QBE: Interim result 2016

Lower interest rates and a rough patch for QBE's Australian business have led to lower profits for the insurer.

Low interest rates do two things very well: drive up asset prices, and screw up insurers. QBE Insurance has reported a 46% fall in net profit to US$265m mainly due to changes in how the company calculates its outstanding claims.

As interest rates fall, QBE is forced to reduce the risk-free rate used to discount projected future liabilities. And as that discount rate falls, the liability effectively gets bigger – which, in this case, led to a US$283m pre-tax adjustment.

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