The QBE Insurance Group Ltd (ASX: QBE) share price plunged more than 7% today to $12.25 after the insurance company warned it had experience higher than expected claims activity in the first five months of 2017 in Emerging Markets.
QBE Insurance says this is due to a combination of increased frequency of medium sized risk claims in Asia, weather-related claims in Latin America and adverse experience in legacy portfolios in Latin America.
QBE says this will result in an expected interim and 2017 financial year (FY2017) combined operating ratio of between 94.5%-96%.
Offsetting the rising costs, the company says its interim investment return is above expectations so far and as a result, its interim insurance profit margin is expected to be between 8.5% and 9.5%.
QBE is an insurer specialising in general insurance, such as car and vehicle insurance, house and contents insurance and travel insurance. The company competes in Australia and New Zealand with the likes of Suncorp Group Ltd (ASX: SUN), AMP Limited (ASX: AMP) and Insurance Australia Group Ltd (ASX: IAG).
Despite the falling share price, the factors affecting QBE may only be temporary. If so, it may be a good time for investors to pick up some more shares in the insurer. At the price of $12.25, QBE should pay a dividend yield of 4.6% in FY2017 according to consensus analyst forecasts. But a better dividend idea could be the following…
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The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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