QBE to take $US450m hit on US storm
UPDATE 1.15pm: Shares in QBE have plunged by more than 8 per cent after the insurer said its losses from superstorm Sandy in the United States could hit $US450 million ($A434.85 million).
QBE shares closed down $1.07, or 8.31 per cent, at $11.80 after touching an earlier intraday low of $10.90.
They have fallen from $13.19 since the storm hit the US east coast on October 29.QBE has cut its insurance profit margin guidance as a result of its share of Sandy's estimated $US20 billion ($A19.33 billion) insurance cost.
But QBE still expects its net profit for calendar 2012 to be higher than in 2011.
"Superstorm Sandy will prove to have been one of the most devastating storms in recent US history and the recorded loss of life is incredibly distressing,” chief executive John Neal said in a statement.
"It is frustrating to be reporting disappointing news at a time when the vast majority of our ongoing businesses are performing in line with, or better than, expectations."
QBE had forecast an insurance profit margin for 2012 of better than 12 per cent, but that has been cut to about eight per cent.
It expects to report a net profit after tax and before amortisation in excess of $US1 billion ($A966.32 million) for the year to December 31, an increase of around 30 per cent from 2011.
QBE said its preliminary estimate of retained losses from superstorm Sandy, which hit the US east coast on October 29, will be in the range of $US350 million ($A338.21 million) to $US450 million ($A434.85 million).
The company's previous insurance profit forecast included an allowance for large individual risk and catastrophe claims of 10.5 per cent of net earned premium for the full year.
It is now expected that large individual risk and catastrophe claims will cost up to 12.0 per cent of net earned premium.
"A combination of comprehensive reinsurance arrangements and catastrophe claims allowances ensures that our businesses are well protected against these types of events,” Mr Neal said.
"We anticipate that market pricing will strengthen further post the substantial claims of Superstorm Sandy."
QBE's board has also approved the issue of $US500 million ($A483.16 million) of subordinated convertible debt securities to boost its capital position.
