(Bloomberg) — QBE Insurance Group Ltd. slumped the most in seven months after forecasting an 18% decline in first-half earnings due to higher claims in Latin America and competition with other insurers.
Net income will drop to around $390 million for the six months ended June 30 from $477 million a year earlier, the Sydney-based company said in a regulatory statement today. The insurer wrote about $8.5 billion of insurance premiums in the half, compared with a planned $8.9 billion, while it boosted its Latin America claims reserve by $170 million due in part to increased workers' compensation claims in Argentina.
The weaker forecast increases the challenge for Chief Executive Officer John Neal, whose focus on profitability recommended him for the company's top job when he was appointed in 2012. QBE shares declined 11% to A$10.57 at the close in Sydney, the biggest drop since December, and were down 35% over the past year.
“It's disappointing following three downgrades last year and puts back the recovery in earnings and reputation another six months,” David Ellis, an analyst at Morningstar Inc. in Sydney, said by phone. “These one-off items caught me by surprise. I can't say I'm confident” that QBE has resolved the problems in its Argentine business.
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