QBE is in a position to perform better following a successful turnaround of its once-struggling business, according to ratings agency Moody’s.

The insurer has strengthened its underwriting capabilities and focused on growing its core business, while departing from the acquisition-led growth strategy of former CEO Frank O’Halloran.

The group has achieved cost savings of $US250 million ($344.4 million) this year, a target set by CEO John Neal after he took over in 2012.

The insurer will report stronger profitability next year and in 2017 thanks to the transformation plan.

“QBE has also refocused its strategy,” Moody’s says. “The successful transformation that followed has resulted in a more integrated and profitable global franchise.”

It reported a net income of $US488 million ($672.5 million) for the six months to June, up 24% on the corresponding period last year.

Operations in its home markets of Australia and New Zealand have remained strong and North and South America are looking up after recent moves to shore up businesses there, including selling off its workers’ compensation business in Argentina and focusing on higher-margin commercial and specialty lines.

“Sustained improvement in its international businesses will augment its core underwriting profitability and diversify its earnings platform,” Moody’s says. “We believe these efforts have put QBE in a strong position to achieve economies of scale. 

“The moves will also improve its risk management and underwriting culture and, as a result, its earnings profile.” 

QBE’s capital base has improved sharply from 2012/13, when debt-financed growth and weak internal capital generation pushed its financial leverage to unsustainable levels.

“The resilience of QBE’s balance sheet has improved, with the strengthening of claims reserves,” Moody’s says. 

“These efforts have put QBE on a stronger financial footing to support its future business initiatives.”