Primary insurer QBE has raised its FY 2023 catastrophe budget to around $1.33 billion as the firm reports an elevated net cost of catastrophes of roughly $700 million for H1 2023.
In a recent H1 2023 results updated, the insurer highlights additional pressure on catastrophe costs following the series of North American convective storms through the second half of June.
As a result of the expected net cost of $700 million from catastrophe events in the period, for FY 2023, QBE has increased its catastrophe budget to $1.33 billion from the $1.175 billion at the end of Q1 2023.
However, despite these losses, growth has persisted with the insurer reporting constant currency gross written premium growth of around 13%.
Group-wide premium rate increases are projected to be approximately 10% in both H1 2023 and Q2 2023. The gross written premium and net insurance revenue for H1 2023 are expected to be around $12.8 billion and approximately $7.9 billion, respectively.
Additionally, the H1 result is expected to include adverse central estimate development, including previously flagged catastrophe costs from 2022 events of $140 million, in addition to crop adverse development of around $40 million,
Further, the half-year investment income is expected to be approximately $660 million, including a $50 million approximate benefit from changes in credit spreads.
The company adds that the H1 result is also expected to include an adverse net impact from asset liability management activities of around $30 million. This represents a ~$200 million impact from higher risk-free rates on core fixed-income assets, partially offset by a favourable claims liability impact of around $170 million.
QBE warns that the combined operating ratio for H1 2023 includes the previously flagged upfront cost of around $100 million linked to the reserve transaction.
Looking forward, QBE still expects to achieve gross written premium growth of around 10% in FY 2023, with a group combined operating ratio of 94.5%.