QBE cuts profit margin, shares fall

QBE Insurance (ASX:QBE’s) shares dropped almost 4 percent in over six months after the insurance group cut its profit margin forecast because of catastrophes. Stocks were down by 68 percent at $16.60, the group’s lowest since November last year.

QBE said their profit margin is lower than last year’s 15.7 percent, but the company did not specify how much. The drop in stocks were caused by the unexpected level of claims in the six months until May, which was estimated at a total of $780 million, higher than the first half from the previous year.

QBE’s ability to reach its full profit margin, which is expected between 15 to 18 percent, is heavily influenced by the amount of large risks and catastrophe claims acquired over the remainder of the year. The company expects its first half profits to increase from 50 to 60 percent after investments improve from the previous year.

In the new forecast QBR will report a net profit of as much as $US704 million for the six months until June 30.