QBE eyes bolt-ons – and exchange rate
QBE CEO Frank O’Halloran says the group is on track to achieve 20% profit growth in 2007, but currency fluctuations could affect earnings.
Mr O’Halloran also says the company will boost future earnings through continued acquisitions globally. But he ruled out large-scale purchases in favour of smaller “bolt-ons”.
With more than 50% of its business overseas, QBE has invested heavily in currency hedging to negate movements in the Australian dollar. Mr O’Halloran says a 1% shift in the dollar could add or subtract $90 million at the bottom line.
“We are talking about big numbers here,” he said at the company’s annual general meeting last week.
QBE’s first-quarter payout losses are running behind the previous corresponding period, but big foreign acquisitions late in 2006 and early in 2007 are likely to boost gross written premium by 30%, to $13.5 billion.
In January QBE entered an agreement to purchase Axa’s Winterthur operations in the US for $1.16 billion after acquiring Praetorian Financial Group for $800 million, which doubled its US premiums book.
Those two purchases are forecast to add $380 million to profit after tax in their first full year as QBE subsidiaries, Mr O’Halloran says.
QBE is also on track for a full-year insurance margin between 17.5% and 18.5%.
In March, QBE reported a 36% rise in full-year net profit to $1.48 billion.
Mr O’Halloran also says the company will boost future earnings through continued acquisitions globally. But he ruled out large-scale purchases in favour of smaller “bolt-ons”.
With more than 50% of its business overseas, QBE has invested heavily in currency hedging to negate movements in the Australian dollar. Mr O’Halloran says a 1% shift in the dollar could add or subtract $90 million at the bottom line.
“We are talking about big numbers here,” he said at the company’s annual general meeting last week.
QBE’s first-quarter payout losses are running behind the previous corresponding period, but big foreign acquisitions late in 2006 and early in 2007 are likely to boost gross written premium by 30%, to $13.5 billion.
In January QBE entered an agreement to purchase Axa’s Winterthur operations in the US for $1.16 billion after acquiring Praetorian Financial Group for $800 million, which doubled its US premiums book.
Those two purchases are forecast to add $380 million to profit after tax in their first full year as QBE subsidiaries, Mr O’Halloran says.
QBE is also on track for a full-year insurance margin between 17.5% and 18.5%.
In March, QBE reported a 36% rise in full-year net profit to $1.48 billion.