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QBE puts year-to-date net cat cost at $334 million

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QBE Insurance Group says the massive flooding in the Hawkesbury-Nepean River region and parts of Queensland, deep winter freeze in the US state of Texas and other natural disasters have led to a net catastrophe cost of $US260 million ($334 million) so far this year.

The $US260 million figure is above the group’s first quarter allowance of around $US180 million ($231 million) and the $US230 million ($296 million) of catastrophe claims incurred in the first quarter of last year, Chairman Mike Wilkins told shareholders in an address at last week’s AGM.

“[WA] was also recently impacted by Cyclone Seroja with widespread property damage and power outages,” Mr Wilkins said. “Despite the adverse catastrophe outcome, the group’s overall first quarter combined operating ratio is in line with expectations.

“Our position with respect to the net ultimate cost of COVID-19 remains unchanged.”

Mr Wilkins says the $US1.52 billion ($1.95 billion) headline loss reported last year is “disappointing” but stresses the group’s underlying performance continues to exhibit “strength and resilience”.

The strong market conditions from last year show no signs of abating, with the business achieving an 8.9% rise in premium rate in the first quarter, Mr Wilkins said. In the corresponding quarter of last year, pricing rose 7.3%.

“Each of our divisions achieved premium rate increases in line with expectations and stronger than the increases recorded in the prior corresponding period, including 10.2% in North America, 9.1% in International and 7.5% in Australia Pacific,” Mr Wilkins said.

“The top-line has improved meaningfully with headline [gross written premium] increasing 28% compared with the first quarter of 2020 or 23% on a constant currency basis.”

Mr Wilkins in his address also touched on climate change as well as diversity and inclusion.

He reiterated the insurer is pushing ahead with the “orderly transition” of its business towards goals set by the Paris Agreement.

“Make no mistake, the board acknowledges that climate change is a material risk for QBE,” Mr Wilkins said. “We are proud of our commitment towards addressing this and the progress we have made.”

He says from January 1 next year for existing clients who derive at least 30% of their revenues from oil sands and Arctic drilling, the insurer will only provide insurance if they are on a pathway “consistent” with achieving the carbon emission reduction targets as set by the Paris accord.

Similar underwriting criteria will apply from January 2030 for companies with 60% or more revenue from oil and gas extraction.

At the AGM the majority of shareholders again rejected a resolution demanding the business set fossil fuel exposure reduction targets.

The resolution, promoted by shareholder Australian Ethical and requisitioned by a group of other investors, is similar to the one last year that was also voted down by shareholders.

QBE had urged shareholders not to back the resolution.

On diversity and inclusion, Mr Wilkins says the business is now aiming to have 40% of its leadership roles filled by women.

“We came close to achieving our goal of having 35% women in leadership by 2020 with 34.8% and we achieved our target of having 30% women on the group board,” Mr Wilkins said. “However, we know there is more to do and have since developed a new target of having 40% women in leadership and on the Group Board by 2025.”