QBE Insurance Group (ASX:QBE) could outperform expectations on catastrophe (CAT) losses in the second half of 2024, following a relatively mild November and December, according to a Monday report from The Australian, citing investment and financial services firm UBS.

Despite facing potential losses of up to AU$65 million from the California bushfires, QBE's overall CAT allowance for the year remains well-positioned to absorb the impact, the report said.

The insurance provider had about AU$810 million in written premiums in California in 2023, with nearly AU$70 million of this exposed to the bushfires that have ravaged parts of the state, UBS Analyst Kiren Chidgey noted.

However, Chidgey pointed out that this projected loss is well below QBE's AU$450 million maximum event retention, providing the insurer with considerable financial flexibility.

Chidgey also emphasized that the estimated AU$65 million loss would account for only about 5% of QBE's catastrophe budget for fiscal year 2025, which stands at AU$1.33 billion.

As a result, UBS sees ample headroom for QBE to manage the remaining catastrophe losses for the first half of 2025.

Shares of the company fell nearly 2% at market close.

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)