QBE faces a massive blowout of $1.5 billion thanks to US natural disasters
Written on the 23 January 2018 by David Simmons
INSURANCE company, QBE (ASX: QBE) has flagged a full-year loss of $1.5 billion on almost $US1 billion of one-off costs and blowouts associated with natural disasters in North America and the Caribbean.
The insurance giant says the devastating fires in California, Hurricane Maria, and December's storms in Australia, has added $US130 million to its catastrophe costs in the fourth quarter.
Hurricane Maria is widely regarded as the worst natural disaster on record in Dominica and Puerto Rico.
The expected loss for the 12 months to 31 December also reflects a $US700 million goodwill impairment against QBE's North American business and a $US230 million write-down related to the cut in the US corporate tax rate.
This $1.5 billion loss is in contrast to the $US844 million profit recorded in 2016.
The catastrophes increased the full-year combined operating ratio - which measures expense, commission and claims ratios - by about one per cent over the previously estimated target range of 94.5 to 96.0 per cent.
Chief executive of QBE, Pat Regan (pictured), also cited another poor performance by QBE's emerging market operations, with a strategic review into its Latin American unit underway.
The company will update the market on its plans going forward on 26 February when its half yearly results are released.
"This has been a challenging year for QBE, reflecting an unprecedented cost of catastrophes as well as the particularly disappointing deterioration in our emerging markets business," says Regan.
Shares in QBE are down 3.48 per cent to $10.12 per share at 10.51am AEDT.
Business News Australia
Author: David Simmons