Global insurance giant QBE is stepping up its attempt to find cost savings across its business, unveiling measures that are expected to result in an extra $US90 million ($98 million) in savings.
The Australian-based company said on Tuesday its move to replace hundreds of workers in Western countries with staff in Manila was on track to result in annual cost savings of "at least" $US250 million by 2015.
As well as this cost-cutting, which is being implemented in Australia first, the company signalled it may save an additional $US90 million by looking to better exploit its buying power when handling insurance claims.
Chief executive John Neal said the company expected to hit its full-year forecast for premiums to increase by about 5 per cent, and that the company had benefited from relatively few natural disasters and the recent fall in the Australian dollar.
QBE, which is looking to rationalise its operations after a spate of acquisition-led growth under former boss Frank O'Halloran, earlier this year unveiled a plan to save $US250 million a year by 2015 by sending about 700 positions to the Philippines.
With the changes being rolled out across its Australian division, Mr Neal said, expenses would be cut by at least $US250 million as a result of the program. It will also result in changes to its operations in America and Europe.
"This is very much the start, the first wave, if you like, and there will be more activity that will follow," he said.
So far, 521 positions in Australia have been affected by the offshoring changes. Most of these staff are set to be redeployed within the group, while 39 have been made redundant, and 52 contractor positions have not been renewed.
Its Australian head, Colin Fagen said QBE was "extremely confident" it would save more than the original $US85 million in costs that it had planned to trim from its Australian operations by 2015. This was because the company's redundancy costs had been lower than expected, and the volume of work being carried out in Manila was greater than expected.
Alongside the Manila plan, QBE expects to save at least $US90 million a year by improving its procurement processes when handling claims.
Nomura analyst Toby Langley said the update suggested QBE's total savings could be up to 40 per cent more than it previously forecast earlier this year.
Mr Langley said it was a "very confident" presentation from QBE, and its claims experience in the latest half appeared to have been benign.
"They clearly feel very comfortable, in contrast to more difficult announcements made over the past 18 months."
QBE shares rose 4.2 per cent to $15.94 after the update.
QBE, which reports its profits on a calendar year basis, will present its half-year results in August.
Insurers have benefited with relatively few natural disasters recently, while QBE with extensive US operations, also benefits from a falling Australian dollar.