Group's share price fell 5% following the announcement

Australian insurance group QBE expects its first-half net profit to be 40% down on the same period last year and its insurance profit margin, at 15.7%, to miss previous guidance of 16%-18%.

QBE’s share price fell 5% on 26 July in reaction to the announcement. Some expect the insurer to take the news in its stride, however.

Macquarie insurance analyst Tony Jackson described the expected profit decline and lower-than-expected insurance profit margin as “no big deal”. He said the declines were in part caused by heavy first-half catastrophe losses, which affected the whole industry. This was exacerbated by weak equity markets. Jackson said that QBE would not need to take remedial action and had turned in “a very good technical result in the circumstances”.

QBE expects gross written premium for the first half of 2010 to be 20% higher than the same period last year, at $6.9bn, insurance profit to be 7% up to $820m, and combined operating ratio to be around 89%.

QBE now reports in US dollars.