(Reuters) — Australia’s QBE Insurance Group Ltd. said on Friday that costs associated with catastrophic claims through April had reached nearly 90% of the allowances it had set aside for the first half of the year, sending its shares down nearly 9%.
QBE, the nation’s largest insurer by market capitalization, said the net cost of catastrophe claims was about $480 million at the end of April, compared with the $535 million it had set aside for catastrophe claims in the first half of the year.
QBE said it experienced “elevated” disaster activity at the start of the year, highlighted by cyclones and flooding events in New Zealand, as well as storms in North America and Australia.
The insurer added that it topped up last year̵7;s negative performance reserves by $130 million, citing complexity and delays in receiving claims from natural disasters that occurred late last year.
As a result of these increasing costs, QBE raised its annual target combined operating ratio to approximately 94.5%, up from a previous target of approximately 93.5%.
Shares in the insurer fell as much as 8.8% to A$13,820, their worst intraday fall since February 18, and clocked their fourth straight session in the red. The stock was also the second biggest loser on the ASX 200 benchmark index.
Rising claims costs overshadowed a strong start to the financial year, with gross written premiums (GWP) rising 11% in the first quarter, prompting the insurer to raise its annual GWP forecast to around 10% growth from its previous outlook to high single-digit growth.
Last year, QBE listed GWP at $20 billion.