QBE has reported strong growth in its premium income for the six months ending June.

Gross premium income was up 20% to $US6.86 billion ($7.65 billion) with Australia contributing the greatest increase.

The Australian business generated premiums of $US2.046 billion ($2.28 billion), up 26%, while the US business was up 13% to $US2.34 billion ($2.61 billion).

European premiums grew by 6% to $US1.57 billion ($1.75 billion) while Asia Pacific was up 15% to $US295 million ($329 million).

The company attributes the growth in gross premium to the acquisitions it made during the past two years, new distribution channels and an overall increase in premium rates of 3%.

These strong premium inflows helped QBE deliver a good profit on its insurance business, up 8% to $US822 million ($916 million).

However, the insurance profit margin to net earned premium was down slightly by 1.8% to 15.7% for the half year.

CEO Frank O’Halloran says while the company has delivered a good result on its insurance business, “the increase in insurance profit was more than offset by the significantly lower investment returns from volatile fixed interest and equity markets”.

The company’s net profit after tax was down 39% to $US440 million ($490 million).

QBE has also not been immune from natural catastrophe claims, which have affected profit margins.

In the US, insurance profit margins dropped by 5.1% mainly due to catastrophe claims while Australian claim ratios were up 4.7% due to storms in Melbourne and Perth, Cyclone Uli, the Kalgoorlie earthquake and flooding on the east coast.

Despite the pressure on claims from natural catastrophes, QBE is predicting strong growth in both premium income and profit by 2013.

The company expects gross written premium to grow by $US2.3 billion ($2.5 billion) during the next three years and profits to rise by $US400 million ($445 million).

Part of this growth will be driven by increased premiums on renewal business and global initiatives on reinsurance costs, claims and expense ratios which will be unveiled before the end of this year.