Australian insurer and reinsurer, QBE Insurance Group Limited, indicated an adverse development of $130 million on natural catastrophe events which primarily occurred in late 2022, including winter storm Elliot in North America and certain Australian events.
As a result of these increasing costs, QBE hiked its FY23 plan Group combined operating ratio target to around 94.5%, up from earlier target of around 93.5%.
Due to the timing and complexity of the events, particularly for winter storm Elliot, few claims were received and assessed prior to FY22 reporting, the re/insurer noted. QBE has strengthened reserves by $130 million for these events, QBE added.
The re/insurer has reported gross written premium (GWP) growth of 11% in the first quarter of 2023, with group-wide renewal rate increases averaged 10.0%.
These figures were supported by a re-acceleration across property classes, and higher rate increases for QBE Re.
The re/insurer hiked its GWP growth outlook for fiscal 2023 after a “strong start” to the year for premium growth and on expected increases in premium rates.
QBE now expects a growth of around 10% to its constant currency GWP in fiscal 2023, up from its prior forecast of mid-to-high single digit growth.
QBE said net cost of catastrophe claims was around $480 million at April-end, compared with the $535 million it had set aside for the first-half catastrophe allowances.
The re/insurer said it experienced “elevated” catastrophe activity through the beginning of 2023, underscored by cyclones and flooding events in New Zealand, alongside a series of storms in North America and Australia.
QBE currently estimates that Crop gross written premium will be around $4 billion in FY23, with net earned premium of around $1.4 billion.
“Flooding in the eastern states of Australia through early 2022 was one of the largest Australian catastrophes on record.The Insurance Council of Australia in April this year said insurance customers have lodged more than 240,000 claims totalling $5.81 billion as a result of the floods, making it the costliest extreme weather event in Australian history,” said QBE Group Chairman Michael Wilkins.
“On account of the stronger than expected start to the year, and expectation that rating will remain firm for the foreseeable future, we have raised our FY23 growth outlook,” said QBE Group CEO Andrew Horton.
Additionally, QBE made progress in repositioning its investment portfolio over the quarter, with risk assets representing 11% of total investment funds under management (FUM) at 31 March 2023.
Total investment FUM was $29.1 billion, up from $28.2 billion at FY22. In 2Q23 FUM will be negatively impacted by about $1.9 billion from the reserve transaction announced in February, QBE said. Core fixed income remains 89% of total investments.
The gradual reduction in risk free rates through the quarter resulted in unrealised gains on fixed interest securities of $78 million, which was offset by a negative claims liability discount impact of about $100 million, QBE added.
