Forecasts & Results
QBE Syndicate 386: 2020 and 2021 Year of Account Forecasts
Posted 08/08/2022 – Forecasts & Results
QBE has released updated forecasts for the 2020 and 2021 years of account for syndicate 386.
Syndicate 386
The 2020 forecast has worsened to between +0.2% and +5.2% of capacity, midpoint +2.7%. The previous forecast range was between +8.1% and +13.1%, midpoint +10.6%.
The 2021 forecast has worsened to between +11.1% and +16.1% of capacity, midpoint +13.6%. The previous forecast range was between 11.4% and +16.4%, midpoint +13.9%.
Alpha comment
The revised forecast for the 2020 year of account is undoubtedly disappointing. QBE has cited a poor investment return and a deterioration on prior year claims as roughly equal reasons for the decline. Whilst 386 is not the only syndicate that has downgraded its investment income forecast, the continued poor performance on prior years is concerning. The forecasting process at the syndicate appears to be driven by actuarial and accounting processes, rather than the normal methodology that we see from most syndicates. We are in contact with QBE to attempt to understand its forecasting and reserving methodology.
Although the 2021 forecast has fractionally worsened due to a reduced investment income forecast, slightly offset by an expectation of higher underwriting returns, the mid-point has remained steady since the initial forecast unlike the 2020 year. However, given the volatility in the syndicate’s recent forecasts, we await further updates over the coming quarters with some scepticism, although the QBE management has suggested that, given the current strength of the premium rates, that the 2021 and subsequent years of account should be less affected by the volatility that we have seen recently.
