Announcing its half-year profit results yesterday, QBE noted that strong property price appreciation, particularly in NSW, has led the Reserve Bank and APRA to pressure the banks to tighten credit terms and conditions in the mortgage market, which has flowed through to significantly reduced new business flows in its lenders’ mortgage insurance business.
“We have revised our FY15 gross written premium expectations down by around five per cent or $200 million,” QBE’s chief executive of Australia & New Zealand operations Colin Fagen said.
“This is due to the delayed inception of the aforementioned new business opportunities, an industry-wide downturn in lenders’ mortgage insurance new business volumes, a slightly more competitive pricing landscape and a currency impact of close to $100 million due to the weaker Australian dollar.”
QBE posted a 24 per cent profit increase but recorded a 15 per cent fall in gross written premiums, reflecting the weaker Australia dollar.
“On a constant currency basis, gross written premium fell by only one per cent primarily due to a 20 per cent industry-driven decline in lenders’ mortgage insurance premium and the general softening of the market, particularly in strata-title insurance products.
“Excluding the lenders’ mortgage portfolio, premium income in our traditional markets increased by one per cent,” he said.