Rate increases drive QBE to 131% profit growth

QBE’s net profit jumped 131% to $1.36bn in 2023 after pushing through rate increases averaging 9.7% across the business, compared with 7.9% the year before.

Gross premiums recorded 10% growth to $21.75bn, driven by international business where premiums increased by 17%. Portfolio exits impacted growth of 8% in Australia and 4% in North America.

Rate increases were highest for Australia renewals at 12.5% followed by its North America portfolio at 10.5% and 7.8% for international business.

QBE has tried to improve its standalone property portfolios across the group, reducing premiums by $400m from terminated property accounts. A further $600m worth of portfolios is earmarked to be cut.

QBE’s combined ratio strengthened slightly to 95.2% from 92.9%, including 0.6% impact from the group’s $1.9bn reserve transaction in the first half of 2023. QBE said the result was also helped by premium rate increases, which were at or above inflation for most lines of business, and lower catastrophe claims, which at $1.09bn were within the group’s allowance for the first time in the past four years.

The insurer said the cost of catastrophes was driven by secondary perils across all divisions and it has increased its catastrophe allowance from $1.18bn to $1.28bn for 2024.

QBE said improving its performance in North America remains a key focus for the board and management. The division closed the year with a combined ratio of 103.7% from 99.5%, weighed down by prior year catastrophe losses. International business recorded a strong improvement in its underwriting result to record an improved combined ratio of 89.5% from 94.8%.

Group level investment income jumped 141% to $1.37bn in 2023.

CEO Andrew Horton said: “Financial performance improved in the period, and QBE is demonstrating greater consistency and resilience. We are pleased with the ongoing progress across our strategic priorities and expect trading conditions to remain favourable in the year ahead.”

The group is projecting mid-single-digit growth in gross premiums in 2024 and a combined operating ratio of under 93.5%.

Horton added: “We want to accelerate QBE’s data-centric capabilities and expand our ability to support customer resilience through new technologies, such as artificial intelligence. We will continue to leverage technology to deliver better outcomes for customers through our modernisation strategic priority and QBE Ventures initiatives.”