QBE is sticking to its full-year earnings guidance even as the business anticipates first-half catastrophe cost will take a hit from the North American convective storm events in June. 

In a first-half trading update the insurer says the storms have led to “additional pressure on catastrophe costs” beyond those outlined on May 12. 

As a result the business has revised its net catastrophe costs for the January-June period to $US700 million ($1.03 billion). In the May update the insurer had an allowance of $US535 million. 

Its first-half result is also expected to include another $US40 million ($58 million) in crop adverse development as well as previously flagged catastrophe costs of $US140 million ($205 million) from 2022 events. 

Following the first-half cat cost revision, QBE has adjusted its 2022 catastrophe budget to $US1.33 billion ($1.97 billion). QBE previously set an allowance of $US1.175 billion ($1.75 billion). 

Group-wide premium rate increases of about 10% are expected for the first-half and second quarter while first-half gross written premium (GWP) and net insurance revenue of $US12.8 billion ($19 billion) and $US7.9 billion ($11.7 billion) are anticipated. 

GWP on a constant currency basis is still expected to grow 10% for the full year and group combined operating ratio of 94.5% is anticipated. 

“Combined operating ratio outlook now includes a revised FY23 catastrophe budget of $US1.33 billion, and continues to exclude the upfront impact from the reserve transaction announced in February,” QBE says in the update.