QBE Insurance : 2017 Half Year Report

QBE Insurance Group Limited ABN 28 008 485 014

Level 27, 8 Chifley Square, SYDNEY NSW 2000 Australia

GPO Box 82, Sydney NSW 2001

telephone + 612 9375 4444 • facsimile + 612 9231 6104 www.qbe.com

17 August 2017

The Manager

Market Announcements Office ASX Limited

Level 4

Exchange Centre 20 Bridge Street

SYDNEY NSW 2000

Dear Sir/Madam,

The Directors of QBE Insurance Group Limited announce the financial results for the half year ended 30 June 2017.

The following documents are attached:

1. Appendix 40 - half year report; and

2. QBE's half year report including financial statements for the half year ended 30 June 2017.

;

Carolyn Scobie

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Attachments

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Net profit after tax for the period to 30 June 2017 was $345 million, up from a profit of $265 million for the same period last year.

The Group's underwriting result was a profit of $154 million compared with a profit of $54 million last year, reflecting a combined operating ratio of 97.5% compared with 99.0%. The result benefited from a stronger underwriting performance in both the North American and Australian & New Zealand Operations, partly offset by the impact of increased claims activity in Emerging Markets.

The net claims ratio was 65.3% compared with 64.8% for the same period last year. The current period claims ratio was impacted by the cost of the Ogden decision ($154 million) which was foreshadowed in our year end 2016 results announcement to the market and a reduction in the level of favourable prior accident year claims development ($145 million excluding Ogden compared with $218 million for the same period last year). The prior period ratio was adversely impacted by a significant reduction in risk-free rates used to discount outstanding claims ($283 million).

The combined commission and expense ratio was down compared with the same period last year (32.2% compared with 34.2%) primarily due to changes in business mix and the benefit of expense initiatives.

Excluding the benefit of higher risk-free rates and the one-time impact of the Ogden decision, the combined operating ratio would have been 95.3%, which is around the mid-point of our revised target range of 94.5%-96.0% advised to the market on 21 June 2017.

Additional disclosures

Additional Appendix 4D disclosure requirements can be found in the QBE Insurance Group Limited Half Year Report for the period ended 30 June 2017 (Attachment A). The Half Year Report should be read in conjunction with any market or public announcements made by QBE Insurance Group Limited during the period in accordance with the continuous disclosure requirements of the Corporations Act 2001 and the ASX Listing Rules. The independent auditor's review report is included at page 59 of the Half Year Report.

Other information

During the period, QBE Insurance Group Limited held an interest in Pacific Re Limited (30.97%) and Raheja QBE General Insurance Company (49%). The Group's aggregate share of profits of these entities is not material.

QBE Insurance Group Limited