QBE 2.42% $9.29 qbe insurance group limited

News: QBE UPDATE 1-Australia's QBE Insurance sees H1 loss on virus hit, investment losses

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    (Adds details on claims expected, combined operating ratio, company comment)

    July 22 (Reuters) - Australia's QBE Insurance Group (QBE) on Wednesday warned of a statutory loss for the first half, largely due to coronavirus-related claims and investment losses tied to extreme volatility in markets.

    The pandemic has added to challenges faced by Australian insurers, which are yet to recover from a turbulent summer after raging wildfires, drought and hailstorms led to a surge in claims that weighed on their margins.

    Statutory loss, which excludes adjustments for one-time items and expenses, is expected at $750 million after tax, against a profit of $463 million a year earlier, the company said in a statement to the stock exchange.

    The insurer pegged the hit from the outbreak at around $335 million, largely consisting of $150 million of virus-related incurred claims and $115 million relating to additional risk margins stemming from uncertainty caused by the outbreak.

    The virus is expected to hurt multiple lines of the business, it said, with claims expected due to business interruptions, workers' compensations, higher casualties and health problems and a deterioration in credit.

    The statutory loss was also a result of a net investment loss of about $125 million, caused by "extreme investment market volatility" during the period, the company said.

    QBE expects its first-half combined operating ratio (COR) -ratio of claims paid against premium income earned - to shoot up to 104% from 95.2% it reported last year.

    Excluding the virus impact, the figure was seen at around 98%, it said.

    "While the landscape remains highly uncertain, at this stage QBE currently estimates total COVID-19 related costs to be around $600 million pre-tax," it said.

    Out of that figure, about $265 million was expected in net claims over the next 12-18 months, QBE said, primarily in trade credit and lenders mortgage insurance, apart from casualty and landlords' insurance.

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