Government and central bank responses to the COVID-19 pandemic have eased claim pressure risks even as the global economic outlook remains uncertain, QBE CEO Pat Regan says.

“The speed and resolve with which governments and central banks responded to the health and economic challenges around the globe provide comfort that the more adverse scenarios we thought possible earlier in the year look increasingly less likely,” he says.

In trade credit insurance, QBE has reduced policy limits, while stimulus packages have kept money flowing in the SME sector and governments in the UK, France, Germany and The Netherlands are stepping in with trade credit backstops.

QBE has estimated COVID-19 impacts of $US600 million ($838 million), including $US335 million ($468 million) contained in its first-half result.

Lenders mortgage insurance is another exposure area being monitored, while the company says it is confident its policy wordings mostly exclude virus impacts in business interruption, and reinsurance will limit any losses. Test case outcomes of industry wordings are awaited in Australia and the UK.

Mr Regan says the group recognises the need for the industry to work together to evolve products and services that can better respond to events such as the coronavirus pandemic in the future.

“We will also work with our partners, regulators and governments in this regard,” he says in the half-year report.

QBE slumped to a first-half net loss of $US712 million ($994 million), compared to a net profit a year earlier of $US463 million ($648 million) amid impacts from the virus and natural catastrophes.

The result included a pre-tax investment loss of $US90 million ($125.9 million), down from a previous $US755 million ($1.1 billion) profit.

Gross written premium (GWP) rose to $US8.01 billion ($11.21 billion) from $US7.64 billion ($10.69 billion) a year earlier, while the combined operating ratio deteriorated to 103.4% from 95.2%.

Mr Regan says pricing momentum has been driven by the US and international markets, while gains in Australia were muted by SME assistance decisions to hold rates steady in some areas.

Second-quarter premium rate growth of 10.2% was the highest group-wide increase since the aftermath of the September 11, 2001 attacks in the US.

“Looking forward, I certainly expect the pricing environment to remain supportive for the rest of 2020 and at this point well into 2021,” Mr Regan said.

Sydney-based Moody’s Financial Institutions Group Vice President Frank Mirenzi says QBE’s premium price increases and a lower attritional claims ratio point to underlying business improvement.

“High levels of capital and lower financial leverage also reflect a strong balance sheet able to counter potential further claims volatility,” he said.

S&P Global Ratings says QBE’s half-year result shows “green shoots emerging” across underlying operations.

“Swift repositioning as well as subsequent market rebounds moderated the earnings impact of market volatility on the group’s investment portfolio,” it said.

AM Best affirmed its credit ratings for the group following the results announcement, noting that a focus on rate adequacy and improving market conditions could contribute positively to technical performance over the coming years.