Global insurer QBE has announced net profit of $750 million over 2021, marking a return to profitability after taking a net loss of $1,517 million in the previous year.
The improved performance reflects a turnaround in underwriting profitability, as well as considerable top-line growth, with gross written premiums increasing by 22% to $18,457 million.
QBE notes that insurance trading conditions were favourable throughout 2021, which helped to support its focus on driving improvements in profitability while also achieving growth.
In addition to the strong premium rate environment, premiums benefitted from improved customer retention and new business growth across all regions.
Growth in crop business was especially strong at 51%, and QBE reports that group-wide renewal rate increases averaging 9.7% during the year consistent with 1H 2021 and 9.8% for the full-year 2020 period.
QBE also reported a combined operating ratio of 93.7% for 2021, compared with 104.2% in the prior year which was significantly impacted by COVID-19 claims and adverse prior accident year claims development.
The group’s improved underwriting performance reflects a 1.4% improvement in the ex-cat claims ratio and a 2.2% reduction in the combined commission and expense ratio which more than offset significantly increased catastrophe claims.
Catastrophe claims for the year were $905 million or 6.6% of net earned premium, up from $688 million or 5.8% in the prior year and 0.9% above the QBE’s increased allowance. Events included Winter Storm Uri, Hurricane Ida, Storm Bernd, Cyclone Seroja and widespread flooding and storm damage in Australia.
The result included underlying adverse prior accident year claims development of $192 million or 1.4% of net earned premium compared with $366 million or 3.1% of adverse development in 2020.
Net investment income was $122 million compared with $226 million in the previous year.
“I am pleased with the strong premium growth and significant uplift in underwriting margin,” said QBE Group CEO, Andrew Horton. “The strong result was achieved despite the heightened level of catastrophes during the year which remain a major issue for the industry.”
“In targeting ongoing premium growth, we will remain vigilant in pricing adequately for an appropriate risk-adjusted return on capital, with claims inflation, catastrophe costs and overall portfolio volatility key areas of ongoing focus,” Horton continued.
“Our new strategic priorities will support further optimisation and improvement in returns, alongside a focus on driving greater consistency in returns.”
“Following another year of elevated natural catastrophe claims costs alongside rising inflationary signals and continued low interest rates, the industry operating environment remains highly uncertain. Because of this, the premium pricing environment is likely to remain positive in 2022.”
“In light of this, we expect gross written premium growth to be in the high single digits in 2022. Moreover, delivery against our strategic priorities should result in an improved and more consistent return profile over time such that the Group is capable of consistently delivering a low to mid-90’s combined operating ratio.”