’s chairman Marty Becker has pointed to increasing globalisation as causing the ‘toughest marketplace’ in his memory, and the backdrop to the insurer’s FY2015 results.
The Group announced net profit after tax (NPAT) as US$807 million but Gross Written Premium (GWP) was down 7% overall.
“I think I can say without doubt that this is the toughest marketplace I can remember,” Becker said.
“Increasing globalisation has seen new capital entering the insurance market seeking a profitable home and consequently dragging down prices.
“At the same time, investment returns remain well below historic levels. To remain profitable insurers have no option but to focus their efforts on high quality underwriting, efficiency and cost reduction.”
He continued: “Against that challenging backdrop, QBE
has delivered on 2015 promises.
“Despite challenges in a number of our markets, our business overall has largely achieved target.”
Becker added: “I am increasingly confident we are set up for future success.”
In Australia and New Zealand, the business saw its GWP drop 14% as the decline of the Australian dollar and increases in claims hit the business.
‘Significant’ rate decreases in the New Zealand market made a dent in QBE
’s premium income, with a decrease of 7.3%, and coupled with Australia’s 2% fall it averaged to 2.4%.
Group CEO John Neal said: “With the backdrop of considerable catastrophe claims activity in the first half of 2015, ongoing price competition and a significant increase in NSW CTP claims frequency, Australian & New Zealand operations’ combined operating ratio of 91.3% is a solid outcome.
“By repricing our NSW CTP portfolio and implementing important operational changes designed to build scalability in to the acquisition cost base, we aim to hold underwriting margins steady despite continued challenging market conditions.”
A bright spot for the business in Australia and New Zealand was the growth of the commercial portfolio, which saw a 5% bump.
New business growth was strong across most lines of business in New Zealand, the company said.
“Pleasingly, our traditional commercial portfolio grew by around 5% despite premium rate decreases in most products,” the company said in its reporting.
“Growth was driven by a heightened focus on the customer experience which enhanced the retention of quality business and led to the placement of additional new business.”
Neal noted that he was pleased with the result as it included investment in the business which would pay dividends over the coming years.
“I am pleased to report we have executed on the targets we set at the beginning of 2015, delivering an underwriting result at the better end and an insurance profit margin towards the middle of our target ranges,” he said.
“The success of our portfolio remediation activities of the last three years is evidenced by each of our businesses now producing an underwriting profit and, particularly, by the continuing improvement in the performance of our North American Operations.
“It is noteworthy that we produced our result in the face of a number of headwinds, including challenging insurance pricing and investment markets, a significantly stronger US dollar and continued low interest rates. Moreover, the result included substantial investment in infrastructure, technology and people.”