QBE announced its full 2019 financial results earlier today, with the insurer reporting a huge net profit spike. It announced a FY19 statutory net profit after tax of US$550 million, up 41% from US$390 million in 2018.
Further rises were also recorded across the board, in what proved to be a comparatively successful year for the insurer. Adjusted net cash profit after tax was US$733 million, up 6% from US$692 million in 2018, while adjusted cash profit return on equity was 8.9%, up by 0.9% from the previous year. Other increases were seen in premium rate momentum and group-wide renewal rate, with the latter rising to a 6.3% average compared to 5.0% in the previous year.
Pat Regan, QBE CEO, explained the reasons behind the insurer’s strong 2019.
“Cell reviews and the Brilliant Basics program have transformed QBE,” he said. “It has embedded a strong and transparent performance culture while upgrading the core capabilities of the business – pricing, risk selection and claims management – and driving a consistent approach to doing business across the group.”
However, as it has across the world, weather and natural disaster have impacted financials. The insurer reported a FY19 combined operating ratio of 97.5% above the FY19 target range of 94.5%-96.5%, largely due to adverse weather conditions which severely impacted its US crop insurance business.
The insurance group’s historically profitable crop business experienced significant prevented planting claims and depressed harvest yields. This contributed to a crop combined operating ratio of 107.5% and impacted its FY19 combined operating ratio by around 1.8% relative to the long-term average combined operating ratio of the crop business.
The results were also impacted by significant Australian bushfire claims that occurred over recent months across the country.
Regan explained that the foundations, however, remain strong.
“Despite the impact of adverse weather conditions on our North American crop business, the underlying fundamentals of our business remain strong and we continue to see improvement in both the quality and resilience of our earnings.”
“In 2019, we made substantial progress across all our strategic priorities and recorded especially pleasing results in Australia Pacific and International,” Regan said. “With strong pricing momentum, non-core asset sales completed and having significantly strengthened reserves in portfolios facing more challenging industry-wide inflationary trends, we enter 2020 with strong prospects for further sustainable margin improvement.”