Australia’s QBE reports more than doubling first-half profit but misses estimates

Australia’s QBE insurance group on Friday reported a more than doubling of its first-half profit, boosted by higher premium income, but missed analysts’ view, sending its shares to a low of over six months.

The company’s gross written premiums (GWP) rose 2% to $13.05 billion in the first half of fiscal 2024 on the back of higher premium rates for the period.

However, it cut its GWP growth estimate to 3% for fiscal 2024 from 5% previously as it expects a lower premium from its crops division.

Its first-half results were also helped by lower catastrophe claims. The company paid $527 million mainly to account for floods in Dubai, storms in the US and exposure to unrest in New Caledonia, less than the $609 million booked for the period.

The Sydney-based insurer, which has a presence in 27 countries, said its profit after tax for the six months ended June was $806 million, compared with $404 million a year ago, but missed Jefferies’ estimate. of 811 million dollars.

The company’s shares fell 5.1 percent in early trading to $15.49, their lowest level since late January.

Meanwhile, lower catastrophe claims helped improve the combined operating ratio (COR) to 93.8% compared to 98.8% a year earlier. A ratio below 100% means the insurer earned more in premiums than it paid out in claims.

In its North America (NA) segment, COR was 97.5% for the six months, down from 103.7% in the previous half.

“Investors should take some comfort from NA’s performance, while otherwise the bottom line is broadly, if not slightly ahead,” analysts at Citi said.

The company said earlier this year it would shut down its struggling North American mid-market segment.

It has entered into reinsurance contracts with UK-based RiverStone International and global insurance group Enstar in an attempt to reduce its exposure to reserves totaling approximately $1.6 billion, comprising mainly reserves for the mid-market segment in NA.

These transactions are expected to de-risk all of QBE’s NA middle market reserves and a small number of other portfolios in its international and North American businesses and result in a net capital gain of $230 million for QBE in a second half of the year.

(Reporting by Ayushman Ojha, Rishav Chatterjee and Himanshi Akhand in Bengaluru; Editing by Pooja Desai, Shilpi Majumdar and Michael Perry)

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Loss of profit Australia