US1 billion profit
The profit growth forecast comes as a law firm looks into launching a class action against QBE, on behalf of share ugg slippers holders hit by a massive share price fall in December caused by news of the company’s US woes.
QBE made a $US250 million loss in 2013, its first since 2001, after major writedowns on the value of its North American business.
But with writedowns now out of the way, the company could expect to return to its previous levels of profitability in 2014, chief executive John Neal on Wednesday told shareholders.
“If you look at the combined operating profit ratio, and that insurance profit margin of 10 per cent, and the confidence we now have in the action we have taken in the balance sheet, you are talking about a return to net profit after income tax of in excess of $1 billion,” he told the company’s annual general meeting in Sydney.
New chairman Marty Becker said the company’s US business had faced a string of problems, including two years of losses from its crop insurance division because of major weather events.
It had a ugg slippers lso faced troubles in its mortgage insurance business and its program business, which evaluates insurance applications and determines premiums.
“We’ve had a perfect storm in the US of the mortgage industry meltdown, the crop business and the weather related patterns in the US, but the place where QBE needs to take responsibility is the program business,” he said.
“We’ve been in the program business for a long time but unfortunately the reality is we’ve been too optimistic in terms of the loss picks we’ve taken on that business.”
As the general meeting got underway ugg slippers , law firm Maurice Blackburn was announcing its intention to investigate a potential class action against QBE.
The lawsuit centres on QBE’s December 9 announcement that it was expecting to post a $US250 million annual loss, well below what market analysts had been expecting, which caused the company’s share price to plunge 30 per cent in two days.
Investors who bought into QBE prior to the writedowns had paid too much for their shares, Maurice Bl ugg slippers ackburn class actions principal Jacob Varghese said.
Potential legal action would argue investors should have been better informed about the extent of the problems with the US business earlier, he said.
QBE said it had complied with its obligations to keep the market notified of changes to its outlook or performance, and would fight the class action if it goes ahead.
“We are very vigorous in terms of recognising our continuous disclosure obligations and we are 100 per cent confident that we’ve met those in every respect,” Mr Neal said.