NU Online News Service, Jan. 13, 10:41 a.m.EST

Australia's QBE Insurance Group says a record level ofcatastrophe claims in 2011 prompted the company to warn investorsthat its profit will be down up to 50 percent.

The country's largest insurer says that its annual report is tobe released at the end of February but projections are not good. Itlowered its profit margin to between 7 percent and 7.5 percent froma previous forecast of 11 percent.

After the first six months of 2011, QBE cut its profit margin to11.2 percent from 15.8 percent as catastrophe losses totalednearly $1.1 billion.

The company also decreased its dividend, but says its capitaladequacy exceeds its minimum target.

Earthquakes in New Zealand as well as flooding in Australia in2011 were to blame for plenty of claims, but Frank O'Halloran,QBE's chief executive officer, says the frequency of events duringthe second half of the year—though they may have garnered fewerheadlines—“continued at an unprecedented level.”

O'Halloran lists Hurricane Irene, tornadoes, wildfires, hail,flooding and wind and snow storms in theU.S.as well as the floodinginThailand, bush fires inAustraliaand riots inEurope.

“OurU.S.crop-insurance business produced a below-averageunderwriting profit due to the severe hail and flood claims,” headds in a statement.

“We have made a number of changes to lessen the impact of acontinuation of this heightened level of catastrophes goingforward,” O'Halloran continues. “This includes substantiallyincreased premium rates for property classes of business, higherdeductibles, the purchase of more reinsurance for a frequency ofcatastrophes and reducing exposures in some areas.”

The insurance group's 2012 reinsurance has been placed, with anexpected overall increase in cost of about 5 percent.

QBE says rate increases are being sought inAustralia,NewZealand, theU.S., and parts of Asia,LatinaAmericaandEurope.

The outlook for 2012 is positive, says QBE, with a targetedcombined operating ratio of 89 and an underlying profit margin ofabout 15 percent.