SYDNEY (Bloomberg) ? QBE Insurance Group Ltd., Australia?s largest property and casualty insurer, agreed to buy Praetorian Financial Group Inc. from Hannover Re for $800 million in its biggest purchase, more than doubling sales in the US.

The acquisition of New York-based Praetorian from the world?s fourth-largest reinsurer will add $1.4 billion to annual insurance premiums, Sydney-based QBE said yesterday in a statement.

Chief executive officer Frank O?Halloran, whose firm gets almost 80 percent of its profit outside Australia, is acquiring insurers overseas as rivalry crimps prices at home. QBE recently bought two farmers? insurers from Bermuda-based White Mountain Insurance Group Ltd. in the US and will add $150 million of profit from Praetorian in 2007.

?This will make the Americas far more significant for QBE,? said Peter Vann, who helps manage $1.1 billion at Constellation Capital Management in Sydney, including QBE shares. ?They?re getting pretty good profit for the price they paid.?

O?Halloran also said full-year profit will increase by about 30 percent to A$1.42 billion ($1.1 billion), up from his previous forecast of more than 15 percent, on ?better-than-expected market conditions and lower large losses and catastrophes for 2006.?

Hurricanes in the US, which flooded New Orleans, made 2005 the worst year on record for catastrophe losses, O?Halloran said in February.

Prices of insurance for companies, QBE?s biggest revenue earner, fell nine percent in Australia in 2006 as competition for customers intensified, according to a survey by JPMorgan Chase & Co. that was released last week.

In the US, QBE purchased National Farmers Union Property & Casualty Co. in 2005 and Kansas-based OneBeacon AGRI in August. O?Halloran forecast $1.2 billion of US insurance sales in 2006.

Praetorian gets 22 percent of its premiums from workers? compensation coverage, 22 percent from commercial auto, 22 percent from commercial casualty and 12 percent from commercial property, QBE said. The purchase includes Praetorian Insurance Co., Redland Insurance Co. and Praetorian Specialty Insurance Co.

QBE?s stock closed 5 cents higher to a record A$26.30. The shares have risen 34 percent this year, outpacing a 29 percent gain by the seven-member S&P/ASX 200 Insurance Index.

Shares of Hannover Re rose 1, or three percent, to 34.11 at 12.30 p.m. in Frankfurt, valuing the Hanover, Germany- based reinsurer at 4.1 billion ($5.4 billion).

?Hannover Re exited at a good price and will be looking to re-deploy this capital within its life and non-life division,? Bear Stearns & Co. analyst William Allen wrote in a research note. Hannover Re?s ?appetite for seeking acquisitions on the life side is well known.? He has a ?peer perform? rating on the shares.

Hannover Re in March transferred its continued US specialty insurance business to newly founded Praetorian from its Clarendon Insurance Group unit. Specialty insurance includes art insurance, health insurance for pets and policies for high-risk drivers.

?The specialty insurance business has been disappointing in the past so the concentration on Hannover Re?s main reinsurance business is the right move,? said Lucio Di Geronimo, an analyst at HVB Group with a ?neutral? rating on Hannover Re?s shares.

?The sale will free up enough capital to allow them to underwrite up to 1.5 billion euros in additional premiums in more profitable reinsurance,? di Geronimo said.

Hannover Re expects to compensate the earnings reduction following the Praetorian sale ?easily,? chief executive Officer Wilhelm Zeller said on a conference call. The disposal will reduce net income by 20 million to 40 million euros when the sale closes as expected in the second quarter of 2007, Zeller added.