Qbe Insurance Group Limited (QBE) Share Price

QBE Company Profile

QBE Insurance Group Limited is one of the top 25 insurers and reinsurers worldwide with operations in all key global insurance markets. QBE is an Australian listed company with a Group Head office based in Sydney, and has offices in 45 countries with around 13,000 staff worldwide. Our underlying business strategy is to maintain operations in the key global insurance markets and, where possible, to be a lead underwriter for selected lines of business, setting rates and conditions in the markets in which we operate. QBE Group's strategy of diversification by product and geographical exposure is fundamental to managing our insurance and reinsurance risks and has been a vital ingredient in the Group’s success. We have developed and embedded a unique QBE culture throughout the organisation based on key essential behaviours and applying effective risk management practices and controls. We aim to grow the business through our existing extensive networks and acquisitions of insurance businesses, portfolios and teams of underwriters that meet our stringent criteria for minimum return on equity and EPS accretion in the first year of acquisition. QBE Group has successfully delivered more than 115 acquisitions over the last 25 years and has grown substantially, particularly over the last 10 years. QBE is targeting annualised gross written premium of around $13 billion for 2008 and in excess of $16 billion for 2009.

Highlights half year ended 30 June 2008

Quality insurance profit up 6% to $1,116 million (2007: $1,053 million) despite the substantial appreciation of the Australian dollar, increased frequency of large individual risk and catastrophe claims and market conditions

Insurance profit margin of 21.8% (2007: 22.2%) at high end of market performance

Profit after tax before net realised and unrealised equity gains and losses was up 7% to $920 million (2007: $860 million)

Cash flow from operations was on target at $839 million, up 7% (2007: $785 million)

Reported net profit after tax for the half year was $859 million, down 7% (2007: $921 million)

Compared with the same period last year, reported profit adversely affected by $196 million due to substantially weaker equity markets (down $122 million) and the strong Australian dollar (down $74 million applying constant exchange rates)

Interim dividend of 61.0 cents per share (2007: 57.0 cents) representing a payout of $542 million, up 10% compared with 2007 interim dividend

Return on average shareholders’ funds 19.9% (2007: 28.1%)

Net earned premium up 8% to $5,108 million and using constant exchange rates up 18%

Reinsurance costs as a percentage of gross earned premium reduced to 14% (2007: 17%) after additional protection purchased in the period and greater use of our captive Equator Re

As previously announced, $200 million of aggregate reinsurance protection was purchased to cover a frequency of large individual risk and catastrophe claims exceeding 8.5% of net earned premium

Gross written premium up 1% to $6,603 million and gross earned premium up 4% to $5,958 million. Using constant exchange rates gross written premium and gross earned premium up 11% and 13% respectively – growth was mainly from Australia and acquisitions in the US

Premium growth was adversely affected by increased competition and below budgeted growth for new business due to inadequate pricing, particularly in Europe and the US; offset slightly by overall higher customer retention and better than expected premium rate reductions on renewals of 2%

Eight acquisitions in the period to date include the US based North Pointe, underwriting agencies in the US and Australia and the recently announced PMI Mortgage Insurance. We expect the first full year to generate in excess of $550 million additional net written premium and $160 million incremental profit after tax.

Our Vision

To be internationally recognised as:

a highly successful general insurance and reinsurance group; a builder of shareholders' wealth; a developer of "can do" people; and an organisation that excels in the continuous delivery of new and proven quality products and services.

Our Values

increasing the long-term wealth of shareholders; customer satisfaction and retention; employee motivation; and integrity.

For more information www.qbe.com.au