Insurer QBE says the cost of catastrophes and natural disasters so far in 2024 is tracking in line with expectations, despite a wave of cyclones, bushfires and extreme weather events battering parts of Australia and North America.
In the four months to the end of April, it said the net cost of catastrophe claims stood at about $US300 million ($453m), which accounts for just under half of its first-half allowance of $US609m.
“Catastrophe costs were underscored by a number of storm events, predominantly in Australia and North America,” the company said in a first-quarter trading update released on Friday to coincide with its annual general meeting.
It also reported it had seen a “modest” level of catastrophe development from the previous year, mainly related to European weather events which included hail damage in Italy in the September quarter.
The insurance giant said there had been a contraction in premiums, excluding rate increases, which was attributed to lower — and more volatile — crop premiums and property portfolio exits in North America and Australia.
Like many other Australian insurers, QBE has also pushed through double-digit premium increases which has put further strain on household budgets already stretched by the cost of living and higher home loan rates that in most cases have added more than $1000 a month to the average mortgage.
QBE premiums across the country rose 11 per cent in the quarter — the lowest level over the past year, and down from 13.9 per cent in the December quarter — but customer retention slipped to 76 per cent. Group-wide premiums rose 7.3 per cent, with a retention rate of 81 per cent.
Growth in gross written premium grew 2 per cent across the insurer’s 27 global markets. Excluding crop, group gross written premium growth was 9 per cent.
Chief executive Andrew Horton told shareholders at the AGM that the company had enjoyed a good start to 2024.
“Markets remain supportive, with continued momentum in gross written premium, while underwriting performance is tracking to plan,” he said.
“We continue to expect constant currency group gross written premium growth in the mid-single digits this year.
“Through the first quarter, gross written premium growth was 2 per cent on both a reported and constant currency basis. This was supported by group-wide renewal rate increases of 7.3 per cent, which are tracking in line with expectations.”
Mr Horton also noted solid investment returns for the quarter for its $US30.3 billion portfolio, underscored by supportive interest rates alongside favourable returns in its risk asset portfolio. Total investment income came in at just over $US400m for the three-month period.
Looking ahead, QBE said it expects gross written premium growth in the mid-single digits for the full year, with premium rate increases expected to remain supportive.