QBE braces for $750m H1 loss as COVID-19 takes toll on multiple lines

Re/insurer QBE has said that the global COVID-19 pandemic has "adversely impacted multiple lines of business" with losses reaching approximately $335 million in the first half of 2020.

The group expects to report a H1 2020 net statutory loss after-tax of around $750 million, primarily reflecting the impact of COVID-19, catastrophe experience and prior accident year claims development combined with a net investment loss of around $125 million as a result of extreme investment market volatility.

The Australian insurer has stated that multiple lines of business have been impacted, including property (business interruption), reinsurance, workers’ compensation, casualty (including D&O), accident & health (A&H), trade credit, lenders’ mortgage insurance (LMI) and landlords’ insurance.

The insurer currently estimates total COVID-19 related costs to be around $600 million pre-tax, including roughly $265 million of potential further net claims that could emerge over the next 12-18 months, primarily in trade credit and LMI, but also in casualty (including D&O), A&H, landlords’ insurance and other classes.

The H1 2020 COVID-19 underwriting impact of around $335 million includes nearly $150 million of net incurred claims, $115 million of additional risk margin related to the uncertainty, $50 million of premium concessions and reinsurance reinstatement costs and $20 million of expenses including motor vehicle premium refunds.

The group expects to report a H1 2020 combined operating ratio of around 104 percent, reflecting the impact of COVID-19, adverse catastrophe experience of around $60 million and adverse prior accident year claims development of around $120 million.

QBE Group CEO, Pat Regan, said: “Despite the impact of COVID-19, I am encouraged by the strong underlying trends evident in the result. Notwithstanding significant uncertainty surrounding the enduring impact of the COVID-19 pandemic, our greatly strengthened capital base positions us well to capitalise on accelerating pricing momentum and emerging organic growth opportunities.”

“The safety and wellbeing of customers and our people remains a key priority and this is especially so during these unprecedented times. We are supporting customers through various initiatives including premium refunds, premium deferrals, extending credit and counselling services to vulnerable customers and accelerating claims payments.”