QBE’s flagging stock price has received a boost amid early signs of recovery and an oversubscribed $600 million share placement.

Retiring CEO Frank O’Halloran last week confirmed guidance released in December by reporting a 45% fall in profit after tax of $US704 million ($651 million) for the full year on natural catastrophe payouts, widening credit spreads and lower rates on discounting outstanding claims.

Catastrophe claims rocketed 200% last year to $US1.733 billion ($1.6 billion), with flooding in Thailand and earthquakes in Christchurch and Japan comprising more than a third of QBE’s payouts to policyholders.

Individual claims combined with cat claims totalled $US2.355 billion ($2.17 billion).

Profits from QBE’s Australian and Asian business fell the most of its global portfolio, while the company’s captive reinsurer, Equator Re, lost $US56 million ($51.8 million) after returning a profit of $US322 million ($297.8 million) in 2010.

QBE’s insurance margin for 2011 more than halved to 7.1%, while its dividend of 87 cents has fallen more than 32% since the previous year.

The company’s combined operating ratio was up seven percentage points to 96.8%.

Despite the poor result, investors found reasons for optimism in the long term. QBE says it has increased deductibles, reduced exposure to higher-risk regions, purchased $US565 million ($522.5 million) in additional reinsurance and expects average premium rises of 5% this year.

“In our industry, it often takes a tough year like 2011 to change the direction of the premium cycle,” Mr O’Halloran said.

“We have had a positive start to 2012 with catastrophe claims substantially lower than this time last year, credit spreads reducing, a slight rise in risk free rates and premium rate increases higher than expected, particularly in the US and Australia.”

Cashflow increased 57% to $US2.139 billion ($1.97 billion), while gross written premium jumped 34% to $US18.291 billion ($16.9 billion). QBE has forecast a six-percentage point improvement in its insurance margin to 13% for 2012.

Morningstar analyst Peter Warnes said the key figure was a drop in QBE’s attritional claims ratio (ACR) from 50% to 49.2%. The ACR measures net claims less than $US2.5 million ($2.3 million) and is used to gain an insight on an insurer’s risk profile minus catastrophe claims.

“We all know what all the negatives were, but the main positive was the attritional claims ratio, which is just about world leading,” Mr Warnes told insuranceNEWS.com.au.

“You can’t do much about cyclones, but attritional claims is where management really comes to the fore.”

Mr Warnes said QBE has also benefitted from fewer weather events so far this year, while more than 50% of its unrealised losses due to widening credit spreads were recovered by the end of last month.

“They also have no impairments in a portfolio worth $US28 billion ($25.9 billion) – no one else around the world can make that statement,” he said.

Investors also responded positively to a share placement announced last week, which sought to replace $US500 million ($462 million) in convertible debt due to uncertainty if the Australian Prudential Regulation Authority would accept the debt as regulatory capital.

QBE is on track to raise $600 million, including $450 million from institutional investors and $150 million from shareholders.

Combined with capital-raisings from last year, when the insurer placed $US1 billion ($937 million) of debt through notes on the US market and a further £325 million ($496 million) from UK institutional investors, QBE has raised $2 billion from shareholders since May.

QBE shares rose by nearly 50c in the two days following the release of its financials on the ASX and closed at $12.25 on Friday, their highest price since mid-January.