Australia's QBE profit hit by high claims, cuts dividend

SYDNEY Mon Feb 25, 2013 5:06pm EST

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SYDNEY Feb 26 (Reuters) - QBE Insurance, Australia's top insurer by premium income, posted a lower-than-expected 8 percent rise in full-year net profit due to high claims for accidents and adverse U.S. weather, prompting it to slash its dividend.

QBE, which has completed more than 75 acquisitions in the past 10 years, reported an annual net profit of $761 million, compared with $704 million a year ago and $760 million at the half year.

QBE said its annual cash profit was $1.04 billion, in line with guidance in November when it had warned of big claims from U.S. storm Sandy and said its insurance profit margin would be around 8 percent.

QBE said its underwriting result was hit by significant prior accident year claims, the severe U.S. drought, Sandy and lower risk-free rates.

The company will pay a final dividend of 10 Australian cents per share, down from 25 Australian cents a year ago, and said it would adopt a policy payout ratio of up to 50 percent of cash profit this year. It forecast an underlying insurance profit margin of 11 percent for 2013.

QBE said it was replacing its chief financial officer and the heads of its operations in North America and Europe, in addition to its recent appointment of a new Asia Pacific head.

The stock has risen 13 percent in the past year, compared with a 18 percent rise in the benchmark S&P/ASX 200 Index . (Reporting by Lincoln Feast; Editing by John Mair)

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