Why QBE’s chief executive calls half year “disappointing” despite profit surge

Chief executive lifts the lid on first-half financials

Why QBE’s chief executive calls half year “disappointing” despite profit surge

Insurance News

By Terry Gangcuangco

“This has been a disappointing half for me in many regards, but I do think we’re making progress on our key initiatives and have good momentum in the business.”

Those were the words of Andrew Horton (pictured), group chief executive at QBE Insurance Group, during the company’s earnings call on Thursday prior to which it was announced that the insurer saw a massive lift in its net profit after income tax – from $48 million in the first half of 2022 to $400 million this time around.

So, why is Horton a little less happy about QBE’s half-year financials?

Trouble in North America

“Underwriting performance was impacted by catastrophe costs, both in the current and prior year, resulting in a combined operating ratio (COR) of 98.8%, or 97.6% excluding the upfront cost of the reserve transaction we announced in February,” the CEO noted during the results webcast.

“Though we’ve been able to better absorb some of the setbacks and still maintain a double-digit return on equity, I’m disappointed with the extent of the catastrophe volatility this half on our result in North America. Improving returns in North America remains our highest priority.”

In terms of underwriting profitability, only North America posted a COR above 100% during the first half. Australia Pacific, barely making it, took a hit from the weather events in New Zealand earlier this year.  


H1 2023 COR

H1 2022 COR

North America






Australia Pacific







Echoing Horton’s sentiment, QBE group chief financial officer Inder Singh declared: “This has been a very challenging half for underwriting performance. The impact from catastrophes has been too large, and the returns in North America are not acceptable.”

In his one-on-one with Insurance Business following the results webcast, Horton cited the above as among the “elements of disappointment” marring an otherwise outstanding set of financial results.

“We’ve been focusing on North America for a number of years now, and it needs to be a lot better than that,” the CEO said while at the same time highlighting the “many, many positive things” such as the group’s capital strength and stability of management.   

The plan for North America, in terms of core lines, is to have a good balance between crop, specialty, and commercial.

Horton told Insurance Business: “Then how do we ensure they’re all delivering in this low- to mid-90s combined ratio? So, there’s more work to do on the US. But the US – it’s a much more straightforward business than it ever has been. It’s not that many lines of business, so we haven’t got too many areas to focus on to improve it.”

Profit source

During the first half, QBE’s total investment income amounted to $662 million – a huge jump from last year’s $20 million loss. This positive result was the main driver behind the insurer’s largely improved net profit after income tax, instead of what QBE earned from underwriting.

As highlighted during the company’s presentation, QBE generated more investment income in the first half than it did over the course of 2022. Horton, however, would like underwriting to contribute more to the bottom line.

“It’s purely driven by our investment income being so much higher, and that’s likely to continue for the rest of the year,” Horton said when he sat down with Insurance Business. “So, we’re probably going to earn a similar number in the second half of the year.

“Overall, profits of the company look good and return on capital looks good. But we are an underwriting company and, therefore, we need to deliver a good underwriting profit.”

With a new group chief underwriting officer slated to take on the post in September, the group CEO is keen to further advance QBE’s portfolio optimization, which is among the insurer’s strategic priorities.

Referring to Peter Burton, who is moving on from his international markets role, Horton said: “So, let’s look at our underwriting. Are we consistent in what we’re doing? And then second is this aggregation issue – have we got aggregations we haven’t thought of yet? Then he’s also going to be responsible for the reinsurance buy. So, these are all linked things.

“Let’s get our consistency of underwriting and underwriting appetite. Let’s ensure we understand the aggregations. That will link into our reinsurance, and ultimately links into an improved combined ratio. So, these are the conversations Peter and I have had and will continue to have.”

According to Horton, efforts to better manage volatility continue at QBE, with property catastrophe risk remaining a major focus.

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