QBE returns to profit in 2018 due to fall in cat claims and cost-cutting
Australia-based QBE Insurance Group returned to profit last year helped by "significantly reduced catastrophe claims", after an extreme 2017, and a robust cost-cutting programme.
QBE reported full year 2018 net profit after tax of $390 million, representing a big turnaround on the substantial loss ( $1.25 billion net loss) it made in the same period a year earlier. The cash profit after tax was $715 million.
The company's CEO Pat Regan said: “The actions we have taken to simplify the group, implement a rigorous performance management framework and upgrade core capabilities in pricing, risk selection and claims management delivered meaningful improvement in the underlying quality of our business and our financial performance in 2018.
"The group’s improved 2018 financial performance reflected significantly improved attritional claims experience across all divisions coupled with a reduced level of catastrophe claims. This was partly offset by a lower net investment yield which was adversely impacted by market volatility in the final quarter," Regan added.
The group reported a 2018 year-end combined operating ratio of 95.7 percent in line with its target range, and an improvement from 103.9 percent in 2017.
Its gross written premiums rose to $13.66 billion, compared with $13.33 billion a year ago.
QBE said the uplift in profitability was also achieved as a result of cost savings from efficiency initiatives that were achieved across all divisions, partly offset by the group’s investment in a number of strategic initiatives during the year.
In 2018, the group disposed of its operations in Argentina, Brazil, Ecuador, Mexico and Thailand and sold renewal rights to the personal lines independent agent business in North American operations. The company also unveiled plans to consolidate its Asian and European operations into a "large and better resourced" international division.
During 2019, the group expects to complete the disposal of operations in Colombia, Puerto Rico, Indonesia and the Philippines, as well as the remaining personal lines business in North American operations and the travel business in Australian and New Zealand operations.
“I am pleased with the progress made against our objectives in 2018," Regan said. "Significant portfolio rationalisation and simplification, successful placement of the restructured 2019 reinsurance program, divisional consolidation and initiation of a three-year operational efficiency program position us well to deliver further value for our shareholders in 2019.”
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