Austrlalian insurer also pays US$700m to Bank of America to acquire insurance assets

QBE expects full-year post tax profits in 2010 of US1.28bn and premium income to increase 21% to US$13.6bn.

The Australian insurer also announced today it will pay US$700m to Bank of America for distribution rights for the bank’s voluntary homeowners, contents, motor and other related consumer lines and associated services.

QBE will also take over Bank of America subsidary Balboa Insurance Company. The two deals will net QBE around US$2.8bn in gross written premium.

Chief executive Frank O’Halloran said “QBE’s underwriting performance continues to outperform the large majority of our global peers and the Australian market and is very satisfying in a year of increased frequency of small and large catastrophes.

“Our strategy for profitable growth from acquisitions and market leading results remains unchanged. Over the past six years we have increased premium income by an average of 15% per annum and produced combined operating ratios of less than 90% in each of those years.”

Speaking on the Bank of America deal, O’Halloran said: “The distribution agreement with Bank of America in the US and the portfolio transfer provide QBE with a specialist personal lines portfolio which is complementary to the Sterling National business acquired in 2008.”

The Australian insurer will release full-year results on 28 February.

Highlights (subject to audit)

• Gross written premium up 21% to US$13.6 billion

• Net earned premium up 20% to US$11.4 billion

• Net claims ratio down from 60.3% to 59.8%

• Net commissions and expenses ratio up from 29.3% to 29.9%

• Combined operating ratio of 89.7%;

• Underwriting profit up 18% to US$1.17 billion

• Insurance profit margin of 15.0%

• Investment income, before foreign exchange gains, down 41% to US$518 million

• Foreign exchange gains down 51% to US$141 million

• Net profit after tax and exceptional items down 17% to around US$1.28 billion

• Probability of adequacy of outstanding claims >89%.