An absence of major storm related losses in the six months to June has helped QBE Insurance Group has lifted first-half net profit by 5% to $358 million, helped by higher average premiums across its operations and a a more streamlined business structure.
The insurance giant said its key measure – gross written premiums – were up 1% to $US7.9 billion. The company has declared a partially-franked interim dividend of 22 Australian cents a share, unchanged from a year earlier.
The Group’s underwriting result was a profit of $US260 million compared with a profit of $US185 million for the same period last year, reflecting a combined operating ratio of 95.4% compared with 96.8% in the prior period.
"The result benefited from a stronger underwriting performance in both North American and European Operations, partly offset by increased claims activity in Equator Re (a group reinsurer). “The prior period underwriting result was negatively impacted by the Ogden decision in the UK ($US156 million).
Net investment income slumped to $US287 million compared with $US424 million for the same period last year, "reflecting mark-to-market losses on the fixed interest portfolio and lower returns on our growth assets”.
That was an investment return of 2.1%, well below target for the year of 2.5% to 3.0%. It came on higher US bond yields and rising US Federal Reserve interest rates.
QBE’s bond holdings carry lower interest rates, so their value fell as the Fed lifted rates during the half and US Treasury yield bounced higher. That forced QBE to write down the value of the bonds.
QBE said it “achieved an average premium rate increase of 4.6% during the half which represents a considerable improvement from the 1.0% increase during the prior period. "
“Following the extreme catastrophe activity of the preceding (December) half, it is pleasing to see a strong recovery in our capital ratios,” the company commented.
The effective tax rate was 7%, down from 17% in the prior period, reflecting the mix of corporate tax rates in the jurisdictions in which QBE operates as well as the recognition of deferred tax assets and utilisation of tax losses in the US tax group.
