REPORTING SEASON: QBE Insurance (QBE)
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Figure 1: QBE Insurance 12 month chart
QBE Insurance (QBE) strengthened its balance sheet while profits missed estimates
QBE Insurance (QBE) posted a weaker than expected annual profit of US$742m for the 12 months ended 31 December 2014. This compares to a US$254m loss in FY13 which was impacted by US$1.2bn in US goodwill impairments.
Earnings were partly held back by higher natural peril claims which totalled US$776m and a firmer US dollar. North American crop catastrophe claims were the single largest expense at US$260m. This was followed by UK floods in January and February which totalled US$136m and the Brisbane storm in November 2014 which cost US$85m.
QBE has been focused on its turnaround strategy and strengthening its balance sheet in 2014. The $15bn global insurance company raised US$780m of equity throughout the year and is in the process of selling its Argentine Workers’ Compensation business for a potential US$95m to a local operator. It offloaded its North American Agency business for US$217m in January.
QBE declared a fully franked final dividend of $0.22/shares payable on 13 April 2015. This takes the full year dividend payments to $0.37. Looking ahead, QBE expects its net earned premium to weaken to between US$12.6bn and US$13bn for FY15 due to the stronger greenback and estimates a profit margin between 8.5%-10%.