Record H1 catastrophes but combined ratio still 89.7%

QBE announced its insurance profit was up 8% to $822m resulting in an insurance profit margin of 15.7% compared with 17.5% for the same period last year.

Its combined operating ratio was 89.7% compared with 89.3%, which it described as “an excellent achievement given the increase in catastrophe claims and the lower risk-free interest rates for discounting outstanding claims.” QBE said it had been a record first half for global catastrophes.

“Most of our peers around the world have reported much higher combined operating ratios for the half year,” it said.

H1 financial highlights $m (2009 in brackets)

  • GWP 6,861 (5,704)
  • Gross premium earned 6,861 (5704)
  • Net premium earned 5,240 (4,379)
  • Underwriting profit 542 (470)
  • Insurance profit 822 (764)
  • Combined ratio 89.7% (89.3%)
  • Profit before tax 528 (893)
  • Net profit after tax 446 (724)

Europe

QBE said: “Generally soft market conditions continue to prevail; however, there are some encouraging signs that we are at the bottom of the cycle for most classes with an upturn predicted by 2012.

“The London insurance market was subject to increased catastrophe and large individual risk loss activity, principally the Chilean earthquake, the Deepwater Horizon oil rig disaster and weather-related claims in Europe and Australia. These claims are expected to selectively harden property reinsurance rates and offshore energy rates.

UK motor

“Motor rates are increasing due to a surge of bodily injury claims, particularly in private motor. QBE now only writes commercial motor in the UK and retains significant inflation margins within claims provisions.

“The prevailing economic conditions have meant generally lower sums insured and reduced insurance premiums for some products. New business levels are in line with our plan, although they remain under pressure in many classes due to inadequate pricing.

Figures

“Insurance profit was a very pleasing $222m, up from $213m for the same period in 2009 with an improved insurance profit margin of 18.1% (17.9%).

“The insurance profit margin benefited from a lower combined operating ratio of 88.4% (89.9%); however, this was partly offset by reduced yields on policyholders’ funds.

“Gross written premium for the half year was up 8% to $2,412m ($2,228m). In pounds sterling, it was up 6% to £1,574m.”

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