Forecasts & Results

QBE Syndicate 386: 2020 and 2021 Year of Account Forecasts

Posted 07/11/2022 – Quick takes

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 -6.6% and -1.6%, midpoint -4.1%. The previous forecast range was between +0.2% and +5.2% of capacity, midpoint +2.7%.

The 2021 forecast has improved to between +12.7% and +17.7% of capacity, midpoint +15.2%. The previous forecast range was between 11.1% and +16.1%,  midpoint +13.6%.

Alpha comment

We are extremely frustrated that the forecast for the 2020 year of account has deteriorated further. A loss now looks likely on a year which 15 months ago was forecast to produce a profit of +21.3%. Half of the deterioration stems from investment losses with the other half coming from the professional indemnity (PI) and international accounts. Whilst this is not the only syndicate to downgrade its investment income the deterioration on the underwriting is extremely concerning. We are engaging with QBE to understand further the deterioration and will keep members informed accordingly. The syndicate’s result has, in most years, improved in the final quarter before closure, with the 2019 year of account moving from a -1.1% midpoint loss to a +8.8% profit, which suggests there is some scope for this year to improve before close.

The forecast for the 2021 year of account has improved this quarter, having worsened last quarter. This year of account is not following the same pattern as the 2020 year of account, although the midpoint of the forecast is now the same as it was for the 2020 year of account at this stage of development, and will benefit from the extensive portfolio remediation the syndicate undertook on the International and PI accounts, as well as an improving rating environment across all subclasses. Therefore, we are hopeful that this year of account will produce a better result than 2020, but given the volatility in the syndicate’s forecasting, this is not a foregone conclusion.

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