Big Insurers Face Earnings Drought
The Age
Monday August 18, 2008
THE combined full-year net profits of the country's three largest listed general insurers will struggle to get above $2.3billion for 2008 in what has been the worst period for earnings growth for five years.
The best hope of a decent result lies with the global insurer QBE. Its half-year result on Thursday will hint at whether it will meet analysts' expectations of a $1.9billion bottom-line figure by December 30.Industry watchers are tipping a six-month net profit of about $880 million, 4% less than the corresponding period a year ago, but reasonable given the global credit crisis and softening insurance markets.QBE has turned its focus back to its home base in recent months to provide its top-line revenue growth by first trying, but failing, to buy Insurance Australia Group for $8.7 billion, and then snapping up home loan insurer PMI Australia for $1billion last week.However, QBE's ambitions towards IAG are unlikely to have stopped there.While the group has set its sights elsewhere since May's failed tilt, there will still be questions as to whether QBE plans another attempt. This will depend on the efforts of IAG's recently appointed chief executive Mike Wilkins in turning around the troubled owner of NRMA Insurance.Having announced a financial, operational and managerial clear-out last month, Mr Wilkins is unlikely provide many more unpleasant surprises to go with what Deutsche Bank expects to be a $254 million net loss for the year to the end of June when IAG reports its results a day after QBE.Like IAG, Suncorp's insurance operations have been hit hard by massive storm-related claims and falls in the value of its equity investment portfolio.
© 2008 The Age
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