QBE shares slump again

Australia: Australian-listed global insurer QBE has said it is expecting to post a first-half net profit after tax of around USD390 million, while analysts had generally been expecting a result closer to USD547 million for the period.

The result will also be well down on last year’s first-half profit of USD477 million. QBE shares had slumped nearly 11 per cent to USD10.61, as investors digested the surprise. The main factor behind this writedown was a USD130 million increase in its claims reserves, driven primarily by a USD170 million increase for its Latin American operations, especially due to its Argentinian workers’ compensation portfolio. The insurer’s profit margin for the first half is likely to be 7-8 per cent, rather than analyst forecasts which centred on a 10 per cent margin.

The company says, outside Latin America, most of its global insurance divisions are performing well and, if non- recurring costs are excluded, would have posted a 10 per cent profit margin.