QBE issues profit downgrade as US weather bites

Global insurer QBE has downgraded its profit guidance for the current financial year due to unfavourable weather conditions in the United States.

The insurer on Wednesday said its crop insurance business in the US would report a combined operating ratio – which compares claims and other expenses to total premiums, and is a key measure of profitability – of 107 per cent to 109 per cent.

A ratio of above 100 per cent indicates the underwriting activity is unprofitable. QBE said the key ratio had blown out because of poor weather, and other parts of the US had also experienced higher than expected claims.

As a result, QBE said the combined operating ratio across the entire group “could be slightly above” its previous guidance of 94.5 per cent to 96.5 per cent.

Against this, it said premium rates had increased over the year and it expected a better combined operating ratio of 93.5 per cent to 95.5 per cent in 2020.It will report its full year profits for 2019 in February.

More to come