Australia's QBE flags loss due to U.S. claims, shares plunge
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(Reuters) — Australia's QBE Insurance Group Ltd. said on Monday it expects to post an annual net loss of about $250 million in 2013, hurt by a claims increase and goodwill writedowns at its North American operations.
Shares in Australia's biggest insurer, which were placed on a trading halt last Friday, plunged by more than 20% to a nine-month low in early trade.
QBE, which posted a net profit of $761 million a year earlier, also forecast cash net profit after tax of around $850 million for 2013. This is down from $1.04 billion the year before, and about 28% below analysts' forecasts, according to Thomson Reuters data.
"It's a horrible situation, it's akin to what we have seen from (gold miner) Newcrest over the years," said Chris Weston, an analyst at IG based in Melbourne.
"If you are an investor, you are looking at consistent disappointment from the management level."
QBE, which generates about 30% of its revenue from North America, said it had already put in place a new executive team for the region.
The insurer separately announced that Belinda Hutchinson, a director for 16 years, would step down as chairman in March 2014 and be replaced by board member Marty Becker.
The downgrade followed a review of QBE's North American operations that prompted it to increase its provision for prior accident year claims and write down goodwill, identifiable intangibles and other assets.
The revision was largely due to a $300 million claims increase and $330 million in write-offs of identifiable intangibles associated with QBE's financial partner services business in North America, it said.
"Regrettably these charges and provisions increase our target combined operating ratio and reduce our expected insurance profit margin and reported profit for 2013," chief executive John Neal in a statement.
QBE also cut its an insurance profit margin to around 6% for 2013, from a previous guidance of 11%.
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QBE sees $228 million loss on write-downs, higher claims in North America
QBE Insurance Group Ltd. expects a loss of $250 million Australian ($228 million) during the 2013 financial year because of write-downs and higher claims at its North American operations, The Herald Sun reported citing the Australian Associated Press.
