QBE has recorded a surge in profits but drawn the ire of shareholders who believe it has failed to act on climate change risks as unusual weather ravaged its North American operation.
Although QBE’s revenue dropped 1 per cent, profits after tax surged 41 per cent off the back of the sale of its insurance operations in Indonesia and the Philippines, wool and livestock-in-transit businesses in Australia, and the Unigard Indemnity entity in North America. But the company has flagged severe climate volatility ahead.
“Globally, the economic costs from natural disasters have now exceeded the 30‑year average for seven of the last 10 years, while the number of extreme weather events globally has tripled since the 1980s,” group chief executive Pat Regan wrote in the company’s annual report.
QBE’s underwriting of crops in North America was hit particularly hard when an “abnormally wet spring” led to crops being planted much later in the season and an “unusually cold and hail affected end to the growing season” led to lower yields.
But while QBE has announced its intention to divest from thermal coal by 2030, the insurer’s continued underwriting of fossil fuel extraction – including tar sands and unconventional gases – has drawn fierce criticism from pressure group Market Forces, which has announced it will file a shareholder resolution in an attempt to force QBE to divest from fossil fuels completely.
“QBE can’t be taken seriously on climate unless it phases out its support for all fossil fuels,” said Market Forces campaigner Pablo Brait.
“The insurance industry’s very existence is under threat due to the impacts of the climate crisis. Profits are being smashed and premiums are becoming unaffordable across vast swathes of Australia.”
According to Market Forces, the net cost of catastrophe claims in QBE’s APAC business increased significantly to US$193 million – 5.4 per cent of net earned premium – compared with US$106 million for the previous year. And that doesn’t include the costs from bushfires and hailstorms in January, or floods in February.
“It makes no sense for QBE to be underwriting the industries most responsible for fuelling natural disasters,” Mr Brait said.
“It’s not only unethical but bad for business. Shareholders are asking QBE to act in their interest and phase out oil and gas exposure.”
QBE declined to comment on the proposed resolution.