QBE’s latest investor update proves that while the insurer may not be bulletproof, it can certainly absorb plenty of heat.

The global insurer’s divisional CEOs assembled in London last week to update investors on its progress. And the mood was upbeat.

While large risk and catastrophe claims have dragged the forecast half-year insurance margin into the low end of the 16-18% target, QBE continues to demonstrate its resilience to challenging market conditions.

Its positive prognosis comes despite the effect of storms in Perth which cost the insurer $108 million, a Melbourne hailstorm costing $76 million, the severe earthquake in Chile ($91 million), and Deepwater Horizon oil rig loss ($29 million).

Add the effect of the European Winter Storm Xynthia, Iceland volcano travel claims and US tornadoes, and the volatility of the last six months becomes abundantly clear.

Despite this, QBE has held up in the face of the onslaught, with gross written premium forecast to increase 7% to $15.4 billion for calendar 2010, with net earned premium expected to rise 7% to $13 billion.

The insurer expects to achieve global premium rate increases of 2-3%, ahead of expectations, while the strengthening US dollar and pound are expected to benefit second-half results.

Cat claims appear small change within such a context.

There is little doubt the global insurance market continues to be plagued by low interest yields, rising claims and a highly competitive market, but QBE claims it is making much of the running.

“The generally held perception of QBE as a strong and resilient business is a pretty good one,” Ibisworld Senior Industry Analyst Michael Wilson told insuranceNEWS.com.au. “All those claims still fall within an annual allowance of $1.1 billion. That’s the reason why they can stick to that forecast, because they’ve included a big enough provision.”

Among its divisions, Mr Wilson identifies the Americas as the one region not performing quite in step with the rest of the QBE empire. Last year the division recorded an insurance margin of 14.7%, which, although lower than the global yardstick of 17%, was nevertheless a healthy enough buffer.

“The effect of low investment yields, subdued competition and profit margin mean [the Americas division] return on equity is lower than just about every other market that QBE has around the world,” Mr Wilson told insuranceNEWS.com.au.

The fact the Americas is seen as a relatively poor performer is an indication of the standards QBE and its shareholders set for the managers. QBE has traded as high as $25.34 this year, but on Friday closed down 2 cents at $18.66.

The Americas division intends to chase acquisitions in specific segments to avoid poker-hot competition in mainstream insurance lines, with QBE already in control of 10% of the US agricultural market.

“Ahead of the much-awaited economic rebound, QBE will be looking to the distress that a lot of insurers are in at the moment, which may offer good acquisition opportunities for QBE,” Mr Wilson said.

With IAG slowed by costly UK operations and Suncorp yet to fully realise the benefits of its extensive restructure, Mr Wilson believes QBE continues to throw down the gauntlet to its local rivals.

“It doesn’t matter what industry you’re looking at, that kind of margin would make a lot of businesses happy,” he said.

And while QBE’s talk of restating its earnings in US dollars might concern some observers of the Australian major, Mr Wilson says it’s a natural development for a growing multinational that currently earns more than 50% of annualised premium income in American dollars.

“While you can’t not be exposed to currency, conventional wisdom would dictate that you report in the currency in which you do most of your business,” he said. “That reduces the potential for exchange rates to warp what it is you are doing.”

In its sign-off last week, QBE reiterated its businesses are all in great shape and are well positioned for the expected rise in premium and interest rates, as well as future acquisitions and distribution opportunities.

Of course – QBE’s shareholders have come to expect nothing less.