Australian insurer now expects H1 2014 profit to drop 18%

Shares in Australian insurer QBE dropped 11% in trading today after the company said its first-half 2014 profit would be down 18% on the same period last year.

QBE’s shares closed at A$10.57 on trading on the Australian Stock Exchange, compared with Monday’s closing price of A$11.89.

The share fall follows QBE’s announcement that it expects its first-half 2014 profit after tax to be US$390m, compared with the US$477m it made in the first  half of 2013.

The profit warning was triggered by QBE needing to strengthen reserves by US$170m for its Argentine workers’ compensation business because of higher-than-expected claims on large individual risks.

As a result, the company now expects its first-half combined operating ratio to be between 96% and 97%, compared with analysts’ consensus expectations of around 93%.

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