QBE Insurance Profit Plummets in First-Half

QBE Insurance, Australia's top insurer by premium, said its acquisition pipeline remains strong and aims to get back to an insurance profit margin of 16-18 percent for the year after posting a 39 percent fall in half-year profits.

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QBE, which has made more than 75 acquisitions in 10 years to spread to 49 countries, said it retains a strong balance sheet to ensure easy additional borrowing to fund acquisitions.

"The medium to long-term outlook for insurance profit is positive... and a strong pipeline of opportunities," it said in a statement.

QBE shares rose 1.65 percent in early trade in a flat market as investors were comforted by the reiteration of the 2010 outlook.

QBE's woes are not different from its global peers, which are facing weak stock markets and lower bond yields. In June, smaller rival Insurance Australia Group cut its 2010 forecast for the third time in as many months.

Acquisitions are seen adding $800 million to gross written premium in 2010, with almost all of it coming in the second half. It said it aims to grow gross written premiums 19 percent to $13.4 billion in 2010.

It reiterated its full-year forecast of an insurance profit margin between 16 to 18 percent, compared with 15.7 percent in the first half.

Weak Markets Hurt

QBE on Thursday reported a 39 percent fall in first-half net profit, as expected, on weak markets and a lack of one-off gains.

Net profit fell to $440 million from $720 million a year-ago on a 20 percent rise in gross written premium to $6.86 billion. It had flagged its half-year earnings expectations in July.

Profit was hurt by lower investment income as the yield on cash and fixed income securities fell to 2.3 percent from 4 percent. Equity losses doubled while foreign exchange gains fell by nearly three quarters.

QBE presented its earnings in U.S. dollars for the first time as overseas operations make up 75 percent of business and half the annual premium is written in U.S. dollars.