QBE posts record loss; sells unit to Zurich

QBE posted a record loss and said it is selling its Latin American business to Zurich Insurance for $409m.

The Australia-based insurer blamed the record cost of catastrophes in the second half of the year and a deterioration in the group’s emerging markets businesses, as well as two significant non-cash items including a $700m write down in its North American business.

European operations had another strong result in difficult trading conditions, QBE said, with reduced performance in the second half partly due to exposure to North American catastrophes, as well as a reduced level of positive prior accident year claims development which moderated from the levels seen in recent years.

The European division’s combined operating ratio of 95.2%, up from 90.7% in the prior year, is a strong result in the current environment, the company said.

European gross written premium rose 4.1% to £3.144bn. The underpriging profit fell 44% to £121m, which excluded a £109m adverse impact from the Ogden rate cut. Europe’s insurance profit rose 6.9% to £249m. 

European chief executive Richard Pryce said: ”We have delivered this performance in the most challenging environment we have experienced for the last five years.”

Group net loss for 2017 was $1.25bn compared with a profit of $844m in 2016.

The net cost of catastrophes after reinsurance was $1.23bn in 2017, compared with $439m a year earlier.

Adjusted combined operating ratio for the year was 104.1%, moving out from 93.7% in 2016.

Excluding the net cost of large individual risk and catastrophe claims retained in excess of the group’s aggregate reinsurance protection, the adjusted combined operating ratio would have been 98.2%.