QBE has provided an update on its recent trading performance, reaffirming its outlook for FY24. Here are the key highlights:
Trading Performance:
- Gross Written Premium (GWP) Growth: For the nine months to 30 September, GWP grew by 2% compared to the prior year, on both reported and constant currency bases. This growth was driven by a 5.9% increase in Group-wide renewal premium rates, though there was a 2% decline in ex-rate growth due to non-core portfolio exits. Excluding these portfolio exits, GWP growth increased by 5%, or 9% when excluding Crop.
- Renewal Premium Rates: Renewal premium rate increases were 4.9% in Q3 2024, slightly lower than in the first half of the year, particularly due to classes in North America and International with higher claims inflation, such as property and accident & health. Overall, rates continue to track at or above inflation in most classes.
Underwriting Performance:
- Catastrophe Claims: QBE noted that the 2024 industry insured losses are expected to be significant, surpassing $100 billion. QBE’s net catastrophe claims for the four months to October were approximately $425 million, tracking in line with the 2H24 catastrophe allowance of $671 million. Despite the significant global catastrophe costs, particularly in North America, QBE’s North American division is performing as expected.
- North America Crop: The FY24 combined operating ratio for the Crop division is expected to be around 94%, with yields not as favorable as pre-harvest expectations, but still strong enough to offset the impact of lower commodity prices.
Investment Performance:
- QBE experienced favorable investment performance in Q3 2024, driven by solid returns in both fixed income and risk asset portfolios. The core fixed income yield remains supportive at approximately 4.4%. Risk asset performance was strong across enhanced fixed income and equities. As of Q3 2024, total investment Funds Under Management (FUM) stood at $33.4 billion, up from $30.5 billion at 1H24, with risk assets accounting for 13% of the portfolio.
Outlook for FY24:
QBE continues to expect:
- Group GWP Growth: Around 3% in constant currency, inclusive of a ~$600 million headwind from exited portfolios, which is slightly higher than the $550 million headwind expected at 1H24. The North America middle-market run-off is tracking ahead of expectations.
- Combined Operating Ratio: QBE expects the Group’s combined operating ratio for FY24 to be approximately 93.5%, assuming that catastrophe claims remain in line with the 2H24 allowance and Crop performance stays broadly in line with expectations.
In summary, QBE is on track to meet its full-year targets, supported by steady growth in premiums, strong underwriting performance despite the challenging catastrophe environment, and favorable investment results.
