Home / Daily / QBE looks to improvement after $2 billion loss
19 February 2021
QBE Group says it's well placed to take advantage of a stronger market to pursue targeted growth and improve its performance in the wake of a $US1.52 billion ($2 billion) loss.
Interim CEO Richard Pryce says “while obviously very disappointed” with the headline loss, the company enters the current year with confidence and optimism and with pricing momentum.
“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 today.
QBE flagged the size of the loss in December, with details today confirming impacts from the underwriting result, 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.
Mr Pryce says he is reinvigorating and evolving the firm’s cell review and brilliant basics programs, introduced by predecessor Pat Regan, as he looks to maximise “rare” market conditions to drive margin expansion in portfolios and regions offering the most profitable opportunities.
“We don’t view it’s a market where you just write anything that moves. We are still going to be careful and selective and frankly QBE has made too many mistakes in the past by pushing growth in the wrong place,” he said today.
Mr Pryce, who shelved retirement plans to take over as interim CEO after the departure of Mr Regan in September, said he would provide more details on QBE’s technology modernisation at the interim results, but confirmed he was not planning to continue leading the company.
“I have made it clear that I am not considering the role permanently,” he said. “My understanding is the board is progressing well with the search for a new CEO.”
Gross written premium (GWP) rose 10% to $US14.64 billion ($18.86 billion) last year on a constant currency basis and adjusted for disposals.
Premium gains were driven by the northern hemisphere, and strong pricing is expected to continue, with a likely flattening out of the pace of gains in some areas.
Catastrophe claims were $US688 million ($886 million), up from $US426 million ($549 million) in the prior year and $US134 million ($172 million) above allowance. Major impact came from Australian bushfires, hail and storms, coupled with US wildfires and a record number of Atlantic hurricanes.
QBE’s total COVID-19 allowance remains at $US785 million ($1 billion), after the company raised the figure in January following a UK Supreme Court test case decision on business interruption cover which substantially went against insurers.
Mr Pryce said the company had decided not to provide results targets for the current year “given the considerably uncertainty as a result of the pandemic and its lingering impact on the global economy”.
QBE did not declare a final dividend due to the “substantial” loss, but said subject to global economic conditions not deteriorating materially it expected to resume payments with the interim result.