Half-year earnings at lower end and 2010 will b a tough year
QBE told London analysts yesterday that half-year profit would be at its lower end of its 16% -18% target and that 2010 would be a tough year for the insurance market.
It said acquisitions in 2010 to date will add over US$1.3bn additional annualised GWP of which US$0.4bn was included in QBE’s initial premium target. And it said it was raising prices in renewed business by 2% to 3%.
It also said:
- Projected 2010 premium income will exceed its initial 3% target growth
- Outlook for 2010 GWP up 7% to $15.4bn and NEP up 7% to $13.0bn
- In US$, forecast GWP up 18% to US$13.3bn and NEP up 19% to US$11.2bn
- Premium forecasts for 2010 at 2009 FX rates – GWP up 16% to $16.7bn and NEP up 17% to $14.2bn
QBE’s share of large risk and catastrophe claims within allowance of $1.1bn or 8.5% of full year NEP with reinsurance protection of $180m above this amount
QBE said its estimated large risk and catastrophe claims in excess of $2.5m to 31 May 2010 totaled $555m (2009: $458m). This includes:
- Perth storms $108m
- Chilean earthquake $91m
- Melbourne storms $76m
- Deepwater Horizon $29m
QBE said insurance margins affected by low interest yields and currently higher than normal large loss activity. But it said distribution and acquisition opportunities are increasing.
Good news
Deutsche Bank said investors should sell protection on QBE bonds because credit-default swaps on the company are pricing in too much risk, Bloomberg reports.
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