Strong Australian Dollar Forces QBE To Revise Down Earnings Forecast

Post by NeilMc on November 3, 2009 · Under Business News, Company News, insurance · Comment

Australian insurance major QBE, has had to cut its revenue growth targets due to a strong Australian dollar reducing the contribution of its international earnings.

Gross written premiums are expected to rise by 10 per cent to $14.4 billion in 2009 rather than the initially forecast $16.2 billion.

The robust Australian dollar has affected top-line revenue growth and the company’s net profit, QBE said during an investor presentation on Monday.

In local currency terms, the GWP outlook was little changed from targets set in the company’s annual report in February.

QBE, the largest Australian insurer, said that the lower cost of catastrophe had offset higher than expected claim frequency. The company also noted there had been lower releases of claims provisions from previous years.

QBE expects combined operating ratio for 2009 to be 87-89 per cent, and the insurance margin would be 17-18 per cent. Net investment yields had increased in the second half of the year because of the rise in equity markets.

The insurance major is considering making future results presentations in US dollars, the currency in which it derives more than 50 per cent of its premium income.

QBE says it expects next year’s Australian Gross written premiums to vault by 24 per cent to $4.2bn.

The company says it also expects Gross written premiums from its European operations to be the largest by written premium, and expects an increase of 8 per cent to $5.12 billion.

The Americas will increase 10 per cent to $5.01bn, whilst the Asia-Pacific operation will gain 14 per cent to $800 million, subject to currency fluctuations.

At the current value of the Australian dollar, the total GWP for next year would be $15.1bn, still below the previous $16.2bn forecast for this year.

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