The QBE Insurance Group Ltd (ASX: QBE) share price has edged higher after an early announcement today. The Aussie insurer has now finalised the renewal of its 2021 reinsurance program effective 1 January 2021.
At the time of writing, the QBE share price is up 0.23% at $8.58.
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Why is the QBE share price on the move?
QBE told the market the 2021 reinsurance program was placed in line with expectations, at terms "slightly better" than allowed for in its planning.
Reinsurance is when an insurer purchases insurance from others to reduce risk in the event of large claims. It helps to reduce risk in the event of catastrophes where many claims may arise from the same event.
QBE has increased its main catastrophe tower to $3.4 billion, up from $3.3 billion in calendar year 2020. North America peak catastrophe retention is $200 million, down from an initial $400 million in 2020 which was reduced to $150 million due to coronavirus.
QBE's US and Australian non-peak catastrophe retention increased to $175 million, up from $125 million in 2020. Retention for other non-peak perils remains unchanged from 2020 at $100 million.
QBE said the increase in catastrophe aggregate attachment reflected exposure growth, increased US and Australian non-peak retentions and recent industry-wide catastrophe frequency.
Foolish takeaway
The finalisation of the reinsurance program for the year has been well-received with the QBE share price climbing higher, despite broader softness in the S&P/ASX 200 Index (ASX: XJO). Shares in the Aussie insurer are now trading with a dividend yield of 3.6% per annum with a $12.7 billion market capitalisation.
After this morning's update, the QBE share price is now trading slightly higher than where it started the year.
Aussie insurers have started the week strongly with QBE not alone in climbing higher. The Insurance Australia Group Ltd (ASX: IAG) share price has jumped 2.74% higher to $4.88 per share at the time of writing. Similarly, shares in Suncorp Group Ltd (ASX: SUN) are up 1.27% to $10.39 per share.
