QBE is well placed to deliver more consistent growth and reduced volatility following remediation work that contributed to a 21% earnings jump last year, group CEO Andrew Horton says.  

Net profit grew to $US2.157 billion ($3.053 billion) for the calendar year and the combined operating ratio beat guidance with an improvement to 91.9% from 93.1% in 2024.

Mr Horton says a favourable crop result and global catastrophe costs falling below allowance were supported by work to improve the group portfolio in recent years.  

“That’s why I think we’ve beaten guidance and also why we feel more confident about achieving reasonable growth and good margin going forwards – all the remediation work we’ve been doing over the past four years,” he told insuranceNEWS.com.au. “We like the portfolio we have.”  

Remediation has included leaving some unprofitable areas, including announcing in 2024 that QBE would exit the North American middle market and focus on specialty, crop and commercial business in that region.

GWP last year was $US23.959 billion ($33.913 billion), up 7% on a reported basis and 8% excluding exited portfolios.  

Gains mostly reflected volumes in the North American and international divisions. Excluding rate increases, Australia Pacific was broadly flat.

Catastrophe claim net costs fell to $US751 million ($1.06 billion), against a $US1.16 billion ($1.64 billion) allowance, despite Australia outsripping expectations after events including Cyclone Alfred.

Equity analyst Jefferies says it views QBE’s catastrophe experience as reflecting more conservative reserve settings, rather than an absence of events.

“With meaningful activity in North America and Australia, QBE has managed its exposures well,” it said.

“As such, QBE’s cat experience is structural, supported by internal settings, rather than cyclical in nature.”

S&P Global Ratings expects sold growth across the global insurance portfolio and says “prudent capital management” will help QBE maintain strong results this year and beyond.

“The result reflected the group’s good geographic diversification, with solid contributions and improved performance across all divisions.”

Morningstar says the result was better than expected, but lower catastrophe costs are unlikely to be the new norm, and the broader insurance market could become more competitive.

“Given elevated insurance profitability – QBE has a 20% return on equity compared with a 10-year average of 8% – insurers likely want to increase volumes, which we think will lead to greater competition, rate pressure and lower returns,” it said.

QBE said last week it has agreed to sell its global trade credit and surety business to Swiss Re Corporate solutions.