QBE sees higher 1H premium; to shut North America middle-market segment
Adds share move in paragraph 2, analyst comment in paragraphs 6-7
By Roushni Nair
June 19 (Reuters) -Australia's QBE Insurance Group QBE.AX on Wednesday forecast a 3% increase in first-half gross written premium on a constant currency basis and said it would close its struggling North America middle-market segment.
Shares of the insurer slipped as much as 1.9% to A$18.03 by 0054 GMT, while the broader benchmark S&P/ASX 200 index .AXJO traded largely flat.
The decision on the North America middle-market segment came after a strategic review revealed it had faced challenges over the past several years. The segment represented a gross written premium of $500 million in fiscal year 2023.
"The closure will have no incremental impact on appetite or strategy for North America's three core businesses - specialty, crop and commercial," the company said in a statement.
A cost of $100 million before tax associated with the closure will be recorded in the fiscal 2024 results, it added.
"For a long time we have been sceptical of QBE's mid-market strategy... at this stage, we think the relief of finally ending this longstanding underperforming business should outweigh the minor negatives on numbers," analysts at Citi wrote.
The $100 million restructuring charge, lower future premium, and potential expense overruns are also factors to consider, they added.
QBE Insurance, which operates in 27 countries, logged a total investment income of $643 million in the five months to May. In the first quarter, it was $406 million.
The group projected a first-half gross written premium of $13.1 billion and net insurance revenue of $8.4 billion, up from $12.80 billion and $7.98 billion, respectively, from a year earlier.
Reporting by Roushni Nair in Bengaluru; Editing by Vijay Kishore and Subhranshu Sahu
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