QBE is profitable again, but it warns global premiums will remain flat this year.

The insurer recorded a profit of $US742 million ($950 million) last year, reversing a loss of $US254 million ($325 million) in 2013.

Gross written premium (GWP) declined 9% to $US16.3 billion ($20.9 billion) and net earned premium fell by the same percentage to $US14.1 billion ($18 billion).

QBE says tight fiscal and cost discipline played a major role in turning around its fortunes.

“At a time when market conditions remain tough and rates are generally low or flat, we believe it is essential to proactively manage our expenses, allowing benefits to flow directly to our bottom line.” 

It says conditions will remain tough this year, and GWP is expected to range from $US15.5-15.9 billion ($19.8-20.4 billion). 

“Accordingly, our focus will be on maintaining underwriting discipline, exercising strict cost control and leveraging greater value from our substantial investment portfolio.”

The combined operating ratio improved to 96.1% last year from 97.8% in 2013.

Gross earned premium from North America fell to $US4.4 billion ($5.6 billion) from $US5 billion ($6.4 billion). The region remains QBE’s biggest source of gross earned premium.

Australia generated gross earned premium of $US3.8 billion ($4.9 billion), down from $US4 billion ($5.1 billion).

Commercial and domestic property accounted for 32.6% of earned premium last year, compared with 34.2% in 2013. The insurer raised its motor insurance business to 17.1% of earned premium from 16%.

Meanwhile, QBE’s Argentinean workers’ compensation business WST, part of the Werthein Group, has been sold for $US95 million ($121.7 million). The deal is expected to be completed in the third quarter of this year.