QBE sells Latin America ops after FY loss
A significant impairment of goodwill and a write-down of deferred tax assets following the reduction in the US corporate tax rate has dragged insurance giant QBE to a $US1.25bn loss.
SYDNEY - [AAP] A significant impairment of goodwill and a write-down of deferred tax assets following the reduction in the US corporate tax rate has dragged insurance giant QBE Insurance (ASX: QBE) to a $US1.25 billion ($A1.6 billion) full-year loss.
The result--which compares to a profit of $US844 million the previous year--includes a jump in net cost of catastrophes to $US1.23 billion, compared to the previous year's $439 million.
The company in January flagged the impending loss, saying it was mainly due to one-off costs and blowouts associated with wildfires in California and Hurricane Maria in the Caribbean.
The catastrophes also pushed up the combined operating ratio--which measures expense, commission and claims ratios--to 104.1 per cent from 93.7 per cent in the previous year.
Meanwhile, revenue for the year to December 31 rose 2 per cent to $US17.69 billion.
QBE's performance was hit by an increase in claims in the North American, Asia Pacific and Latin American operations, while Europe reported a strong result.
Chief executive Pat Regan, who previously had initiated a strategic review of the Latin American operations, on Monday announced QBE would exit most of the region.
The company said it would sell its operations in Argentina, Brazil, Colombia, Ecuador and Mexico to Zurich Insurance Group for $US409 million ($A522 million), recording a pre-tax profit on the sale of around $US100 million.
Operations in Puerto Rico will be retained--becoming part of QBE's North American unit--to facilitate the servicing of claims resulting from Hurricane Maria.
"The decision to exit Latin America is consistent with our focus on simplifying the group, reducing risk and improving the consistency of our results," Mr Regan said in a statement.
"Zurich has a significant presence in Latin America and a strong commitment to the region."
It is expected the transactions--which are subject to regulatory approvals in each jurisdiction--will be completed by the end of 2018.
QBE declared a partially franked final dividend of 4.0 cents a share, a sharp drop from 33 cents a year ago.
QBE POSTS FULL YEAR LOSS:
* Net loss of $US1.25bn vs $US844m profit
* Gross written premium down 1pc at $US14.2bn
* Partially franked interim dividend of 4.0 cents per share vs 33 cents, 50pc franked
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