QBE reinsurance has ‘pleasing’ H1 2019 ‘especially with the cat exposure’

QBE’s reinsurance business had a “pleasing” first half year, especially with the cat exposure, according to Jonathan Parry, chief underwriting officer of reinsurance at the firm.

QBE Group results for the first six months of 2019 showed a 29 percent rise in net profit after tax, reaching $479 million, as well as a combined operating ratio that improved to 95.2 percent from 95.8 percent for H1 2018.

The company restructured its reinsurance business in January 2019 into a “simpler, more sustainable and conventional reinsurance structure”, chief executive officer Pat Regan said.

Specifically on the reinsurance business, Parry told Monte Carlo Today: “The next few months will determine how the overall result pans out. We had a pleasing first half of the year; there was a little bit of Jebi creep but not as significant as some others had.”

Looking ahead to 2020, he said: “We’re keeping a very close eye on terms and conditions in the original insurance market, and it looks as though they are going in the right direction.

“Particularly in the US, E&S property is getting a significant improvement in rates. As reinsurers we set our own terms but if our clients are getting better pricing and better original terms and conditions that will benefit all of us, including reinsurers, and we can piggyback on that.

“We’re seeing improving market conditions. AIG has been vociferous in what they’ve been doing and helping improve market conditions, and we are following that very closely,” said Parry.

“With the Lloyd’s Decile 10 (the London Market’s tough stance on the bottom-performing 10 percent of each syndicate’s portfolio), we’re seeing a significant improvement in terms, in marine, in some aspects of US casualty, professional lines in particular. Auto results have been awful so the T&Cs have improved significantly.

“Whether it’s enough we haven’t yet determined but all these areas are where we are keeping a watching brief, where potentially we’ll open our shoulders if we believe that there is enough margin at the pricing going forward,” he concluded.