Global insurance and reinsurance group QBE, headquartered in Australia, saw a strong increase in reinsurance recoveries in the first half of the year, helping to offset the high number of claims related to natural disasters and bad weather for society.
QBE reported A$2.14 billion in reinsurance income and other recoveries for the half-year, which is not a true reinsurance-only benefit, but is the closest figure reported.
It is significantly higher than the A$901 million reported for the prior year period, as events such as the severe flooding in Australia earlier this year resulted in large recoveries under reinsurance agreements, it seems.
QBE Group Chief Financial Officer Inder Singh said “QBE’s underwriting performance remained resilient in the first half of 2022, despite economic uncertainty, rising inflation, geopolitical tensions and record storms and floods. in Australia”.
Australia’s east coast storms and floods added 9.8% to net catastrophe loss costs, while overall net losses reported for the first half were A$454 million, or 6.3% of net premiums earned, down from the previous year.
But the main reason for the decline appears to have been reinsurance, as gross claims would have been much higher year-over-year, the data showed.
$75 million of these disaster claims are related to the conflict in Ukraine and without them, the cats’ net burden would have actually been under budget, QBE’s chief financial officer said this morning.
During the first half of the year, in addition to benefiting from reinsurance, QBE also used it to further reduce risk, particularly catastrophe risk in the United States.
CEO Andrew Horton said “additional reinsurance and initiatives to reduce the risk of exposure to property catastrophes have helped reduce portfolio volatility.”
The increasing use of reinsurance, which we saw when QBE renewed in January this year, has also resulted in much higher reinsurance costs.
QBE said its reinsurance expenses rose 33% to $1.868 billion from $1.409 billion a year earlier.
QBE now aims to reduce its exposure to US coastal winds this year by more than 30%, which will also be supported by the use of reinsurance, as well as underwriting actions.
In Australia, severe storms and flooding pushed the net catastrophe loss ratio to 9.8% for the first half of 2022, up from 8.2% in prior years, even after support from the reinsurance.
Fellow Australian insurer Suncorp also reported high reinsurance recoveries this week.