North American operations hurt QBE results
QBE’s North American operations were blamed for disappointing 2013 results for the insurance group. The company said it has already taken a number of measures to turn the underperforming unit around.
The Australian-based company made a net loss after tax of $254 million compared with a net profit of $761 million in 2012. It blamed the loss on large one-off costs primarily associated with its North American operations relating to prior year claims, write-off of goodwill and intangibles and restructuring costs.
The company said its cash profit, which it defined as its net profit after tax but before non-cash charges for amortization and impairment of intangibles, was $761 million compared with $1,042 million in 2012.
Its gross written premium income was also down 2% to $18 billion. Again, this was largely due to a $715 year on year reduction in its North American gross written premium and growth in the other divisions being offset by translation to the US dollar.
In contrast, its Latin American operations grew by 13%, its European operations by 4%, its Australian and New Zealand operations by 4% and its Asia-Pacific operations by 26%.
John Neal, QBE’s group chief executive officer, said: “Today’s results were foreshadowed in our announcement to the market in December. We have introduced changes to key management and have taken significant steps to reposition and right-size underperforming businesses in North America and are making excellent progress with our global transformation programme.”
The company’s combined operation ratio was 97.8% for the year, a slight deterioration from 97.1% in 2012. But this was well short of its original 92% guidance. Again, it blamed adverse prior accident year claims development in its North American operations, which reported a $482 million underwriting loss.
Neal continued: “Although we are disappointed with our 103 underwriting result, we have taken the necessary steps to deal with underperforming portfolios, completed an extensive programme of management change and succession across the group and are well on the way to implementing transformation programmes, all of which provide a solid base for our business in 2014.”