QBE shares fell by more than 11% after the big insurer warned profit margins would fall following a jump in claims in South America.
The insurance company has been hit by escalating claims for workers compensation in Argentina, according to an early report to market on the six months to June.
The company told the ASX: “The Group’s insurance profit margin for the first half is now likely to be 7%-8% compared with consensus expectations of around 10%.”
Also premium revenue was expected to be around $8.5 billion and below budget of $8.9 billion for the half, much of the shortfall due to foreign exchange variations.
For the rest of the world, it was business as usual.
Significant and unusual risk claims stemming from the UK floods, as well as North American winter storms and tornado activity, and European storms in June were partly offset by a benign claims experience in Australia.
QBE says it expects net profit after tax of around $390 million, lower than $477 million reported for the same six months in 2013.
QBE shares fell more than 11% to $10.43 before recovering slightly to $10.58.