QBE Insurance Group Ltd., Australia’s second-largest insurer, announced a shocking plunge of roughly $250mn in its 2013 profits Monday. QBE largely attributed the loss to an increase in claims and goodwill writedowns at its North American operations, headquartered in New York.
The loss represents the largest drop in 12 years for the insurer, and precipitated a 22% fall in shares in Sydney.
The announcement came after QBE requested a trading halt Friday and signaled that an announcement to its shareholders would shortly follow. For Brett Le Mesurier, a Sydney-based analyst at BBY Ltd., the trading halt failed to signal the severity of the insurer’s decline.
“The surprise was the extent of the loss,” Le Mesurier told Bloomberg. “While this could be the peak, I don’t think this is the end of QBE’s problems in North America. There should be some residual trouble left.”
QBE attributes much of its losses to a goodwill impairment charge of roughly $600mn, in addition to a one-time impairment charge of $150mn following a review of its North American business.
Despite the disappointment, QBE remains committed to building its business in the US and North America, CEO John Neal emphasized in Monday’s statement.
“We are emphatically dealing with the North American issues that have been detrimental to confidence and underwriting performance over recent reporting periods,” Neal said. “As painful as these decisions are, we are confident that our business in North America will trade profitably in 2014.”