Australia's biggest insurer, QBE Insurance Group, yesterday reported a full-year loss of US1.25 billion for 2017 as claims from natural disasters soared and its emerging-markets business underperformed. In contrast, the company reported profits of $844 million in 2016.
Gross written premiums fell to $14.19 billion in 2017 from $14.40 billion in 2016.
The insurer had revealed last month that it would record an after-tax loss of $1.2 billion as payouts related to California wildfires, storms in Australia and Hurricane Maria weighed on earnings. There was also a $700 million writedown in its North American unit. Group combined operating ratio (COR) for 2017 increased to 104.1% in 2017 from 93.7% in 2016.
“Natural disasters were not the only challenge confronted by QBE during the year, with the performance of the Emerging Markets division a major disappointment due to adverse claims experience in numerous portfolios,” the company said in a statement.
In addition, QBE said it would focus on its struggling units in Asia Pacific and North America. Chief Executive Pat Regan said in a statement that fixing the “unacceptable” performance of the loss-making Asia-Pacific business, which was hurt by workers compensation claims in Hong Kong, was a priority. The unit made a net $179 million loss for the year and reported a COR of 115.5%, up from 95.6% in the prior year.
“We just need to get a bit better at all of those,” Mr Regan told analysts, referring to the company’s operations in Hong Kong, Singapore and Indonesia. .
QBE has agreed to sell its Latin American business to Zurich Insurance for $409 million, making good on its promise to be smaller and less complex.
“Following a strategic review of our footprint in Latin America, we have decided to exit the region in order to focus on our core markets and to improve the quality and consistency of our results,” Mr Regan said.
The Latin American operations, including Argentina, Brazil, Colombia, Ecuador and Mexico, were sold for a pre-tax profit of about $100 million, QBE said.