QBE able to ‘meaningfully reduce’ cat reinsurance retentions at Jan 1 renewal

Australian insurance carrier QBE secured “meaningfully” lower retentions for its catastrophe reinsurance programmes at the January 2025 renewal, driven by recent exposure reductions and improved portfolio quality.

Alongside its full year 2024 results, the global insurer and reinsurer has provided an update on the outcome of its recent reinsurance renewal.

The firm’s main catastrophe reinsurance retention has come down by $100 million year-on-year to $300 million, which QBE attributes to recent portfolio optimisation initiatives.

For the U.S., the retention has reduced from the $350 million secured at the 1.1 2024 renewal to $300 million for 2025.

For Australia, QBE’s reinsurance retention stands at $260 million for 2025, down from $325 million last year.

Lastly, for the rest of the world coverage, the retention has fallen to $135 million for 2025 compared with $250 million for 2024.

The company states that outside of the lower retentions, the 2025 reinsurance programme remains broadly consistent with the prior year.

“Having exited greater than $1B in underperforming property premium, the shape and quality of our portfolio has improved considerably. Benefiting from reduced exposure to perils in North America and Australia, catastrophe experience was again favourable relative to allowance in 2024,” said QBE.

Adding: “Our progress was further validated by our reinsurance partners through the 2025 renewal, where we have been able to meaningfully reduce catastrophe retentions on account of recent exposure reductions and improved portfolio quality.”

For 2025, QBE’s catastrophe allowance is set at $1.16 billion. The probability sufficiency remains ~80th percentile, which the firm explains is consistent with last year.

Most of the reduction in the catastrophe allowance for 2025 versus 2024 relates to the firm exiting non-core property business.

“”As if” analysis highlights the 2025 allowance would have proven adequate in 8 out of the last 10 years. This analysis overlays the 2025 reinsurance program against QBE’s historic catastrophe claims experience (adjusted for inflation and business exits),” said the firm.

In January, QBE returned to the catastrophe bond market for the first time since 2013 with the $250 million Bridge Street Re Ltd. (Series 2025-1), providing the firm with collateralized retrocession for coverage across peak North American perils.

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