Australia and New Zealand were stand-out performers in QBE’s results for the six months to June 30, with the combined business posting gross written premium of $US2.47 billion ($2.37 billion) and an insurance profit margin of 18.5% – up dramatically from 5.6% for the cat-hit first half of last year.

A better catastrophe experience also helped the Australian and New Zealand business to a combined operating ratio (COR) of 91.4%, compared to 103.2% for the first half of last year.

New QBE Group CEO John Neal says premium increases in Australia were, on average, 8.2% for the half, and 15% in New Zealand. Announcing QBE’s half-year results in Sydney on Friday, he noted “significant movement” in deductibles.

Mr Neal expects rates in the Australian market to “stabilise” rather than continue to rise after the increases of the past year, but says QBE could begin to move on liability rates.

While property rate increases in Australia have been “in the teens”, Mr Neal says liability increases have been between 3-5% on average and they “should be higher” given the falling interest rate environment.

He says the pricing situation in liability is something that QBE is “looking very closely at”.

QBE’s overall premium growth in Australia for the half was modest due to better risk selection.

Mr Neal says QBE “has not hesitated” to drop business it considers unprofitable, with the insurer cutting its exposure to flood and cyclone-prone areas of Queensland – where he says rates have not gone up enough – and to hailstorm-prone parts of Victoria.

As a result of that move, QBE’s exposure to last year’s Christmas Day hailstorm in Melbourne was just $35 million in a market loss of around $600 million.