QBE issues profit downgrade

Insurer sees loss of $250m on North American writedowns, Becker set to succeed Hutchinson as chairman in March.

QBE Insurance (QBE) expects to swing to a full-year net loss, due mostly to good will writedowns from its North American business.

In a statement to the Australian Securities Exchange, QBE said it expects to report a full-year net loss of $250 million, compared to a net profit of $761 million in the previous year.

Adjusting for the after tax cost of amortisation and write down of identifiable intangibles and goodwill, QBE said it expects its 2013 cash net profit after tax (NPAT) to be around $850 million compared with $1.04 billion in 2012.

The group also revised its full-year guidance to a combined operating ratio of 97% to 98% and an insurance profit margin of around 6% on net earned premium of $15.2 billion.

Late last week the QBE board completed operational and strategic review of the North American underwriting businesses.

"The extensive investigation by internal and external actuaries of the North American Program portfolio will result in an approximate $300 million increase in prior accident year claims provisions, particularly in relation to long tail classes of business such as workers’ compensation, general liability and construction defects risks," QBE said.

QBE's specialist lender-placed business, QBE FPS will also report a loss in 2013, as a result of a very material and rapid contraction of revenue coupled with one-off regulatory and legal costs and adverse claims experience.

In a separate release, QBE announced Marty Becker will succeed chairman Belinda Hutchinson from March 2014.

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