QBE is expected to report a loss of about $US250 million ($274.51 million) this year after writing down nearly $US1 billion ($1.09 billion) from its US operations.

Group CEO John Neal this morning apologised on behalf of the board and executive at a teleconference of analysts and investors, some of whom pointed out this is the latest in a number of downgrades and asked how confident they can be about today’s announcement.

Chairman Belinda Hutchinson will step down in March, a year early, to be replaced by US insurance executive Marty Becker.

“The board has requested that she remain as Chairman until the release of QBE’s full-year 2013 results,” a QBE statement said. That result will be announced on February 25.

QBE says it will report a cash profit of about $US850 million ($933.35 million), compared with $US1 billion last year.

This will become a $US250 million loss after a $US930 million ($1.02 billion) writedown of intangibles and goodwill, or $US815 million ($894.91 million) after tax.

August guidance of a combined operating ratio (COR) of 92% has been reduced to 97-98%, while guidance of an insurance profit margin of about 11% has been cut to about 6% on net earned premium of $US15.2 billion ($16.69 billion). QBE says next year’s COR will be about 93%.

Mr Neal says North America will return to profit next year.

“We do believe that these painful decisions will draw a line under the past and allow the North American business to trade profitably,” he said.

Mortgage insurer QBE Financial Partner Services (FPS) will become “a viable business on a much smaller scale”.

QBE is working to suck costs out of FPS, after writing down $US330 million ($362.36 million) in intangibles, plus another charge of $US150 million ($164.71 million) in restructuring costs.

FPS’ partnership with Bank of America ended when the bank sold down its loan portfolio. Mr Neal says QBE has been unable to replace Bank of America with another major bank.

He says a strategic review led to an increase in the provision for prior-year claims of $US650 million ($713.74 million), in both active and run-off business, of which $US470 million ($516.09 million) came from the second half, mostly from North America.

The US crop business’ COR will be about 99% on higher-than-expected claims.

CFO Neil Drabsch told a teleconference QBE will not reach its targeted 40% debt-to-equity ratio by year-end, due to a fall in its asset base. The figure is likely to be about 43%.

Trading in QBE shares was halted on Friday at the insurer’s request before today’s announcements. On the resumption of trade this morning they fell 20%.