Weak Stock Markets, Strong Australian Dollar Hit QBE Interims

Fri. August 22, 2008; Posted: 11:56 AM

SYDNEY, Australia, Aug 22, 2008 (A. M. Best via COMTEX) -- QBGPP | Quote | Chart | News | PowerRating -- Hit by weakness in the stock markets and the strength of the Australian dollar, Australian-based international insurer and reinsurer QBE Insurance Group reported a 7% fall in after-tax net profit to A$859 million from A$921 million.

The strengthening of the Australian dollar had a negative effect of A$74 million on after-tax profits, QBE said.

"Premium growth was adversely affected by increased competition and below budgeted growth for new business due to inadequate pricing, particularly in Europe and the U.S.," QBE said in a statement. The group, which has operations in 45 countries, is heavily dependent on economic conditions outside Australia.

Insurance profits rose 6% to a record A$1.11 billion. Net earned premiums increased 8% to A$5.1 billion. The combined ratio was 85.8, compared with 86.2 in the first half of 2007.

QBE noted its agreement to acquire PMI Mortgage Insurance Ltd. in Australia and New Zealand, as well as PMI Mortgage Insurance Asia Ltd.

"We are extremely pleased with the strength and quality of our insurance profit, given market conditions and increased catastrophe activity in the first half," Frank O'Halloran, QBE's chief executive officer, said in a statement. "Our focus is on maintaining our quality customers and profitability at this time in the cycle."

Units of QBE currently have Best's Financial Strength Ratings of A (Excellent).

(By Robert O'Connor, London editor)

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