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Australia's QBE profit beats forecast


(Reuters) — QBE Insurance Group Ltd. on Tuesday posted a higher-than-expected 9% rise in annual cash profit even as Australia’s No.1 insurer by premium income lowered guidance for premium growth for the current year.

Cash profit rose to $893 million for the 12 months to Dec. 31 from $821 million a year ago and higher than analysts’ forecast of $833 million.

The insurer, which generates almost three quarters of its premiums abroad, lifted its 2015 interim dividend by 36% to 30 Australian cents (21 cents) a share.

‘“It’s quite a solid result and the dividend was nice — another sizeable increase,’“ said Romano Sala Tenna, a money manager at Katana Capital which owns QBE shares.

‘“Investors were expecting a worse outcome. We were genuinely nervous given their history to surprise on the downside.’“

Under CEO John Neal, QBE has taken steps to bolster future earnings and reinstate investor confidence after years of underperformance.

A negative or low interest rate environment globally, a China-led slowdown in Asia and weaknesses in some North American and Australian market segments, along with currency headwinds, had investors nervous about QBE earnings, analysts said.

In November, QBE warned the market of challenges in growing gross written premiums due to pricing pressures.

It missed its own guidance for gross written premiums of $14.8 billion in 2015. It sees GWP at $14.2-$14.6 billion this year.

Net earned premium for 2015 at $12.2 billion also fell short of its own expectations. For 2016, it sees NEP at a $11.6-$12.0 billion range.

It posted an insurance profit margin of 9% during the year, towards the bottom-end of a 8.5-10% full-year target. Insurance margin is a measure of profit the company makes on premiums.