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QBE - QBE Insurance News Story

A$8.53 0.3  4.2%

Last Trade - 6:40am

Large Cap
Market Cap £5.74bn
Enterprise Value £8.08bn
Revenue £11.98bn
Position in Universe 51st / 1837

UPDATE 1-Australia's QBE net profit slides 18 pct in first half

Mon 18th August, 2014 11:58pm
(Updates with plans for partial float of mortgage insurance 
business, capital raising, outlook) 
    SYDNEY, Aug 19 (Reuters) - QBE Insurance Group  QBE.AX , 
Australia's biggest insurer by premium income, announced plans 
to partially float its mortgage insurance business and a $750 
million capital raising as it posted an 18 percent drop in 
first-half net profit.  
    QBE, which has been grappling with hefty claims because of a 
range of adverse weather events in North America, plans to cut 
$500 million of convertible subordinated debt through the $750 
million share placement. 
    It also plans asset sales and a partial share offer next 
year of mortgage insurer QBE LMI, which had $1.2 billion in 
assets at the end of June. 
    The company will raise $700 million in Tier-II debt, mainly 
to replace senior debt.  
    "When executed, these initiatives deliver significant 
additional cash and capital resources that will substantially 
improve the group's financial flexibility and ability to better 
withstand a reasonable range of downside scenarios," the insurer 
said in a statement. 
    The Sydney-based company expects its debt-to-equity ratio to 
fall as a result of those steps to its targeted range of 25 
percent to 35 percent from 38.4 percent now.      
    QBE said its net profit after tax for the six months ended 
June 30 was $392 million, in line with a profit warning issued 
last month, and down from $477 million a year ago. 
    The results were hit by higher claims in Argentina, crop 
damage in Latin America, UK floods and storms in North America 
and Europe. 
    American casualty insurers Chubb Corp  CB.N  and Travelers 
Cos Inc  TRV.N  were also hit hard by bigger catastrophe losses 
in the June quarter.  ID:nL4N0PZ6B4  
    Severe storms pounded parts of the central United States in 
early June, producing baseball-sized hail. There were also 
several tornadoes and other dangerous wind storms. 
    QBE reported an insurance profit margin of 7.6 percent in 
the first half, compared with 10.8 percent a year ago. It 
expects that to rise to 8 percent to 9 percent at the end of the 
financial year. 
    The group is facing a class action from shareholders over 
its profit downgrade for fiscal-year 2013.  ID:nL3N0LT4QI  
    Its shares are down nearly 7 percent for the year to date, 
compared with a 4.4 percent increase in the benchmark S&P/ASX 
200 index  .AXJO . 
 (Reporting by Swati Pandey; Editing by Jane Wardell, G Crosse 
and Jan Paschal) 
 ((swati.pandey@thomsonreuters.com; +61-2-9373-1817, Reuters 
Messaging: swati.pandey.thomsonreuters.com@reuters.net; Twitter 
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