Australian insurer QBE, in its latest performance update, has revealed that gross written premium (GWP) growth in the nine months to September 30th was 2% on the prior period, on both a reported and constant currency basis.
The insurer explains that this continued growth was driven by group-wide renewal premium rate increases of 5.9%, while ex-rate growth was 2% due to the impact of non-core portfolio exits.
Excluding portfolio exits, group GWP increased by 5%, and group-wide renewal premium rate increases were 4.9% in the period. This was marginally lower than the first half as renewals for North America and internationally tend to have a greater first-half bias toward classes where claims inflation remains more elevated, including property and accident, and health, notes QBE.
Following an active hurricane season and several secondary perils over recent months, catastrophe claims have surpassed, once again, the $100 billion mark for the industry.
Against this backdrop, the insurer’s catastrophe experience through the second half of the year is tracking broadly in line with expectations, with the net cost of catastrophe claims in the four months to October being approximately $425 million, relative to the H2’24 catastrophe allowance of $671 million.
For FY24, QBE has estimated cat losses of around $950 million, against a cat allowance of $1.28 billion. So, while the catastrophe experience in 2024 has been elevated, losses are within budget for QBE.
The insurer has confirmed that exposure to Hurricanes Milton and Helene was notably lower than historic experience, given recent portfolio exits and optimisation initiatives. The firm added, “Despite the heavy bias of global catastrophe costs toward North America in 2024, performance for QBE’s North America division (and non-core segment within) is tracking in line with expectations.”
Based on currently available data, North America Crop is expected to report a FY’24 combined operating ratio of ~94%, inclusive of some modest favourable prior-year development.
In the period, QBE also saw favourable investment performance underpinned by excellent results in both fixed-income and risk-asset portfolios. Although interest rates moderated through Q3, they have since rebounded and the core fixed income yield remains particularly supportive at around 4.4% currently.
The total investment FUM for Q3’24 was $33.4 billion, increasing from $30.5 billion in H1’24, with risk assets accounting for ~13% of the portfolio. The recently announced $1.6 billion reserve transaction was completed in October, which will reduce both claims reserves and investment FUM in 4Q24.
QBE continues to expect a FY’24 group constant currency GWP growth of around 3%, inclusive of a roughly $600 million headwind from exited portfolios, slightly higher than the $550 million expected at the H1’24 result, as the North America middle-market run-off continues to track ahead of expectations.
The FY’24 group combined operating ratio of around 93.5% is based on the assumption that catastrophe experience tracks in line with the H2’24 catastrophe allowance, and Crop is broadly in line with expectations.
