QBE Insurance Group Focuses on Improving Returns and Portfolio Quality

QBE Insurance Group has announced its plan to reduce its exposure to property in its catastrophe-affected North American business. The insurer aims to improve returns and enhance the quality of its portfolio.

Financial Performance

In the first half of the year, QBE reported a net profit of $400 million, a significant increase compared to $48 million the previous year. However, this fell short of consensus expectations. The company’s first-half combined operating ratio, which measures underwriting profitability, worsened to 98.8%. This was mainly due to the impact of catastrophe costs arising from events in New Zealand and storm activities in North America.

Strategic Focus

While QBE acknowledges that its core business in North America is in better shape than before, Chief Executive Andrew Horton emphasized the importance of reducing catastrophe exposure in the division. He stated that their primary focus is on rebalancing the portfolio and negotiating favorable terms and rates to achieve profitability. The goal is to drive the North American business to where they want it to be, with a combined operating ratio of less than 95%.

A Closer Look at the North American Business

To achieve its goals, QBE plans to concentrate on its U.S.-based crop, specialty, and commercial business. Of particular concern is the mid-market business within the commercial sector, which is currently overexposed to property. The insurer is undertaking a review and expects changes in underwriting practices. Consequently, QBE’s property portfolio in the mid-market is expected to shrink.

In summary, QBE Insurance Group is actively working towards reducing its exposure to property in its North American business. By focusing on improving returns and portfolio quality, the company aims to achieve greater profitability and drive its North American business forward.

Property Exposure and the Growth of Cyber Insurance

QBE, one of the leading property and casualty insurers, is reassessing its property exposure due to the increased risk from natural catastrophes. The company aims to reduce such exposure in order to protect itself in the event of a calamity.

At the same time, QBE recognizes the immense potential for growth in the cyber insurance market. With its current cyber book valued at approximately $150 million, QBE believes that this figure could rise significantly in the future. Despite the United States being the largest purchaser of cyber insurance globally, there are still many individuals and businesses that do not have coverage. This presents a tremendous opportunity for insurers to tap into this untapped market.

However, QBE emphasizes the importance of consistency when it comes to offering cyber insurance alongside property and casualty coverage. Consistency in pricing, claims management, and addressing the issue of aggregation are key factors to consider. Insuring every individual or business with vulnerability to cyber threats poses a significant risk, as a massive loss due to a single event could severely impact the insurer. Therefore, QBE aims to approach its cyber insurance portfolio on a global level rather than dividing it into regional segments.

Currently, QBE operates three cyber businesses – one in the United States, one in the international market, and one in Australia Pacific. Going forward, QBE plans to grow its cyber insurance offering carefully and thoughtfully. The company aims to provide comprehensive coverage while mitigating potential risks.

Overall, QBE is committed to reevaluating its property exposure while capitalizing on the enormous growth opportunity in cyber insurance. By applying a global approach and ensuring consistency across its cyber insurance offerings, QBE aims to position itself as a leader in this evolving market.