QBE expects a first half loss of $US750 million ($1.1 billion) including COVID-19 pandemic and natural disaster impacts and has warned on continuing virus-related claims.

“The pandemic has, or is expected to, adversely impact multiple lines of business,” QBE says in a statement to the Australian Securities Exchange today.

Those include property (business interruption), reinsurance, workers’ compensation, directors’ and officers’, accident and health, trade credit, lenders’ mortgage insurance (LMI) and landlords’ insurance.

“While the landscape remains highly uncertain, at this stage QBE currently estimates total COVID-19 related costs to be around $US600 million ($847 million) pre-tax,” QBE said.

That figure includes about $US265 million ($374 million) of potential further net claims that could emerge over the next 12-18 months, mainly in trade credit and LMI.

QBE will provide full details on its half-year financial results on August 13 but today flagged impacts from coronavirus claims and expenses, natural catastrophes, and an expected net investment loss of around $US125 million ($176 million) due to extreme market volatility.

The six-month combined operating ratio will be around 104%, while excluding coronavirus effects the ratio is around 98%.

The COVID-19 first-half underwriting impacts of $US335 million ($473 million) comprise $US150 million ($212 million) of net incurred claims, $US115 million ($162 million) of extra risk margin, $US50 million ($70 million) in premium concessions and reinsurance reinstatement costs and $US20 million ($28 million) of expenses including motor premium refunds.

Amid the volatile conditions, premium pricing has continued to harden. Renewal rates increases averaged 8.7%, compared with 4.7% in the year-earlier period, and gross written premium rose around 10%, adjusted for currency and asset sales.

QBE says its capital position remains strong when measured against regulatory and rating agency requirements and it has considerable further flexibility on its capital structure.

“Despite the impact of COVID-19, I am encouraged by the strong underlying trends evident in the result," CEO Pat Regan said.

“Notwithstanding significant uncertainty surrounding the enduring impact of the COVID-19 pandemic, our greatly strengthened capital base positions us well to capitalise on accelerating pricing momentum and emerging organic growth opportunities.”

Australia’s extreme summer of natural catastrophes and industry-wide loss creep related to Hurricane Irma, which hit the US in 2018, has also affected the group’s numbers.

Catastrophe claims increased to $US310 million ($438 million) from $US180 million ($2 million) a year earlier, exceeding the $US250 million ($353 million) allowance.