QBE Re to increase US property catastrophe underwriting

QBE Re plans to increase its presence in US catastrophe reinsurance in the January 1 renewal season with a focus on peak-zone wind and earthquake. 

In a blog on QBE’s website, Bermuda-based executive director, global property Andy Richardson said the reinsurer was “setting a course to adjust our historically deliberate underweight position in the US reinsurance market”.

“Our core focus is on peak-zone wind and earthquake, although that’s not to say we won’t contemplate other types of coverage or accommodate our core cedant needs where we can,” Richardson said. 

He noted that secondary perils continued to rise and drove 80% of the $58 billion in worldwide natural catastrophe insured losses in the first half of 2024. 

“Catastrophe excess of loss reinsurance wasn’t typically designed to cover significant losses from more localised events such as hailstorms and tornadoes,” he sad. “What we have seen in recent times has been the attritional erosion of reinsurer earnings and the underperformance of the cat product more generally as a consequence of these risks being transferred on the scale they have been.  

“Investment in the modelling and understanding of secondary perils has really only recently begun to catch up with that of hurricane and earthquake.  At QBE Re, we always build a bespoke view of risk for each cedant, which means where we do decide to take on secondary peril exposure we are able to articulate and quantify the price accurately.”

 He added: “Above all else, our approach to growth will be informed by our desire for more meaningful relationships with a focused number of cedants whose underwriting discipline is aligned with ours.  Our cedant partners are now comprised of large nationwide carriers, super-regional and select large regional buyers. Where possible we will look to trade with people we can support across multiple lines of business.”

“In the lead-up to 1.1, the property reinsurance market feels healthy and positive and there is every indication at this stage that ample retro capacity will be available to support it,” he said. “Having said that, we are lucky to be part of a strongly capitalized group, and so are less dependent on the retro market capacity cycle than others, creating a smoother glide path to deliver on our ambitions over the long term.”

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