Australia’s QBE Insurance posts strong first half on fewer disasters
(Reuters) — Australia’s QBE Insurance Group Ltd. posted a better-than-expected 4% rise in first-half profit, helped by fewer natural disasters in its biggest markets, sending its shares up almost 9% to their highest since November.
The strong result draws a line under a tumultuous period for the company that announced two profit warnings and slumped to a record annual loss last year as hurricanes swept the Atlantic and earthquakes rattled Mexico.
The global insurance provider reported a net profit of $358 million for the six months ended June, compared with $345 million a year ago and a Citi forecast for $329 million.
Its combined operating ratio — claim payouts against premium income — improved strongly, falling 240 basis points, against the 2017 financial year. The company expects the ratio to tighten further by the end of December.
“There were no new bad surprises,” said Morningstar analyst David Ellis. “They’re not stellar numbers, but when you put them all together it looks like the building blocks are being put in place, finally, to de-risk and simplify the business.”
Since January, when Pat Regan took over as CEO, QBE has moved to quit Latin America, selling operations there to Zurich Insurance Group A.G. for $409 million. It has offloaded underperforming units in Thailand and Hong Kong.
“These simplification initiatives will result in the exiting of businesses and portfolios that generated an underwriting loss of over $200 million in 2017,” Mr. Regan wrote in a report attached to the firm’s annual results on Thursday. “I am confident that we have the right program of work underway to meaningfully transform our business and am encouraged by our early progress.”
It marginally improved its combined operation ratio guidance for the full year to between 95% and 97%, having previously said it could have been as high as 97.5%.
The higher the figure, the greater the payouts versus premium income, and the bigger the burden on the insurer.
QBE shares rose almost 9%, before ending the day up almost 7% at AU$10.89 ($7.91), while the broader market closed flat.
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