Catastrophes hit QBE

Insurer lifts profit but cuts final dividend

INSURER QBE has trimmed its final dividend amid a surge in natural disaster costs across Australia and the US, though the insurer has still managed to lift its statutory profit 41 per cent to $US550 million ($A818.8 million).

QBE’s total cost of large individual risk and catastrophe claims came in at $US1.381 billion for the year, representing 11.9 per cent of net earned premium compared to 9.8 per cent a year ago when the total catastrophe figure was $US1.163 billion.

Large individual risk claims alone were higher than expected at $US955 million.

The higher disaster costs follow a summer of bushfires which ravaged Australia and unusually wet spring weather which affected US crop insurance.

“Unusually poor” spring weather in the US affected the crop planting of many farmers, and reduced their yield.

Early frost and hail also severely impacted the performance of the company’s historically profitable crop business.

The gross cost of catastrophe claims in Australia increased significantly compared with 2018 and included the Townsville floods, storms in NSW and Queensland, as well as the extensive fires.

Net Australia-Pacific catastrophe claims costs increased to $US193 million ($A287.3 million), or 5.4 per cent of net earned premium, compared with $US106 million or 2.8 per cent in the prior year.

The firm’s revenue from continuing operations slipped 1 per cent to $US15.19 billion for the 12 months to December 31, reflecting the sale of the Indonesia and the Philippines insurance arms, and the travel business and wool and livestock-intransit businesses in Australia during the year.

Gross written premiums fell 1.6 per cent, or $US185 million, to $US13.44 billion.

The company’s interim dividend will be AU27 cents, franked at 30 per cent, down from AU28 cents, 60 per cent franked, 12 months ago.

Management said it had steered operations away from areas it believed were prone to large losses.

These areas include the commercial car market and single-engine helicopters.

Chief executive Pat Regan said: “You’ve got be real smart. There are lots of pockets of increased claims activity.”

Shares in the insurer on the ASX closed higher by 61 cents, or 4.31 per cent, to $14.76.