QBE Insurance Group full-year earnings have been boosted by premium rate growth, with the Australia Pacific division delivering a stronger result despite natural catastrophe and inflation challenges and the North America division returning to an underwriting profit.

Reported net profit rose to $US770 million ($1.12 billion) compared with $US750 million ($1.09 billion) a year earlier as gross written premium rose 13% to $US20.1 billion ($29.1 billion). The overall adjusted combined operating ratio improved to 93.7% compared to 95%.

CEO Andrew Horton says the business is demonstrating improved resilience against a backdrop marked by industry challenges including geopolitical tensions, elevated catastrophe experience and a surge in inflation.

Mr Horton told insuranceNEWS.com.au that he was also pleased by stability in the group’s leadership roles since taking up the CEO position around 18 months ago, and says the insurer has “great foundations” as it looks forward and reduces volatility.

“We have genuine momentum behind us, returns are improving and we’re building a more consistent business,” he said today. “Our confidence in the medium-term outlook for QBE is high and has been building progressively over the year.”

Mr Horton was recruited to QBE from UK-based Beazley in 2021 and tasked with driving an improved performance from the global company, organised into Australia Pacific, International and North America divisions.

Australia Pacific GWP last year rose 9% to $US5.24 billion ($7.59 billion), with premium rate increases averaging 9.5% after they steadily built over the course of the year. The combined operating ratio improved to 90.1% from 91.4%.

Mr Horton welcomed improvements in the North America business, which reported a return to underwriting profitability for the first time in four years. The combined operating ratio at 98.9% compared to 102.9% the previous year, and Mr Horton says the focus is on driving the measure to levels in the lower nineties, as QBE looks to greater consistency in profitability across the group.

The International division combined operating ratio deteriorated to 92.5% from 90.6%, reflecting inflationary pressures, an adverse covid business interruption judgement, costs associated with the Russia/Ukraine conflict and catastrophe experience.

Group net catastrophe claims costs increased to $US1.060 billion ($1.54 billion) compared to the allowance of $US962 million ($1.39 billion), as flagged in a November update. The allowance has increased this year to $US1.175 billion ($1.70 billion), reflecting higher reinsurance retentions and exposure growth.

QBE also said today it had entered into a broad-based reinsurance transaction with Enstar, at a pre-tax upfront cost of about $US100 million ($144.9 million), to de-risk its exposure to a portfolio of reserves totalling about $US1.9 billion ($2.75 billion).

The portfolio encompasses a range of North America and international long-tail reserves, mainly related to financial lines, discontinued programs and reinsurance business, largely underwritten between 2010 and 2018.

QBE’s outlook is for GWP growth in the mid-to-high single digits this year, on a constant currency basis and for a combined operating ratio of about 93.5%. Looking ahead, the group’s aim is to deliver a consistent combined operating ratio in the mid-to-low 90s.