Insurance profit at QBE’s European operations dropped 12% to US$199m ( £120.5m) in the first half of 2011 from US$225m in the same period last year.
The division’s combined ratio increased seven percentage points to 95.4% from 88.4%.
QBE said the profit reduction was caused by the record level of natural catastrophe claims in the first half and an “unusually high” frequency of marine and energy risk claims. However, it added that these claims were partly offset by reserve releases from old underwriting years.
The decreased profitability came despite a 17% increase in gross written premium to US$2.8bn (H1 2010: (US$2.4bn). QBE said the growth was largely driven by its purchase of Belgian (re)insurer Secura in late 2010.
QBE Europe was able to achieve “significant” price increases in areas hit by the catastrophe and energy claims. The company said UK commercial motor rates were up 5% as a result of poor market results and bodily injury claims inflation. However, the company added that in other classes, particularly UK and European property/casualty business, there was heavy competition and no sign of an immediate upturn.
At the group level, QBE’s first-half profit after tax jumped 53% to US$673m in 2011 (H1 2010: US$440m). However, the combined ratio increased 6 points to 95.7% (H1 2010: 89.7%) as a result of the high level of global natural catastrophe claims in the first half of 2011.
The profitability increase was driven by a 30% growth in gross written premium to US$8.9bn (H1 2010: US$6.9bn).
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