Australian insurer and reinsurer, QBE Insurance Group Limited, has reported its financial results for the first quarter of 2022, while also commenting on its potential exposure to the conflict between Russia and Ukraine.
The company experienced 19% growth in gross written premiums over Q1, with group-wide renewal rate increases averaging 7.9%.
These figures were supported by growth in in segments such as Crop and QBE Re where gross written premium is heavily weighted to the first quarter.
QBE currently estimates that Crop gross written premium will total $3.3 billion this year, a significant increase from the $2.7 billion recorded in 2021.
At this increased size, QBE has placed an external quota share on the 2022 underwriting year to manage net retention, and Crop net earned premium is expected to be $1.3 billion to $1.4 billion in 2022.
Elevated catastrophe experience continued in Q1 2022, including widespread flooding and storms across the east coast of Australia and Storm Eunice in the UK and Europe, although QBE says natural catastrophe claims for the quarter were in line with its quarterly allowance.
QBE currently expects to have some exposure to the broader Russia/Ukraine conflict across a number of lines such as political violence, political risk and aviation.
While it acknowledged that the situation remains dynamic, it sees potential net impact at around $75M, which will ultimately be reported in catastrophe costs.
“Despite a number of natural catastrophes and significant geopolitical events, positive momentum experienced through FY21 continued into 1Q22, and I was pleased with QBE’s resilience through what was a turbulent operating environment,” said QBE Group CEO Andrew Horton.
“We have had a strong start to the year for gross written premium growth and will review FY22 outlook at the half-year result following the key mid-year renewal period,” he continued.
“As discussed at the recent 2021 result, our strategy centred around resilience and consistency should result in the business being capable of delivering a consistent low to mid90s combined ratio. Based on our current view, in FY22 we continue to expect a Group combined operating ratio that demonstrates improvement on the FY21 exit combined operating ratio of ~94%.”
QBE has also entered into a transaction to reinsure legacy North American Excess and Surplus (E&S) lines prior accident year liabilities, which will reduce the Group’s exposure to further reserve volatility in this run-off portfolio, and is currently expected to adversely impact QBE’s FY22 underwriting result by approximately $50 million.
Additionally, QBE made progress in repositioning its investment portfolio over the quarter, with risk assets representing 9% of total investment assets at 31 March 2022.
