QBE Insurance Europe makes £74m 2011 underwriting loss

QBE European Operations’ largest division continues to make an underwriting loss despite a positive result across the group.

QBE Insurance (Europe) Limited (QIEL) reported an underwriting loss for the full year of 2011 of £74m, a 28% increase on 2010’s £58m underwriting loss. Claims incurred, net of reinsurance, jumped 9% to £741m (2010: £680.4m).

The 2011 combined operating  ratio improved slightly to 105.6% in 2011 from 106% in 2010 thanks to lower commission and expense ratios.

Gross written premium at QIEL was flat at £1.28bn.

The division’s profit after tax increased 62% to £62.2m (2010: £38.3m). However, this was largely driven by a one-off boost in dividends received from group undertakings, which inflated QIEL’s investment income and offset the underwriting losses.

Investment income, after expenses and charges, jumped 32% to £139m from £105.3m. The dividend boost was caused by the liquidation of an investment subsidiary, whose investments were transferred directly to QIEL in the form of a dividend.

QIEL is a special commercial insurer writing business in the UK and Europe. It is the largest of QBE European Operations’ five. The others comprise two Lloyd’s syndicates (386 and 2999), QBE Reinsurance (Europe) and Secura, a Belgian reinsurer QBE bought in 2010.

QBE European Operations as a whole posted a profitable 2011 combined ratio of 96.6%. This was 3.8 percentage points up from 2010’s 92.8% COR because of the heavy global catastrophe burden in 2011. The net profit dropped to £95m from £194m.

QBE declined to comment on the QIEL results.