19 August 2015 Insurance

QBE profits jump despite high cat claims

Australian insurer QBE reported a jump in profits for the first half of 2015, despite experiencing an increased number of catastrophe claims stemming from Australia and the Pacific, partly thanks to its reinsurance protection.

The insurer’s profits hiked 24 percent to $488 million in the first half of 2015, compared with $392 million in the first half of 2014.

Its enhanced aggregate cover took on $213 million of losses in the first half of 2015, with a jump in catastrophe claims (gross of aggregate recoveries) to $419 million, compared with $273 million in the same period of the prior year.

Gross of the $213 million of recoveries against QBE’s aggregate reinsurance protections, the total cost of large individual risk and catastrophe claims increased to $765 million or 12.3 percent of net earned premium, compared with $704 million or 10.3 percent in the first half of 2014.

QBE’s gross written premiums (GWP) increased 3 percent to $8.6 billion in the first half of 2015, compared with $8.3 billion in the first half of 2014, while its combined ratio improved to 95.3 percent in the period, compared with 96.5 percent in the first half of 2014.

John Neal, QBE group chief executive officer, said: “QBE’s 2015 interim result demonstrates improvement in all key metrics despite more challenging market conditions, increased catastrophe activity and substantial foreign exchange headwinds.

“While the gross cost of catastrophe claims increased by around $150 million driven by the worst series of weather events in Australia since 2011, the impact was mitigated by our enhanced aggregate reinsurance protection.

“While our commitment to exit non-core businesses has temporarily impacted premium income, these initiatives have significantly strengthened our balance sheet and materially reshaped profitability.”

He added: “With remediation initiatives largely behind us, it is time to turn our attention to growth. Following recent executive appointments, we now have the platform, strategy, resources, leadership and cost management discipline required to drive profitable growth.”

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