QBE sees profits rise as rates increase by 4.7%

QBE reported cash profit after tax up 35% to $520m in the first half of this year, helped by lower claims, improved investment and average group-wide premium increases of 4.7%. Gross written premium (GWP) rose 1% to $7.6bn, with the firm’s net profit after tax up 29% to $463m compared with the same period in 2018. The group reported an underwriting loss of $24m compared to £260m in the prior period, equating to a combined operating ratio of 100.4%, from 95.4% in H1 2018. Excluding the impact of changes in risk-free rates used to discount net outstanding claims and a one-off impact related to the UK’s Ogden rate, QBE’s H1 combined operating ratio stood at 95.2%, from 95.8% in the first half of last year. Net investment and other income was $755m, compared with $287m in the prior period. QBE’s attritional claims ratio was down to 47.7% from 50.2% a year earlier. But this was partly offset by an increase in the net cost of large individual risk and catastrophe claims, following a restructuring of the group’s reinsurance programme. The insurer said it saw premium rate increases across all regions in the first half of this year, with momentum building in North America and the London market. The overall average increase of 4.7% compares with average rises of 4.6% in the first half of last year. QBE’s international business recorded average rate increases of 3.8% in H1, compared to 4.5% in the same period last year. It achieved an average premium renewal rate increase of 3.9% across European operations and 2.2% in Asia. Richard Pryce, QBE’s CEO of international business, said trading conditions “continue to improve across virtually all business lines, albeit at a significantly different pace depending upon product and geography”. He said the London market continues to demonstrate the most underwriting discipline and rate momentum, while QBE is “only seeing early and isolated signs of improving market conditions” in Asia. “In the UK, both commercial motor and financial lines continue to attract the highest rate increases, particularly the latter where double-digit increases are becoming the norm. The European insurance business has seen an improvement in market conditions during 2019, albeit still relatively minor at this stage,” he said. Elsewhere, rates were up 6.8% in QBE’s Australia Pacific division, compared to 6.4% in H1 2018, and up 4.1% in North America, compared to 3.1% a year earlier. International business saw gross premiums up 4% to $2.88bn in H1 and the combined ratio improve to 94.3% from 96.8%. It delivered insurance profit before tax of $231m, from $132m in the first half of 2018. QBE’s Australia Pacific business saw GWP fall to $1.96bn from $2.1bn a year earlier. Its combined ratio increased a touch to 90.5%, from 89%. Insurance profit before tax was down to $244m, from $286 in the first half of last year. GWP was flat in North America at $2.8bn, with the combined ratio also stable at 99.9% from 99% a year earlier. Insurance profit before tax was down to $19m, from $103m in H1 last year. Commenting on the results, QBE group CEO Pat Regan said: “With a strong first half now behind us, good pricing momentum and our full-year targets unchanged, we will continue to build on the good progress we have made against our priorities in the second half of 2019.” Insurance Australia Group (IAG) has reported a significantly improved net profit after tax of just over $1bn for full-year 2019 ending 30 June. This is up more than 16% over the prior year, partly driven by further price strengthening in its commercial insurance book, particularly in Australia.

QBE sees profits rise as rates increase by 4.7%

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