QBE’s full-year earnings grew 21%, lifted by gross written premium gains, investment income and global catastrophe costs falling below allowance despite Australian storms and floods.

Net profit jumped to $US2.157 billion ($3.053 billion), the combined operating ratio improved to 91.9% from 93.1%, and the adjusted return on equity was 19.8%.

GWP increased to $US23.959 billion ($33.913 billion), representing gains of 7% on a reported basis and 8% excluding exited portfolios.

The group’s outlook was for mid single digit GWP growth and a combined operating ratio of about 92.5%.

Group CEO Andrew Horton says the better than expected result reflected North American crop performance and the international catastrophe outcome, plus long-term business improvement measures.

“I think the main reason we ended up beating the guidance was the work we’ve been doing on optimising the portfolio over the past few years to take out some of the lines of business that have been dragging the results back and focusing on the things we’re good at, and ensuring we do have balance in the portfolio,” Mr Horton told insuranceNEWS.com.au.

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.

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

Mr Horton says in Australian commercial there is increased competition from underwriting agencies supported by London capacity, and while growth is challenging, QBE is seeking to build on broker relationships and become more responsive through new technology.

Globally, QBE says rates have softened in some areas, but this follows stronger gains and 90% of the portfolio is expected to be “at or above rate adequacy”.

“The pricing of most of our insurance products is in a good place, so if we sell at the current technical price, most of them will achieve the margin we want to achieve,” Mr Horton said.

As reported in a Breaking News bulletin earlier today, QBE will sell its trade credit and surety business to Swiss Re Corporate Solutions.

Mr Horton says the sale is not part of further divestment plans, and it was a small part of the group.

“We’re really comfortable with the portfolio we’ve got. That doesn’t mean we will never do anything again. There may be things we want to acquire at some point, there may be things that fit better with another home.”