QBE Insurance warns of $750m loss due to pandemic and natural disaster impacts
Major insurance provider QBE Insurance has warned the impacts of COVID-19 will push its interim loss to nearly $750 million.
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Major insurance provider QBE has warned of a $750 million interim loss directly related to the financial inflictions caused by COVID-19 and last summer’s heightened season of natural disasters.
In a statement to the Australian Stock Exchange on Wednesday, QBE said the coronavirus pandemic would cost the group $335 million for the six months ending June 30.
Its COVID-19 impairment charge includes $150 million attributed to net incurred claims, $115 million related to the additional risk induced by the pandemic, $50 million incurred from premium concessions and reinsurance reinstatements and $20 million set aside for other expenses including vehicle premium refunds.
QBE said the pandemic was expected to adversely impact multiple divisions of its business, including lenders’ mortgage insurance, accident and health cover, landlords’ insurance and personal vehicle insurance.
It also said significant natural disaster claims would push the catastrophe bill to around $60 million, and prior accident year claims would cost a further $120 million.
“While the landscape remains highly uncertain, at this stage QBE currently estimates total COVID-19 related costs to be around $600m pre-tax,” the company said in its update.
“This includes approximately $265 million of potential further net claims that could emerge over the next 12 to 18 months.”
QBE expects the pandemic will affect primarily its trade credit and lenders’ mortgage insurance businesses but did note life, health and landlords’ insurance would be adversely impacted throughout the period.
QBE chief executive Pat Regan said the group’s capital remained strong with a liquidity position of $1.5 billion.
“Despite the impact of COVID-19, I am encouraged by the strong underlying trends evident in the result,” he said.
“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.”
QBE said improvement in its attritional claims ratio in combination with a reduction in large individual claims was able to partly offset the large increase in catastrophe claim caused by last summer’s widespread bushfires and significant hail and storm damage across the east coast of Australia.
Originally published as QBE Insurance warns of $750m loss due to pandemic and natural disaster impacts