QBE misses target profits

QBE says it will report in US dollar for 2010 onwards because 75% of business is now written in 48 overseas countries and over 50% of premium income is in US dollars.

It said it expected half-year results to be

• Gross written premium up 20% to $6.9bn
• Net earned premium up 19% to $5.2bn
• Combined operating ratio up from 89.3% to 89.7%
• Insurance profit up 7% to $820m
• Insurance profit margin of 15.7%

Its shares fell as the figures were below target.

Investment problems

Frank O’Halloran said “The insurance profit margin for the half year is expected to outperform the majority of our peers. However, it is slightly below our target range due to the impact of lower interest yields on claims provisions, reduced yields on policyholders’ funds and the record level of catastrophes in the first half.

“Going forward, we are confident that our insurance profit margin will benefit from our many initiatives and expected rises in interest rates.”

“Subject to large individual risk and catastrophe claims not exceeding the substantial allowance in our business plans and risk free interest rates not reducing further, we still expect the full 2010 year insurance profit margin to be in our target range of 16% to 18%.”