Insurer cuts specialist underwriters loose

Banned AR

QBE will sell off stakes in two of its Australian underwriting agencies, as part of a push to offload assets across the globe.

QBE Chief Executive John Neal announced yesterday that strata specialist CHU and plant and mobile equipment specialist UAA would be hived off from QBE and set up as joint ventures.

The insurer posted a net profit of $424 million for the first six months of 2014, down 18% from the same period last year.

QBE has posted a net profit of $US392 million ($424 million) for the six months to June, down 18 per cent from $US477 million for the same period a year earlier.

In a bid to raise roughly $1.5 billion in new capital, QBE will also take mortgage insurance arm QBE LMI public, and sell its underwriting agencies in the US.

Neal says CHU and UAA are the only Australian agencies affected by the plan.

“The only other agencies we own are inextricably linked with the underwriting so you wouldn’t really deem them to be independent agencies,” he says.

“Those are the only two we have that operate in a dual capacity, as an agency and also as a carrier.

“Let me stress that in both those instances we will maintain 100% of the underwriting and that they are being structured as joint ventures, so it’s a partial sale where we would like to maintain an interest in the agency structure and retain control.”

Neal says no decision on much of a stake QBE will retain has been made.

Overall, the Australian and New Zealand operations saw 10% falls in gross written and net earned premium. However, once the removal of the Victorian fire services levy is factored in, the underlying gross written premium grew by 1%.

IAG also announced its financial results yesterday, posting a $1.6 billion profit, up more than 10% from last year.

Managing Director and CEO Mike Wilkins says it has been a significant year for IAG.

“We have delivered a strong financial result, maintained the strength of our capital position and completed the acquisition of the Wesfarmers insurance underwriting business,” he says.

“The improvement in our underlying performance has continued and demonstrates the value of pursuing a disciplined and consistent strategy over a number of years.