QBE has locked in a favourable new reinsurance program for the next three financial years, starting this year.

The new arrangements will be about 9% of net earned premiums for catastrophe claims above $US5 million ($4.9 million).

“Overall our reinsurance expense is expected to be about 12% of gross earned premium based on the expected portfolio mix for 2011,” Group CEO Frank O’Halloran said this morning.

“This ratio compared with 15.4% in 2010. The worldwide covers are expected to reduce the cost of annual reinsurance protections by close to $US300 million ($296 million), with an estimated improvement of 0.5% in the combined operating ratio.”

Mr O’Halloran says QBE has locked in 82% of its reinsurance with still 18% to buy in the 2012 and 2013 financial years.

“We don’t have some of the same issues [when it comes to reinsurance] as some of the others [large Australian insurers],” he said.

“A number of reinsurers are considering their strategy for Australia and NZ primarily because of the significant amount of losses that have occurred in the marketplace in the last two to two-and-a-half years.

“It’s been a pretty torrid time for them.”