Home / Corporate / QBE looks to revival after full-year loss
22 February 2021
QBE Group says improvements in the business and further market strength give it confidence for the year ahead as it seeks to rebound from a $US1.52 billion ($2 billion) loss.
“My primary focus remains performance improvement including that the group takes full advantage of currently favourable market conditions by maximising premium rate increases while driving targeted growth in portfolios and regions offering the most profitable new business opportunities,” Interim Group CEO Richard Pryce said on Friday.
The result, flagged in December, was impacted by a high level of catastrophe activity, COVID-19, a slump in investment income, impairment of goodwill and deferred tax assets in North America and IT charges.
The combined operating ratio deteriorated to 104.2% from $97.5%. Excluding COVID-19 impacts it deteriorated to 98.6% from 97.5% due to catastrophes and adverse prior year claim development, mainly in North America.
Gross written premium (GWP) rose 10% to $US14.64 billion ($18.86 billion) last year on a constant currency basis and adjusted for disposals.
Mr Pryce says rate gains have been led by northern hemisphere markets and premiums are likely to remain strong, even with some tapering off in the extent of gains.
“It is easier to point to the causes of the hardening cycle than it is to predict its duration but rates are expected to keep increasing for at least the remainder of 2021,” he told a results briefing.
Mr Pryce, who shelved retirement plans to take over as interim CEO after the departure of Pat Regan in September, says he is continuing with the cell review and “brilliant basics” programs to improve performance and will provide more details on QBE’s technology modernisation at the interim results.
But he confirmed he does not intend to lead the company on a permanent basis, with the board “progressing well” with the search for a new CEO.
QBE did not provide financial targets for the current year “given the considerable uncertainty as a result of the pandemic and its lingering impact on the global economy”.
S&P Global Ratings says capital and hybrid raising by QBE last year more than compensates for the full-year loss and capital adequacy remains strong.
“On an ongoing basis, we expect earnings to benefit from continued rate strengthening and improvements in attritional claims, supported by reinsurance covers,” it said.
The company released an updated Environmental and Social risk Framework with the results, saying it will stop insuring new tar sands projects from 2022.
Activist group Market Forces says it falls short on climate change action required to meet Paris Agreement objectives and a shareholder resolution on the issue will be lodged in coming weeks.
QBE is “kicking the can down the road” in allowing business as usual in other oil and gas underwriting and investing until 2030, campaigner Pablo Brait says.
“All companies undertaking or planning new oil and gas projects or expansions must be refused insurance, as their activities are not consistent with keeping global warming below 1.5 degrees,” Mr Brait said.