QBE’s US claims reserves continue to be deficient, according to a Bank of America Merrill Lynch report.

It says this has serious implications, because if group-wide reserves were 1% in deficit, profit would drop 10%.

“The conclusion we draw is that QBE’s reserving surpluses that existed between 2003 and 2009 have now largely dried up,” according to Australian-based analyst Andrew Kearnan.

The company’s US claims reserves are between 2% and 5% deficient, according to Merrill Lynch’s projection.

The more subjective and “perhaps best-case” scenario is they are between 1% surplus and 2% deficit.

This is after QBE added $US231 million ($241.18 million) to its US reserves last year to cover prior-year deficiencies, the report says.

“QBE is yet to do enough in the US to rebuild its balance sheet,” the report says. “This is consistent with our similar studies over the past four years, which have all predicted US reserve shortfalls.”

A QBE spokesman told insuranceNEWS.com.au the company does not comment on analysts’ reports.