Mud just won't stick to QBE

This continues QBE's run of luck when it comes to writing risks against global catastrophes. The insurance giant also avoided the full impact of a string of costly disasters this year ranging from earthquakes in South America to freak hailstorms across Australia.

QBE famously emerged as just one of a few global insurers to sidestep the full exposure to Hurricane Katrina, which hit the US gulf states in 2005, even though it had a substantial American commercial property book.

This year QBE has set aside $1.3 billion for payouts linked to large risk and catastrophe events, but it has spent only a third of this on claims despite this year shaping up as one of the most costly for the global insurance industry.

Hurricane Katrina ranks as one of the most expensive insurance events, resulting in payouts of more than $US41 billion ($49 billion).

While QBE provides insurance cover for oil rigs, it has told investors it had significant reinsurance protection in place for any claims relating to the disaster. This suggests QBE's liabilities to the spill - if any - will be capped given that global reinsurers would be picking up the tab for outstanding claims.

The Deepwater spill in the gulf is one of America's largest offshore spills. Since the blowout of the well on April 20, BP has struggled to contain the oil gushing into the gulf.

BP is self-insured against the accident, but it is locked in a legal battle over payouts from insurance cover held by the Deepwater rig operator Transocean. QBE is one of the 36 insurance syndicates that provide cover on the rig.

Analysts have estimated that the total insured losses from the disaster could reach more than $US3 billion, although some have forecast the final bill could run to double-digit figures.

Coming on the heels of IAG warning of a $425 million one-off charge related to rising claims in the British car insurance market, QBE said it had enough funds set aside to cover payouts.

British insurers have been paying out more on car accidents because of what the industry terms "claim-farming" - lawyers acting on a no-win-no-fee basis. This has led to more litigation and inflated injury payouts.

At the end of April, QBE named the Deepwater Horizon disaster as one of several that it had accounted for so far this year. They also include the Haiti earthquake, wind storms in Europe, the earthquake in Chile and savage hail storms in Melbourne and Perth.

Despite the mounting payouts, QBE said it still had $810 million in funds to cover further losses.

The spill is already causing substantial corporate damage for BP, the operator of the Deepwater Horizon oil rig.

BP has lost a third of its value, equivalent to $75 billion, since the explosion in late April, due to uncertainties about its exposure to the clean-up and what the potential compensation will amount to.

In London there is mounting speculation that BP could emerge as a takeover target or at least that it could be forced to seek merger talks with its European rival, Royal Dutch Shell.

June 3, 2010

Insured losses from Gulf of Mexico oil rig expected to be $US1.5 billion. QBE tells

investors reinsurance protection is in place.

April 28, 2010

Haiti earthquake, European windstorm, Chile earthquake, Melbourne hailstorm, oil rig loss, Iceland volcano travel claims. QBE tells investors claims are within

signifi cant allowance.

September 17, 2008

QBE has immaterial reinsurance exposure to US insurance giant AIG. Also reports no direct investment exposure to Lehman Brothers.

September 6, 2005

Insurance industry losses from Hurricane Katrina total $US41 billion. QBE tells investors its exposure is within allowance for large losses.

September 29, 2004

Insurance industry losses from four US hurricanes, including Hurricane Ivan, $US28 billion. QBE tells investors exposure is within allowance for losses.

December 20, 2004

QBE reports no material exposure to Asian tsunami. Tells investors expected claims

are within allowances for large losses.

September 28, 2001

Global insurance World Trade Centre losses total about $3.4 billion. QBE exposure is

$250 million.

September 13, 2001

QBE has $US2 million exposure to American Airlines airbus crash in New York.