Sydney-based QBE warns that its Emerging Markets’ division has experienced an unexpected surge in claims from January through May due to multiple factors.
As a result, this division is expected to report a first half combined operating ratio of around 110 percent in its 2017 interim result to be reported on Aug. 17, the company said in a profit warning statement.
The heightened claims activity in Emerging Markets is due to a combination of increased frequency of medium sized risk claims in Asia, weather related claims in Latin America and adverse experience in legacy portfolios in Latin America, the company said.
This is likely to add approximately 1 percent to the group’s interim and FY17 combined operating ratio of 94.5 percent-96.0 percent.
On the other hand, QBE’s three large operating divisions are currently on track to report results in line with budget and premium income is in line with previous targets.
The interim investment return is currently above expectations, which increases the likelihood that the FY17 investment return will be at the top end of the group’s previously advised 2.5 percent-3.0 percent target range, QBE said.
In addition, the interim insurance profit margin is expected to be 8.5 percent-9.5 percent, the company added.
“We are encouraged by the improvement in the combined operating ratio in Australia & New Zealand as well as North America while Europe continues to perform well. Nonetheless, heightened claims activity in our Emerging Markets division will increase the group’s interim and FY17 combined operating ratio by around 1 percent,” said QBE’s Group Chief Executive Officer John Neal.