QBE Profit Misses Guidance on Impairments, Lower Dividend

QBE Insurance Group Ltd., Australia’s biggest insurer, said full-year profit missed forecasts as it wrote down the value of its U.S. units. The company lowered its dividend payout.

Net income in the full-year to Dec. 31 rose 8 percent to $761 million from $704 million a year earlier, Sydney-based QBE said in a statement today. That compared with a median forecast of nine analysts surveyed by Bloomberg for a profit of $884 million and QBE’s guidance of more than $820 million. It will pay a dividend of 10 Australian cents for the second half, down from 25 cents a year earlier, it said.

QBE shares fell 2.2 percent to A$12.75 at the close of trading in Sydney, the biggest drop since Jan. 29, paring this year’s gains to 17 percent. The benchmark S&P/ASX 200 Index declined 1 percent today.

“On a down day for the ASX 200, companies need to at least hit profit estimates to escape further selling pressure,” Ben Le Brun, Sydney-based market analyst at OptionsXpress, said in an e-mail. “QBE however has badly missed their numbers, again. In what could be a double blow for shareholders, QBE has lowered their dividend payout ratio as well.”

While catastrophe claims declined and returns on investments rose, QBE said this was offset by $464 million of adverse prior accident year claims and increased risk margins. The company wrote down brands, distribution channels and licenses on restructured businesses in the U.S. and said it took a “more cautious view on future cash flows for recent acquisitions.”

Cash profit for 2012 rose 32 percent to $1.04 billion, QBE said. The company forecast premium rates to increase by 5 percent on average in 2013 and said that it expects an underlying insurance profit margin of 11 percent, from 8 percent in 2012.

“QBE is no stranger to earnings downgrades and a renewed focus on improving their margins has been put in the ‘heard it all before basket’ by investors,” Le Brun said.