December 17, 2019 / 10:02 PM / a month ago

Australia's QBE Insurance flags higher claims payout for North American crop business

(Reuters) - Australia’s QBE Insurance Group said on Wednesday its North American crop business is expected to pay claims of around 107%-109% on net earned premium of nearly $1.2 billion in 2019 due to adverse weather conditions.

QBE said an unusually cool season and a rise in crop damage claims would lead to a deterioration in the unit’s claims payout ratio - formally, the combined operating ratio - rising slightly above the top end of its 2019 target range of 94.5% to 96.5%.

The company expects 2020 net investment return in the range of 2.5% to 3%, down from 3% to 3.5% this year, reflecting lower global risk-free rates, Australia’s second-largest listed insurer said in a statement.

“The adverse weather conditions are also anticipated to contribute to slightly elevated attritional loss experience in some of our North American property classes,” QBE said in a statement.

In August, QBE reported a 35% rise in cash profit in the first half of the year, helped by lower claims and a robust investment return.

The company was set for a recovery following a weak spell in 2017 when hurricanes swept the Atlantic and earthquakes rattled Mexico.

Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Shinjini Ganguli

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