The market has responded negatively to QBE’s half-year figures despite a result CEO Frank O’Halloran describes as “absolutely stunning given the level of catastrophes that the world has experienced in the last six months”.

QBE reported an after-tax profit of $US673 million ($647 million) for the six months to June 30, up 53% on the corresponding period last year and in line with earlier forecasts.

The profit result was largely driven by an improvement in QBE’s investment income, which was up 65% on the first half of 2010.

But on the back of the record run of catastrophes, its insurance profit margin fell from 15.8% to 11.2%, although the company says that excluding one-off factors such as the catastrophes its underlying insurance margin is 16%.

Net earned premium for the half was up 29% to $US6.8 billion ($6.5 billion), primarily driven by recent acquisitions, while underwriting profit fell 46% to $US291 million ($280 million).

Catastrophe and large individual risk claims represented 15.9% of net earned premium, up from 9.3% for the first half of 2010 and compared to an average of 8.1% over the past seven years.

Total major claims cost for the half was $US1.08 billion ($1.04 billion). But despite being hit hard by the catastrophes, QBE managed a combined operating ratio of 95.7%.

Mr O’Halloran says the result would have been better, but June saw further significant developments in its large loss and cat claims bill with the US tornadoes, Christchurch earthquake, deterioration in Cyclone Yasi claims and a number of large individual risk claims adding an additional $US250 million ($240 million) in losses, net of reinsurance.

QBE shares fell to a seven-year low of $12.25 when the results were released last Friday, before rebounding slightly to close down 5.6% at $12.98.

Of the stock market reaction, Mr O’Halloran says: “There was always going to be a slight over-reaction until people absorbed the fact that our underlying business is very strong and that our first half was heavily impacted by our large risk and individual catastrophe claims.”