QBE says net profit doubled to $US802 million ($1.22 billion) in the first half, and the company also flagged today that a multi-year push to refine the business and exit underperforming areas is reaching a conclusion.

The reported profit rose from $US400 million ($609 million) a year earlier, while gross written premium increased 2% to $US13.05 billion ($19.88 billion), with rate increases partly offset by portfolio exits. The combined operating ratio improved to 93.8% from 98.8%, driven by lower catastrophe costs and more stable reserve development.

In June, QBE announced it was exiting its loss-making North American middle-market business under moves to turn around the region’s performance. The company today said it has also entered into reinsurance transactions with RiverStone International and Enstar to protect against adverse reserve impacts from long-tail claims development.

“A key message today is that we feel we’re drawing to a conclusion a long ... period focused on remediating underperforming businesses,” group CEO Andrew Horton told a briefing. “With the vast majority of our business performing well, we should be able to spend the majority of our time planning for the future, rather than addressing problems created in the past.”

Mr Horton told insuranceNEWS.com.au the continuing North America businesses offer profitable growth, including in financial lines, cyber and healthcare, the Europe and UK business offers opportunities, and growth is seen in Australian commercial despite more competition.

“We’ve got such a breadth of portfolio that there’s quite a number of growth opportunities,” he said. “And although the rate of rate increase is falling, the technical adequacy of a lot of our lines of business is in pretty good shape.”

QBE maintained guidance for a full-year combined operating ratio of about 93.5% but cut the GWP growth outlook to about 3% from “mid single digits” previously.

The change mainly reflects the North America middle-market exit and factors in lower than anticipated crop premium and increased competition in Australia.

Group-wide premium renewal rates increased 6.7% in the half, led by short-tail lines in North America and Australia, with the pace slowing from 7.3% in the first quarter to 6% in the second. Australia and Pacific rates were up 9.9% in the half, but increased competition is being seen from local and London market participants.

Mr Horton says QBE is focused on margin amid a risk new short-term capital in the Australian market could push pricing down, in a return to soft market conditions.

“We’ve been in Australia a long time, we have very deep relationships with distribution partners, and this is when it becomes really important. We have a track record of showing consistency over 130 years,” he told insuranceNEWS.com.au.

“We’ve got to continue to focus on profitability, we shouldn’t focus too much on top-line premium.”

Mr Horton says QBE is continuing with a modernisation program, and its launch of global cyber policy QCyberProtect was timely, coming shortly before the CrowdStrike outage that affected systems around the world.

“Normally when these things happen, demand increases, because it reminds the market these are the sort of events you can insure against,” he said.  

The outage also highlights the need to manage aggregation risks, with businesses generally less attuned to cyber exposures than potential impacts from natural catastrophes.

“It just reminds people how interconnected everything is and how a relatively small upgrade can have a global impact,” Mr Horton said. “Cyber is something the insurance industry should do; we just need to manage the exposure, think about our reinsurance, manage the accumulations, think about our claims.”

QBE’s first-half result was also boosted by net investment income increasing to $US733 million ($1.12 billion) from $US662 million ($1 billion).