QBE to close its North America middle-market segment

Decision follows an extensive strategic review

QBE to close its North America middle-market segment

Insurance News

By Terry Gangcuangco

QBE Insurance Group has decided to proceed with an orderly closure of its North America middle-market segment after conducting what the insurer described as an “extensive” strategic review.

It was noted that the impacted segment, which accounted for approximately $500 million of gross written premium in 2023, has faced performance difficulties over several years.

By closing the middle-market segment, QBE aims to sharpen its focus on business areas with stronger market positions, relevance, and scale within North America.

The closure, meanwhile, will not affect QBE’s strategy or appetite for its three main North American businesses: specialty, crop, and commercial.

QBE said it will start non-renewing middle-market policies in line with state regulations. This will result in a reduction of GWP beginning in 2024, with more significant declines anticipated in the next year.

To cover the costs related to the closure, a restructuring charge of approximately $100 million before tax will be recorded in this year’s results.

The impact on QBE’s group combined operating ratio for 2024 is expected to be minimal.

Half-year performance forecast

Ahead of the release of its earnings report for the first half, QBE is anticipating GWP to be around $13.1 billion, reflecting a constant currency growth of about 3% compared to the previous period.

Net insurance revenue is expected to be approximately $8.4 billion.

Catastrophe costs for the insurance group in the first five months of 2024 are estimated at roughly $500 million, against a half-year budget of $609 million.

The projection includes the impact of US convective storms, Dubai floods, and an initial estimate of $175 million to $225 million for QBE’s net exposure to civil unrest in New Caledonia.

Based on the preliminary view of its first-half results, QBE expects a group combined operating ratio of around 93.5% for the year.

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