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QBE - QBE Insurance News Story

A$8.47 0.3  3.4%

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

UPDATE 2-QBE Insurance earnings to be hurt by rising disaster claims

Tue 3rd October, 2017 2:03am
* Australia's largest insurer announces $600 mln earnings 
hit 
    * Catastrophe claims up to $1.75 bln from hurricanes, quakes 
    * Buyback now unlikely - analyst 
    * Shares fall 5 pct 
 
 (Adds analyst comments) 
    By Paulina Duran 
    SYDNEY, Oct 3 (Reuters) - Australia's biggest insurer QBE 
Insurance Group  QBE.AX  revealed on Tuesday a $600 million 
earnings hit on its business from hurricanes in the Atlantic and 
earthquakes in Mexico, sending its shares down by more than 5 
percent.  
    QBE said it had increased its allowance for large individual 
risk and catastrophe claims to $1.75 billion for 2017 and 
flagged it expected its combined operating ratio, a percentage 
of claims payouts against premium income, could rise to 102 
percent.  
    "It's a massive hit," Shaw and Partners analyst David 
Spotswood said. "It's a 77 percent downgrade to 2017 earnings, 
on the back of these." 
    It was now unlikely the company had the capital to complete 
a A$1 billion ($782.80 million) buyback announced earlier in 
2017, he said.  
    "The issue is, is this a one-off or does it flow through to 
2018 and 2019, and it looks like there is some flow-through on 
these numbers," Spotswood said.  
    QBE expects a pre-tax impact of about $600 million to its 
2017 earnings from a period of extreme global catastrophes this 
year, the company said in a statement. 
    The company's shares fell more than 5 percent to A$9.67 
following the announcement while the broader market was flat. 
The stock was the largest drag on the Australian benchmark index 
 .AXJO . 
    Insurers and reinsurers in 2017 faced a large spike in 
claims following a slew of devastating natural disasters, 
ranging from Cyclone Debbie earlier in the year to Hurricane 
Maria in September.  
    Fitch Ratings said the probability of ratings downgrades for 
global insurers and reinsurers was mounting as the industry 
faced more than $100 billion in 2017 catastrophe 
losses. urn:newsml:reuters.com:*:nFWN1M70PD 
    QBE Chief Executive John Neal said QBE had reinsurance 
locked in for 2018 but that it was too early to speculate how 
much reinsurance and primary insurance prices would rise as a 
result of recent disasters.           
     
 
($1 = 1.2775 Australian dollars) 
 
 (Reporting by Paulina Duran in Sydney; Additional reporting by 
Ambar Warrick in Bengaluru; Editing by Stephen Coates) 
 ((paulina.duran@thomsonreuters.com, +612 93218177; 
Ambar.Warrick@thomsonreuters.com; +91-80-6749-6625)) 
 
Keywords: QBE INSURANCE OUTLOOK/
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