Half year profits at QBE fell 46% to $US265 million as increased competition and more payouts cut into earnings.
Revenue was flat at $7.89 billion, up just 1%, as insurances prices came under pressure.
“While the interim result is broadly in line with our expectations, QBE’s business is not immune to macro conditions that are challenging the returns of all insurance companies,” says CEO John Neal.
The result was dragged down by the NSW green slip scheme, the compulsory third party insurance with costs and claims rising.
Neal says the insurance industry faces headwinds caused by low interest rates and competition on pricing.
“We started 2016 expecting premium rates to fall marginally and our experience to date suggests this assessment is valid,” he says.
“Meanwhile, global risk-free rates continue to trend lower — to the point that around 77% of global sovereign bond yields are now below 1% while around 40% are negative.
“These conditions challenge the returns of all insurance companies and our business is not immune.”
QBE has a $150 million cost-cutting target for the second half of the year.
The company declared an interim 2016 dividend of 21 Australian cents a share, franked at 50%, a 5% increase on the 20 Australian cents at the same time last year.