QBE to Non-Renew $500M of North American Mid-Market Biz

QBE announced that it will start shutting down the middle-market segment in North America to focus on North American businesses where it has more meaningful market position, relevance and scale.

Three core businesses remain—Specialty, Crop and Commercial—and the actions on mid-market “will have no incremental impact on appetite or strategy” on those core businesses, QBE said.

The decision to commence an orderly closure of the middle-market business came after an extensive strategic review of the business, which represented about $0.5 billion in fiscal year 2023 and had experienced performance challenges over the last several years, QBE said in a market update statement today.

QBE will record a restructuring charge of roughly $100 million (pretax) in 2024 to account for associated costs.

QBE expects to begin reducing gross written premiums—in accordance with applicable state regulations—in FY2024 but the bulk of the action will take place in FY2025.

(Editor’s Note: QBE’s U.S. middle-market business has been subject to past reviews over the course of a decade under different leadership teams. Related articles: QBE 2013 Loss as Expected; U.S. Mid-Market Biz Under Microscope: CEO; QBE Confirms Strategic Review of U.S. Mid-Market Biz; PCI Recap: QBE NA CEO Sets Record Straight on Middle-Market Biz )

In the same statement, QBE also provided an update on the performance of its overall business for the first half of 2024, noting that the global insurance group expects to record just over $13 billion in gross written premium and a combined operating ratio of about 93.5.

Impacting the result are:

Catastrophe costs of about $0.5 billion for the first five months of 2024 (relative to the first-half 2024 catastrophe budget of $609 million).
A modest but undisclosed amount of prior-year development.
Total investment income in the five months of $643 million.

Cat events included in the cat cost total included U.S. convective storms, the Dubai floods and an initial estimate of $175-$225 million to account for QBE’s net exposure to the ongoing civil unrest in New Caledonia.

Source: QBE