QBE has set its sights on business volume gains after exiting loss-making portfolios and reducing its exposure to catastrophe volatility. 

“We have the breadth, both by region and product, to be capable of delivering mid single digit volume growth sustainably,” Group CEO Andrew Horton told an earnings briefing last week. 

Net profit increased 31% to $US1.779 billion ($2.8 billion) last year, supported by lower natural disaster costs and strong investment returns.  

Gross written premium rose 3% to $US22.395 billion ($35.1 billion), with portfolio exits that have reduced volatility curbing top-line gains. The average renewal rate across the North America, international and Australia-Pacific divisions was 5.5%. 

Mr Horton says the company can gain more depth in some business lines such as construction and health in the US, and the breadth of its international operations presents opportunities.

It is modernising technology in Australia to boost business in an increasingly competitive environment. 

“We have some great businesses here, so I would like to see if we can continue to grow our commercial business,” he told insuranceNEWS.com.au. 

“Our focus is very much on the deep broker relationships we have, the products we’ve been in for a long time, giving good service and then making ourselves easier to do business with, but it’s going to be hard to grow here, because the market’s not growing that much and there’s more competition coming in.” 

Mr Horton says the company also plans to invest in and grow the local consumer book, which makes up a relatively small part of the QBE group’s overall business. 

Catastrophe claim net costs fell to $US1.048 billion ($1.64 billion) last year from $US1.092 billion ($1.71 billion) and were $US232 million ($364 million) below the allowance amid another active year for natural disasters.   

QBE says exposures to US hurricanes Milton and Helene were substantially lower than for similar events in the past. 

S&P Global Ratings says despite heavy catastrophe losses last year for the global insurance market, QBE’s exit from some higher-risk property portfolios softened the blow.  

Results this year should benefit from ongoing premium rate strength and better risk selection, although a rise in social inflation will produce some drag in casualty, S&P says. A $US200 million ($314 million) net exposure to California wildfires should mostly affect the international division.  

QBE has forecast constant-currency GWP growth in the mid single digits for this year and a combined operating ratio of about 92.5%. 

Morningstar says the guidance is better than it expected, and while rate increases have slowed, management sees them as meeting inflation. 

“Unsurprisingly, QBE is happy with current profitability and has set its sights on volume growth,” the analyst said. 

“Our reservation is that in the commoditised industry, competitors will also think ‘more volume please’, and increased competition typically leads to rate pressure and lower industry returns.”

From the latest Insurance News magazine: 'Storm-chasing' claims middlemen have moved into the property space, and insurers aren't happy