QBE bounces back to profit in 2014
Australian insurer QBE posted a solid set of results in 2014 and returned to profit as it benefitted from the absence of prior year claims development and improved underwriting.
QBE’s profits hit $742 million for the year ended December 31, 2014, an increase of $1 billion compared with a loss of $254 million in 2013.
Its combined ratio improved to 96.1 percent in 2014, compared with 97.8 percent in the prior year, while its underwriting profit grew 60 percent to $547 million in 2014, compared with $341 million in 2013.
QBE’s gross written premium fell 9 percent to $16.3 billion in 2014, compared with $18 billion in 2013, or 6 percent on a constant currency basis.
The company said it expected global pricing to remain broadly flat in 2015 and so will focus on maintaining underwriting discipline, exercising strict cost control and leveraging greater value from its substantial investment portfolio.
John Neal, QBE group chief executive officer, said: “I am delighted to report a strong rebound in earnings with the 2014 net profit after tax up by $1 billion to $742 million. It is also pleasing to deliver a result broadly in line with previous targets and market expectations, notwithstanding economic headwinds including foreign exchange movements and a $324 million discount rate impact, $206 million of which impacted the second half result alone.
“An especially pleasing aspect of the result was the improved combined operating ratio of 96.1 percent and the absence of adverse prior year claims development, an issue that has weighed heavily on past results and undermined confidence in our balance sheet and future earnings potential.
“The successful implementation to date of the capital initiatives announced in August 2014 has significantly improved the group’s financial strength and flexibility. Debt to equity as well as regulatory and ratings agency capital measures have improved materially as evidenced by AM Best’s recent decision to revise QBE’s rating outlook from ‘negative’ to ‘stable’ and affirm our financial strength rating at ‘A’ (Excellent).”
