QBE rebounds to a $441m first-half result as Covid impact fades

QBE has bounced back to a profit thanks to high premiums and new business as the listed insurer reaped the benefits of a booming crop market and a slackening of the impact of the pandemic.

The group delivered a $441m profit for the first half, compared to the net loss of $712m in the prior corresponding period.

Adjusted cash profit was $463m. QBE declared an interim dividend of 11c a share, up from 4c.

It said the rebound came on the back of a turnaround in both underwriting and investment returns.

Critically, QBE paid out less than it brought in.

The group’s operating ratio of 93.3 per cent compared favourably with the 103.4 per cent in the prior period.

Moves to set aside significant funds to cover potential Covid-19 and adverse prior accident claims seriously affected QBE in the period.

Gross written premiums also surged, up 20 per cent, as the insurer wrote new business and added coverage to existing customers.

Increases in business in QBE’s crop line was particularly strong, up 48 per cent due to a significant increase in corn and soybean prices. But even excluding the crop line, gross written premium was up 14 per cent.

Premium rates are also up markedly, rising 9.7 per cent compared with the first half, when prices rose 8.7 per cent.

QBE also noted the end of its “pandemic-related pricing relief initiatives” put in place in 2020.

Catastrophe claims for the half came in at $462m or 7 per cent of net earned premium, a significant jump from $308m or 5.5 per cent of net earned premium in the prior period.

Catastrophe costs were driven by massive winter storms that hit Texas, as well as wild weather and flooding in Australia.

QBE fared better than fellow listed insurer IAG, which delivered $427m loss for the year, with $742m in natural peril claims dragging it down.

QBE also faces potential payouts for Covid-19 claims but interim chief executive officer Richard Pryce said he was confident they would be below the $130m ceiling set by the insurer.

QBE is still awaiting the outcome of court action in Australia which may see the company forced to pay insured customers seeking to make claims for interruption caused by the pandemic.