QBE says it is on track to achieve a full-year insurance profit margin of “better than 12%” – in line with its forecast at the half-year.

Premium growth is averaging above 5% across the company’s business, with “significantly higher” increases in Australia and North America, Group CFO Neil Drabsch told the Citi Australian investment conference last week.

He says investment yields for the full-year are ahead of guidance thanks to improving credit spreads and equity returns.

Mr Drabsch also addressed two potential clouds on the horizon – the performance of the US crop and lenders’ mortgage insurance (LMI) businesses.

He reaffirmed QBE’s guidance of a full-year combined operating ratio from the US crop book of 99-102%, following claims from the drought. But he says “US crop insurance fundamentals remain attractive”. The drought is expected to have a positive impact on gross written premium in 2013, with rate rises probable.

In the US LMI book the company forecasts full-year gross written premium of about $US1.7 billion ($1.64 billion). But Mr Drabsch warns the 2013 figure will drop below that, driven by single-digit rate reductions “following pricing pressure after a sustained period of reduced catastrophe [wind] claims”.

Premium volumes will be further affected next year by a “counter-cyclical decline”, he says.

“The net impact of pricing and cyclical change is expected to be about $US120 million ($116 million) lower gross written premium.”