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QBE (ASX:QBE) - CEO, Richard Pryce
CEO, Richard Pryce
Source: Insurance Day
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  • QBE (QBE) has cancelled its dividend distribution after 2020’s unprecedented turbulence drove a US$1.5 billion (almost A$2 billion) loss
  • The loss included a “disappointing” underwriting result and a significant reduction in investment income, among other things
  • As a result, the company has not declared a final dividend for the year but expects to resume payments should economic conditions stabilise
  • While global markets are expected to recover over time, QBE has also elected not to provide any results targets for the 2021 financial year
  • QBE is up 2.52 per cent to $8.94 per share

QBE (QBE) has cancelled its dividend distribution after 2020’s unprecedented turbulence drove a US$1.5 billion (almost A$2 billion) loss.

The global insurance provider had previously hinted at a challenging year and today cited “a disappointing underwriting result” and “a significant reduction in investment income” as the primary issues.

The company also drew attention to the impairment of goodwill and deferred tax assets in North America and charges related to the rationalisation of its IT platforms and real estate footprint.

Catastrophe claims for 2020 grew from US$426 million (roughly A$549 million) last year to US$688 million (roughly A$886.5 million), or 5.8 per cent of net earned premium, which QBE said reflects “particularly adverse” operating conditions due to widespread bushfires and hail and storm claims in Australia as well as additional wildfires and record Atlantic hurricanes in the U.S.

That said, group-wide premium renewal rates continued to increase — primarily in North America while the Asia-Pacific region took slightly longer to catch up — climbing an average of 9.8 per cent compared to just 6.3 per cent in 2019.

But with such a significant loss contrasting last year’s US$550 million (roughly A$709 million) profit, the company did not declare a final dividend for the year.

“Subject to global economic conditions not deteriorating materially, the Board expects to resume dividend payments — of up to 65 per cent of adjusted cash profits — in conjunction with the 2021 interim result,” QBE said this morning.

While markets are expected to gradually recover from impacts associated with the COVID-19 pandemic, QBE cautioned that it’s not known how long such a recovery will take. The company therefore did not publish any results targets for the 2021 financial year.

QBE is up 2.52 per cent to $8.94 per share at 2:07pm AEDT.

QBE by the numbers
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