Home / Breaking News / QBE expects $US1.2 billion loss for 2017
23 January 2018
QBE expects an after-tax loss of $US1.2 billion ($1.5 billion) for 2017 after writedowns on its North American business and the impact of fourth-quarter catastrophes, and new CEO Pat Regan has flagged an overhaul.
The company says it will take an impairment charge of around $US700 million ($875 million) on the carrying value of North American goodwill, reflecting an increase in the long-term combined ratio assumptions for the region in its updated business plans.
A cut in the US corporate tax rate to 21% has also led to a $US230 million ($288 million) writedown on the carrying value of deferred tax assets.
The insurer said it expects to report an overall combined operating ratio of around 104% at the annual results compared to a target range of 100-102% forecast in early October.
“This has been a challenging year for QBE, reflecting an unprecedented cost of catastrophes as well as the particularly disappointing deterioration in our emerging markets business,” Mr Regan said.
Fourth-quarter catastrophes, including Californian wildfires, December storms in Australia and further impacts from Hurricane Maria, added around $US130 million ($163 million) to the net cost of catastrophes.
After a detailed review of year-end claims reserves, the company has strengthened provisions by around $US110 million ($138 million), mainly in North America and Asia-Pacific, also contributing to the combined operating ratio's deterioration.
Mr Regan, who officially took over the helm from John Neal in January after being named the new CEO in September, said he had been conducting a detailed review of the group’s operations over the past few months.
“We have some businesses with strong market positions that are performing well but we also have businesses that are underperforming," he said.
“We have commenced a comprehensive program of work to improve both the level and consistency of performance. At the same time we are conducting a strategic review of our Latin American operations as we look to simplify the group and reduce risk.”
More details in our regular Monday bulletin.
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