QBE Insurance (ASX:QBE) share price on watch following UK COVID-19 court ruling

The QBE Insurance Group Ltd (ASX:QBE) share price is on watch today after an unfavourable COVID-19 court ruling in the UK…

| More on:
digital stock graph against backdrop of world map and covid bugs

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The QBE Insurance Group Ltd (ASX: QBE) share price is not climbing higher with the market today.

In morning trade the insurance giant's shares are trading flat at $9.28 following the release of an announcement.

What did QBE announce?

This morning QBE provided an update on its UK operations and the impact that a ruling by the High Court of England and Wales will have on its business.

According to the release, the High Court of England and Wales has handed down its decision in the test case commenced by the UK Financial Conduct Authority (FCA) in June 2020.

This test case was undertaken to resolve legal issues concerning the interpretation of common business interruption policy wordings.

This includes some policy wordings of QBE's UK operations, in the context of whether those policy wordings respond to COVID-19 and related government mandated nationwide lockdowns.

The company advised that the Court ruled in favour of QBE with respect to two out of three of its notifiable disease policy wordings examined and in favour of insurers with respect to denial of access policy wordings.

However, the Court ruled in favour of the insured with respect to one of QBE's notifiable disease policy wordings. This means that some of QBE policyholders are entitled to claim an insurance payout for business losses suffered when the UK went into lockdown between March and June because of COVID-19.

QBE is considering its options to appeal that decision.

What is the damage?

QBE estimates that its UK business interruption claims exposure is around $170 million before allowing for recoveries under its catastrophe reinsurance protections.

However, it believes that catastrophe reinsurance will limit the net cost of business interruption claims in its UK insurance business to $70 million. This already formed part of the $335 million net cost of COVID-19 allowed for in its recent half year results.

The company advised that it has the opportunity to apply to the Court for permission to appeal some or all of the ruling, with a decision expected to be then made in October.

And while it acknowledges that the estimated gross cost to QBE could increase or decrease, the net cost is not expected to vary.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

Two brokers analysing stocks.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

Woman and man calculating a dividend yield.
Opinions

Buy or bail? Fundie's verdict on 2 ASX 300 shares

Stuart Bromley of Medallion Financial Group provides his insights.

Read more »

A man analyses stockmarket graph on his computer.
Share Market News

US stocks vs. ASX shares in FY25

Would you be surprised to learn that ASX tech shares rose faster than US tech stocks by almost 2:1?

Read more »

A smiling businessman in the city looks at his phone and punches the air in celebration of good news.
Share Gainers

Why ARB, Cleanaway, Hub24, and RPMGlobal shares are storming higher today

These shares are ending the week with a bang. But why?

Read more »

a man weraing a suit sits nervously at his laptop computer biting into his clenched hand with nerves, and perhaps fear.
Share Fallers

Why Evolution Mining, G8 Education, Lottery Corp, and Lynas shares are tumbling today

These shares are ending the week in the red. But why?

Read more »

A businessman lights up the fifth star in a lineup, indicating positive share price for a top performer
Broker Notes

Bell Potter names more of the best ASX 200 stocks to buy in July

These stocks could be best buys this month according to the broker.

Read more »

A man has a surprised and relieved expression on his face. as he raises his hands up to his face in response to the high fluctuations in the Galileo share price today
Broker Notes

Macquarie tips 55% upside for this ASX mining stock

Let's see what the broker is saying about this stock.

Read more »

Five people in an office high five each other.
Technology Shares

5 best performing ASX 200 tech shares of FY25

Some of the technology sector's biggest names led the charge in share price growth last financial year.

Read more »