QBE has announced that an increased frequency of claims in its emerging markets business will impact its combined operating ratio.
The emerging markets business has seen increased claims activity with medium-sized risk claims in Asia, weather-related claims and adverse experience in legacy portfolios in Latin America blamed for pushing the first half combined operating ratio - a key marker of profitability - out to around 110%.
With the claims struggles of its emerging markets business, QBE expects to add around 1% to the group’s interim and FY17 combined operating ratio, which the insurer expects to be between 94.5% and 96%.
John Neal, QBE Group CEO, said that the emerging market segment is an outlier for the group.
“We are encouraged by the improvement in the combined operating ratio in Australia and New Zealand as well as North America, while Europe continues to perform well,” Neal said.
QBE’s premium income is consistent with previous targets and in line with expectations while investment return is above expectations, increasing the likelihood that the FY17 investment return will be at the top end of the previously advised 2.5%-3% range.
Interim insurance profit is expected to be at 8.5% to 9.5%.
