QBE has upgraded its profit forecast for 2006 and expanded its US operation with the US$0.8 billion acquisition of Praetorian Financial Group (“PFG”).
The insurer upgraded its insurance profit forecast for 2006 to around 20 per cent of net earned premium, compared to a previous guidance of between of 17 per cent to 18 per cent.
The net profit forecast was raised to around 30 per cent, compared to 15 per cent previously.
“The significant improvement in profit outlook is due to better than expected market conditions and lower large losses and catastrophes for 2006 to date,” said QBE Group’s chief executive Frank O’Halloran.
PFG is based in New York and writes 37 specialist property and casualty insurance programs through various managing agents (78 per cent) and specialist retail agency business through brokers (22 per cent).
“Subject to no unforeseen circumstances, we anticipate that PFG will produce a profit after tax of US$150 million in the first full year before the cost of funding the acquisition, the capital injection and synergies,” O’Halloran said.
QBE forecast that PFG will add around US$1.4 billion to gross premium income on an annualised basis.
The acquisition will form part of QBE the Americas Division under Tim Kenny as president and chief executive.
“The acquisition is consistent with our strategy of building our business in the specialist insurance program and small to medium regional markets of the US,” Kenny said.
This current acquisition follows the purchases of National Farmers Union Property and Casualty Company in 2005 and the One Beacon Agriculture division earlier this year.
The completion of the sale is expected in the second quarter of 2007, subject to regulatory approvals.
