QBE’s European arm suffers 70% profit dip as investments struggle
QBE’s European insurance division scrapped its dividend as profits plunged 70% during a year of upheaval in 2010.
QBE Insurance (Europe) – a specialist commercial insurer that excludes the Lloyd’s business of the company’s overall European operations (QBE EO) – turned in a profit drop to £38.3m in 2010 from £122.6m in 2009, according to its latest accounts at Companies House.
The combined ratio was slightly improved but was still a loss-making 106% in 2010, compared with 108.9% in 2009.
Having paid out a £75m dividend in 2009, the company directors did not recommend paying a dividend last year.
One key driver of the difference between the two years is investment performance. The company’s 2010 investment income was £108.9m, down 40% on the £180.6m made in 2009.
The company made an unrealised investment loss of £22.5m in 2010, compared with a gain of £38.6m in the previous year.
The underwriting performance again suffered prior-year claims reserve deterioration in its run-off book in 2010, though it was far less severe than 2009.
UK and international casualty reserves deteriorated by £9m (£35.4m in 2009), professional liability reserves by £12.9m (£26.7m in 2009), and marine reserves by £9.3m.
The deteriorating financial performance in 2010 was set against a background of QBE group upheaval across the UK business last year.
In personal lines, the private motor was put into run-off in January and Markerstudy swooped to take a number of staff.
In commercial lines, QBE had its fingers badly burned in the UK SME market when it dumped the Evergreen brand and scaled back the business, following a staff exodus throughout 2010.
But the biggest shock came in December last year, when QBE European Operations managing director Bernard Mageean resigned as part of a company restructure.
Insurance Times understands Mageean lost out when casualty boss Ash Bathia was promoted from managing director of the casualty and motor division to chief underwriting officer of property, casualty and motor division.
In one positive note, it emerged this week that construction giant Laing O’Rourke has signed a three-year cross-class insurance contract with QBE.
QBE declined to comment.