QBE says gross written premium grew strongly in the first quarter, while catastrophe costs for the calendar year so far have been driven by US wildfires, Ex-Cyclone Alfred, flooding and storms. 

GWP increased 8% on a constant currency basis and the insurer continues to target full-year growth around the mid single digits, amid a drag from exits in North American non-core lines.

It has reiterated a combined operating ratio target of about 92.5%.

“Strong premium growth has continued as market conditions generally remain supportive, while underwriting performance has remained resilient in light of a challenging quarter for catastrophes,” group CEO Andrew Horton told the annual general meeting in Sydney today.

First-quarter premium rate growth slowed to 3.4% from 3.9% in the fourth quarter and 6.9% in the previous corresponding period, while international and North American momentum drove “ex-rate growth” of 7%.

The net cost of catastrophe claims for the four months ending April was about $US420 million ($654 million), relative to a first-half allowance of $US549 million ($855 million).

The company has been monitoring global trade developments in the early part of the year.

“At present, we expect any underwriting risks associated with initial trade disruption should be limited,” Mr Horton said. “Over the near-term, the proactive management of any emerging inflationary pressures will be our primary focus.”

QBE has reported net investment income of about $US350 million ($545 million) for the quarter. Mr Horton said while financial market volatility increased markedly last month, the portfolio has shown resilience and is conservatively positioned.

The insurer has adjusted its six strategic priorities by introducing “customer” as one of the pillars, while making “culture” part of its business-as-usual approach. The other five priorities remain portfolio optimisation, sustainable growth, bringing the enterprise together, modernising, and people.

Mr Horton said the change marks a deliberate shift towards a more customer-centric approach to designing products, delivering services and shaping the distribution strategy.

“Too often in our industry, the voice of the customer hasn’t been front and centre. We see this as a real opportunity, and a positive change for QBE to work more closely with our broker partners to better understand, engage with and serve our customers.”

Chairman Mike Wilkins told the meeting QBE does not see a significant near-term impact on its lenders’ mortgage insurance operation from Labor’s election pledge to expand a government-backed scheme helping first home buyers access loans with a 5% deposit.

LMI is an important component of the QBE business and the company has undertaken modelling on potential changes, Mr Wilkins said in response to a question.

“Depending on the uptake, there could be some loss of revenue, but if you look at the way in which some of the lending criteria of the banks we insure has changed over time, that revenue has come down anyway,” he said.

Mr Wilkins said QBE continues to support LMI as a good long-term product that enables customers with slightly reduced risk profiles to get home loans.

“We don’t see in the short to medium term that there’s going to be a significant effect on that, but obviously we are watching and we’ll update our modelling as we need to,” he said.

Mr Wilkins, questioned on climate change issues, defended the company’s underwriting of oil and gas projects.

“The suggestion that we go cold turkey and stop underwriting oil and gas, frankly, is not a sensible suggestion,” he said. “We believe that gas in particular is an essential transition fuel and what we need to do is sensibly support those customers [that] are looking to get to a greener future.”

The sustainable energies unit continues to underwrite alternative sources, including hydrogen, ammonia, solar, fixed and floating wind power, and carbon capture and sequestration, he said.