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QBE on course to meet earnings target

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QBE is confident of achieving a combined operating ratio of 94.5-96.5% for the year, despite Australia’s costly summer of natural disasters.

Improved pricing conditions and a mild catastrophe season in North America have offset the financial impact of the Townsville floods, NSW hailstorms and other events.

“As a result, our overall catastrophe experience for the group, for the quarter, is broadly in line with expectations,’ CEO Pat Regan told last week’s annual general meeting.

He says the insurer remains “well on track” to meet its combined operating ratio goal and an investment return of 3-3.5% based on first-quarter performance.

Premium rates gained about 4% in the quarter, excluding the compulsory third party market, with Australia and New Zealand leading the way at 6%.

Rates in North America were up almost 5% for the first quarter.

QBE made a $US390 million ($557 million) net profit last year after incurring a $US1.2 billion ($1.7 billion) loss in 2017.

Mr Regan told shareholders to “expect a big repeat of what worked well for us in 2018” as the insurer looks to stick with a winning formula. “This will mean a continued focus on performance management and investment in our Brilliant Basics program.”

The program aims to improve underwriting quality, pricing and claims handling in every QBE market and product.

One surprise at the AGM was the rejection of a resolution to set a fossil fuel reduction target.

Nearly 92% of proxy votes went against the resolution, lodged by climate change campaign group Market Forces and Australian Ethical Investment.

A shareholder resolution on the matter was not required because most shareholders – 97.7% – voted against proposed amendments to the company’s constitution that would have allowed the item to be raised during the meeting.

The resolution called on the insurer to disclose short, medium and long-term targets to reduce investment and underwriting exposure to coal, oil and gas assets. The targets would have to meet the Paris climate goals and be published annually.

Market Forces campaigner Pablo Brait says the group “will keep making the case for QBE to reduce its exposure” to non-renewables.

In March QBE announced an energy policy that will see it withdraw from coal-related business when next financial year starts.

The insurer is also aiming for zero direct investment in the thermal coal industry by July 1. It expects to have phased out all underwriting business with thermal coal customers, except for statutory or compulsory insurance, by January 1 2030.