What would investors and the stockmarket do without a profit warning from QBE?
Its share price would probably be more stable and a bit higher – yesterday it fell more than 10% after the latest, surprise statement from the company.
Australia’s biggest global insurer is something of a regular when it comes to warnings about its performance and its insurance – google ‘QBE profit warning” and you get hits from 2012, 2013, 2014, 2016, and yesterday, 2017.
In fact QBE’s record has been blemish free for most of the past year as restructuring, reasonable returns and no one off hits from bad weather (such as Hurricane Sandy in the US in 2012).
In a surprise statement to the ASX, QBE said says higher-than-expected claims from its emerging markets division will have an impact on its first-half insurance profit margin.
The insurer blamed the increased frequency of medium-sized risk claims in Asia, along with weather-related claims and the impact of legacy portfolios in Latin America.
QBE says it expects interim insurance profit margin – a key measure of performance – of between 8.5% and 9.5%, compared to 9.7% in the full-year results it reported in February. The statutory margin was 5.0% for the first half of last year and the adjusted margin was 10%.
“We are encouraged by the improvement in the combined operating ratio in Australia & New Zealand as well as North America while Europe continues to perform well,” says CEO John Neal in a market update.
“Nonetheless, heightened claims activity in our emerging markets division will increase the Group’s interim and FY17 combined operating ratio by around 1%.”
Offsetting the higher costs, QBE said says interim investment are rising (as the company forecast in February).
QBE will report its half-year results on August 17.
QBE shares fell more than 10.2% to $11.87, the lowest since March 1 this year.
