By Ryan Hewlett

Feb 21 - (The Insurer) - QBE was able to “meaningfully” lower retentions across its catastrophe reinsurance programs at the January 2025 renewal, which the (re)insurer attributed to recent exposure reductions and improved portfolio quality.

ASX-listed QBE disclosed on Friday that the retention on its main catastrophe excess of loss (XoL) cover had reduced from $400 million to $300 million for North American, Australian and New Zealand events.

For rest-of-world events the retention has dropped to $200 million, with QBE noting that the rest of the reinsurance tower remains “broadly consistent” with 2024.

The 2025 program features a first layer of $1.6 billion xs $300 million. Above this sits a second layer totalling $900 million xs $1.9 billion for North American, Australian and New Zealand events and $900 million xs $200mn for rest-of-world events.

QBE made the disclosure alongside the release of its full-year 2024 results which saw the carrier post an improved combined ratio of 93.1% and a 3% rise in GWP to $22.4bn.

“Our progress was further validated by our reinsurance partners through the 2025 renewal, where we have been able to meaningfully reduce catastrophe retentions on account of recent exposure reductions and improved portfolio quality,” it said.

The (re)insurer disclosed that headline reinsurance expenses decreased to $3.97 billion from $4.23 billion in the prior year.

Group catastrophe and risk cover was broadly in line with the prior year, reflecting modest cost increases on parts of the program, which were mitigated by non-core property exits and the new Australian cyclone pool.

It also noted that crop reinsurance costs reduced compared to 2023, reflecting lower premium for the year and reduced external quota share reinsurance.

Reinsurance expenses included a charge of around $40 million, reflecting the upfront cost of the $1.6 billion reserve transaction completed in October 2024.

Inder Singh, group CFO told analysts on Friday that while the carrier’s key catastrophe and risk covers for 2025 remain fairly consistent, QBE was “pleasingly”, able to reduce the attachment point of its main cat cover.

“Our ability to reduce this for 2025 speaks to our substantial reduction in cat exposure in recent years, particularly in the US and in Australia, and the overall improvement in the quality of the cat exposure that we write.

“We've spoken to you at length about our portfolio remediation actions, and it's pleasing to have this progress validated by our reinsurance partners. This means our catastrophe retentions were reduced by over 50 million for peak perils.”

Singh added: “Taking all this into consideration, we have set our catastrophe allowance for 2025 at $1.16 billion. The reduction in the absolute cat allowance from $1.28 billion is explained in large part by the runoff of non-core lines which carried meaningful cat budgets.”