QBE expects flat premiums in 2017 due to pricing pressure

Australia’s insurance group QBE expects flat premium growth in 2017 after volumes dropped in 2016.

Gross written premiums were down 2 percent year-on-year at $14.09 billion while net earned premiums were down 2 percent over the period at $11.64 billion.

In light of the still competitive premium pricing landscape and recent exchange rate volatility, gross written premium is expected to remain relatively stable during 2017, the company said in a statement.

The rate of decline in global pricing is easing, the company said, adding that it anticipates that pricing in markets other than Australia will be broadly flat in 2017.

Net profit after tax was up 5 percent in 2016 at $844 million, pressured by adverse foreign exchange rates. The combined operating ratio improved to 93.2 percent in 2016 from 94.3 percent in the previous year.

The 2016 result includes $366 million of positive prior accident year claims development, up from $147 million in 2015, the company said in a statement. The group has reported five consecutive halves of favourable claims development.

“QBE recorded a strong 2016 result with a significant uplift in profitability that is testament to the strength and diversity of our global franchise underpinned by a strong underwriting culture and supported by a high quality balance sheet,” said CEO John Neal.

“Corrective actions across underwriting and pricing, together with improved discipline in our claims management functions, contributed to a significant improvement in the Australian & New Zealand attritional claims ratio in the second half of 2016.

“North American Operations reported a further improvement in performance with underwriting profit more than doubling and the combined operating ratio improving to 97.7 percent from 99.8 percent in 2015. We are expecting a further improvement in profitability in 2017 and 2018.

“European Operations again delivered a strong combined operating ratio of 90.2 percent and our Emerging Markets division recorded a stable combined operating ratio and double digit gross written premium growth on a constant currency basis,” Neal said.

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