Australian headquartered global insurance and reinsurance group QBE saw a steep increase in reinsurance recoveries in the first-half of the year, which helped to offset elevated natural catastrophe and severe weather claims for the company.
QBE has reported AU $2.14 billion of reinsurance and other recoveries revenue for the half-year, which is not a true reinsurance only benefit, but is the closest figure reported.
It’s significantly higher than the AU $901 million reported for the prior year period, as events such as the severe flooding in Australia earlier this year drove large recoveries under reinsurance arrangements, it seems.
QBE’s Group Chief Financial Officer, Inder Singh, said that, “QBE’s underwriting performance remained resilient in the first half of 2022, despite economic uncertainty, higher inflation, geopolitical tensions and record storm and flood events in Australia.”
The east coast Australia storms and floods added 9.8% of net catastrophe claims costs, while overall net catastrophe claims reported for the first half were AU $454 million, or 6.3% of net earned premium, which was down on the prior year.
But the main reason for that decline seems to have been reinsurance, as gross claims would have been far higher year-on-year, the data suggests.
$75 million of those catastrophe claims are related to the conflict in Ukraine and without those the net cat burden would actually have been below budget, QBE’s CFO said this morning.
During the first-half of the year, as well as benefiting from reinsurance, QBE has also been using it to de-risk further, especially from US catastrophe risks.
CEO Andrew Horton said that, “Additional reinsurance and initiatives to de-risk property catastrophe exposure have helped reduce portfolio volatility.”
The increasing use of reinsurance, which we saw at QBE’s January renewal this year, has driven much higher reinsurance costs as well.
QBE reported that its reinsurance expense rose 33% to $1.868 billion, up from $1.409 billion in the prior year period.
QBE now aims to reduce its US coastal wind exposure this year by more than 30%, which will also be supported through use of reinsurance, as well as underwriting actions.
In Australia, the severe storms and flooding elevated the net catastrophe claims ratio to 9.8% for H1 2022, up from the prior years 8.2%, even after reinsurance support.