QBE says net profit grew 5% to $US844 million ($1.1 billion) last year as premiums started to improve in the Australian and New Zealand markets.

The company has also announced a three-year share buyback of up to $1 billion.

The comparative earnings figures were adjusted to exclude the sold Argentine workers’ compensation business and other one-off items. On a statutory basis, profit jumped 23%.

Gross written premium (GWP) fell 2% to $US14.1 billion ($18.4 billion), while the combined operating ratio improved to 93.2% from 94.3%, excluding the discount rate impact.

“We anticipate that the market backdrop will remain challenging [this year], although indications of modest improvement are now emerging,” QBE said.

There are clear signs of price hardening in Australia and New Zealand, while rate reductions are moderating in global reinsurance, according to the insurer.

QBE says pricing in markets other than Australia is expected to be broadly flat this year, and GWP for the group overall is expected to remain relatively stable.

Group CEO John Neal says the Australian and New Zealand attritional claims ratio improved in the second half, after a significant first-half deterioration, as the company took action across underwriting and pricing and in claims management.

After an average premium rate reduction of 0.1% in the first half, Australian premiums finished up 1.7% for the year, and were up 4.5% in the fourth quarter.

Mr Neal says North American underwriting profit more than doubled and the combined operating ratio for the division improved to 97.7% from 99.8%, with further profitability improvements expected this year and next.

QBE says profit improvement and strong cashflow have allowed both the share buyback and a 10% rise in the final dividend to 33 cents.

In the remuneration report, QBE says Mr Neal's short-term incentive (STI) bonus was cut from an expected $2.76 million, based on a scorecard performance, to $2.21 million due to “personal decisions” he had taken.

Noting that he has had “a commendable year” in delivering a strong full year result for QBE, it adds: “However, both parties agree some recent personal decisions by the CEO have been inconsistent with the board’s expectations. Therefore the board has decided that his 2016 STI will be reduced by 20%.” 

Meanwhile, as reported in a Breaking News bulletin this morning, the insurer has announced David McMillan will become Group COO following the shock departure of Colin Fagen earlier this month.

Mr McMillan, previously with Aviva, will join QBE towards the end of the year, based in London.