acquisitions in 2005, improved insurance margins and higher than expected overall premium rate increases for the Group.”

Gross written premium for the half year was up 10 percent to A$5.7 billion (US$4.356 billion) and net earned premium was up 14 percent to A$4.0 billion (US$3.05 billion). Insurance profit before tax increased by 35 percent to A$748 million (US$572.5 million) or 18.7 percent of net earned premium compared with 15.8 percent for the same period last year.

“Operating profit after tax for the half year was affected by slightly lower investment income due to reduced realized and unrealized gains on equities of A$11 million [US$8.4 million] after tax compared with A$39 million [US$29.8 million] after tax for the same period last year,” said the bulletin.

Group CEO Frank O’Halloran commented: “I am extremely pleased to again report a significant increase in profit, solid growth in premium income and improved insurance margins across all divisions. QBE’s geographic spread and product diversification has been beneficial with overall weighted average premium rate increases for the Group in the half year of 6.5 percent being well ahead of our initial expectations of around 4 percent. The overall rate increases achieved by our European and American operations have more than offset the slight reduction of around 3 percent on average in premium rates in Australia for the half year. This gives us greater confidence for our profitability for the rest of 2006 and 2007.”

QBE also revised its profit targets for 2006. The bulletin said that “subject to unforeseen circumstances, its previous 2006 insurance profit target of 16 percent-17 percent of net earned premium has been upgraded to 17 percent-18 percent.”

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