Australia's largest insurer by premium, QBE, has posted a steep decline in its profits for the first half of the year following a number of US weather losses.
QBE has posted a net profit of $392m ($424m) for the first six months of the year, down 18% from $477m for the same period in 2013.
This has led to QBE to announce that it will partially float its Australian mortgage lenders insurance business and sell off its US agency business.
QBE also plans to cut $500m of convertible subordinated debt through a $750m share placement. It also plans asset sales and a partial share offer next year of mortgage insurer QBE LMI, which had $1.2bn in assets at the end as of June.
"These initiatives deliver significant additional cash and capital resources that will substantially improve the group's financial flexibility and ability to better withstand a reasonable range of downside scenarios," the Australian insurer said in a statement.
The insurer had to deal with a number of large claims following adverse weather in the US which was struck by severe storms in early June, producing large hail stones as well as several tornadoes and other dangerous wind storms.
American casualty insurers Chubb and Travelers were also hit hard by large catastrophe losses in the June quarter.
QBE reported an insurance profit margin of 7.6% in the first half, compared with 10.8% a year ago. It said that it expected that to rise to between 8% to 9% at the end of the financial year.
The insurer is also facing a class action lawsuit from its shareholders following a profit downgrade last fiscal year.
Many of QBE’s troubles have been attributed by market experts to its aggressive expansion policy over the past decade; QBE has completed more than 75 acquisitions in the past 10 years to expand to 50 countries.
QBE is now reversing this expansion strategy by divesting itself of its non-core assets with the insurer also announcing that it was finalising the sale of its Central and Eastern European operations.
The capital raising and asset sales are "intended to significantly improve our capital strength and balance sheet resilience," QBE’s CEO Neal said in the company's results statement.
He also emphasised that the measures will support "more predictable and sustainable earnings for shareholders."