Sydney-headquartered QBE’s financial year 2019 (FY 2019) saw a 41% jump in annual post tax profit to US$550 million (FY 2018: US$390 million) despite a difficult nat cat environment.
The insurer was significantly boosted by strong investment returns (from policies) which climbed from US$346 million in FY 2018 to US$649 million last year.
However, the firm’s underwriting performance was lacklustre.
The overall underwriting result (excluding the impact of the Ogden reforms in the UK) fell to US$290 million from US$528 million last year.
Pat Regan, QBE’s group chief executive, commented: “The underlying fundamentals of our business remain strong and we continue to see improvement in both the quality and resilience of our earnings.”
The group’s gross written premium (GWP) for FY 2019 was US$13.44 billion, a decline from US$13.65 billion in FY 2018.
QBE noted strong and continued pricing momentum across the group and across regions – for FY 2019, the average premium rate increase was 6.3%. The second half of 2019 saw an acceleration which averaged 8.3%, compared to 4.7% in the first half of the year.
Regan (pictured) added: “With strong pricing momentum, non-core asset sales completed and significantly strengthened reserves in portfolios facing more challenging industry-wide inflationary trends, we enter 2020 with strong prospects for further sustainable margin improvement.”
The group’s FY 2019 combined operating ratio (COR) deteriorated to 97.5%, compared with 95.7% FY 2018. However, QBE noted an underlying margin improvement despite headwinds and continued attritional claims ratio improvement at 47.5% for FY 2019, compared to 50.2% in FY 2018. For FY 2020, the company aims for a COR of between 93.5% and 95.5%, excluding regulatory and restructuring costs.
With Australia’s recent extreme weather and associated losses from the ongoing bushfires, severe rain and hailstorms, QBE also outlined a 2020 strategy with a focus on a climate change action plan – including continued revisions and adjustments to its catastrophe pricing models.
Regan said: “We got out of places like the Philippines, Thailand, Chile, Puerto Rico [where] it was just too much climate change weather impact risk there, that the risks weren’t worth it.”
He added: “Over the long term, we anticipate that the physical impacts of climate change will result in our customers seeking increased insurance for the protection of their assets and the services they provide.”
Meanwhile board member Mike Wilkins will become chairman of QBE on March 1; Wilkins will replace Marty Becker.
As of 4:30pm Sydney time QBE’s shares were up 4.2% to A$14.75.

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