© Reuters. FILE PHOTO: The QBE Insurance logo is seen on an office building in Melbourne February 28, 2011. REUTERS/Mick Tsikas

(Reuters) – Australia’s QBE Insurance Group Ltd said on Friday costs associated with catastrophic claims for the four months of 2023 had reached nearly 90% of the allowances it had set aside for the first-half, dragging its shares nearly 9%.

QBE, the country’s biggest insurer by market capitalisation, said net cost of catastrophe claims was around $480 million at the end of April, compared with the $535 million it had set aside for the first-half catastrophe allowances.

QBE said it experienced “elevated” catastrophe activity through the beginning of the year, underscored by cyclones and flooding events in New Zealand, as well as storms in North America and Australia.

The insurer added it was topping up last year’s reserves for adverse developments by $130 million, citing complexities and delays in receiving claims from natural catastrophe events that occurred late last year.

As a result of these increasing costs, QBE hiked its annual combined operating ratio target to around 94.5%, up from earlier target of around 93.5%. Combined operating ratio is the sum of ratios of claims, commissions and expenses incurred.

“While this mostly relates to particular events rather than underlying operating performance, this is nonetheless disappointing especially as industry loss estimates for some of these events seem to have been stable,” analysts at Citi said in a research note.

Shares of the insurer plunged as much as 8.8% to A$13.820, their worst intraday drop since Feb. 18, and clocked their fourth straight session in red. The stock was also the second-biggest loser on the benchmark index.

The rising claims costs eclipsed a strong start to the fiscal year, with gross written premium (GWP) clocking an 11% growth in the first quarter, prompting the insurer to hike its annual GWP forecast to around 10% growth from prior view of mid-to-high single digit growth.

Last year, QBE recorded GWP of $20 billion.

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