QBE shares slip on plans to cut back North America business
Make us a preferred source
Make us a preferred source on Google
More news: Shares in QBE were down more than 1% at $18.19 after the insurance giant said it would start an orderly closure of its North America middle-market business.
QBE also outlined a rise in group catastrophe costs for the five months to May due to US storms, floods in Dubai, and ongoing civil unrest in New Caledonia.
The insurer said the North America middle-market policies accounted for gross written premium of US$500 million ($750.3 million). However, it noted that its three core businesses in North America — specialty, crop and commercial would be unaffected.
QBE to cut back North American business
The news: Insurance giant QBE has reaffirmed its half-year premium growth guidance despite a decision to start an orderly closure of its North America middle-market business.
The numbers: The insurer said it will book a restructuring charge of USD100 million ($150 million) before tax in the FY24 results as it stops renewing the North America middle-market policies, which accounted for gross written premium of USD500 million.
It expects gross written premiums to rise 3% to USD13.1 billion in the first half on constant currency growth, and reaffirmed guidance for premiums to grow in the “mid-single digits” in the year ahead.
The context: QBE said the North America middle-market segment had experienced performance challenges over several years and its closure would refocus strategy on businesses with more meaningful market position, relevance and scale. It said the closure would have no incremental impact on its strategy for North America’s three core businesses — specialty, crop and commercial.
The company also said its group catastrophe costs in the five months to May rose to USD500 million, against a first-half catastrophe budget of USD609 million, largely on account of US convective storms, flooding in Dubai floods and an up to USD225 million in costs on its exposure to the ongoing civil unrest in New Caledonia.
Investment returns also improved from the first quarter, and are expected to close the half at USD643 million, up from USD406 million, it said. QBE will detail first-half results in August.
The source: ASX announcement
