Australian-based insurer
QBE has revealed that its statutory net profit has increased by 30% for the first half of 2017 – but poor performance in its emerging markets division weighed down the results, leading to the departure of an executive and splitting of the division.
“The performance of emerging markets was a major disappointment,” QBE said in a market filing.
That “poor performance” has claimed a high-ranking QBE head, with QBE’s chief executive for emerging markets David Fried stepping down. The emerging markets division will now be split into two separate divisions: one for Asia-Pacific and another for Latin America.
Jason Brown, who is currently the group’s chief risk officer, will become Asia-Pacific CEO, while Carola Fratini, current CEO of QBE’s Argentina operations, will take the reins for Latin America.
“A detailed review has been undertaken to determine the remediation activities required to improve underwriting performance in the second half of 2017 and beyond,” said John Neal, QBE Group CEO.
“In addition to the tightening of underwriting controls and discipline, improved pricing models are being introduced, enhanced reinsurance protections considered and cost reduction plans implemented.”
From US$265 million for the first six months of 2016, statutory net profit for QBE grew to US$345 million. Adjusted net profit after taxes rose by 76% to US$464 million.
Global gross written premiums rose by 3%, while the insurer’s combined ratio deteriorated from to 95.3% from 94.5% in the first part of last year, due to weaker underwriting results in its emerging markets. This was within the company’s expected range, when it announced higher underwriting losses in June.
The emerging markets result “reflects a material increase in the current accident year claims ratio across numerous portfolios and regions, in both Asia Pacific and Latin America, coupled with adverse prior accident year claims development, primarily in Hong Kong workers' compensation”, the market filing read.
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