Besides motor, QBE Europe boss Richard Pryce said there was not enough rate increases in UK portfolios

QBE Europe saw profits fall 7% for 2018 to £237m from £256m last year.

The reduced performance was largely due to an underwriting result of £134m, down 18% on the 2017 result of £163m.

But chief executive of European operations Richard Pryce was full of praise for the group’s underwriting teams, who he said “continued to display leadership and discipline” in 2018.

The division saw an average renewal rate increase of 4.4%, compared with a reduction of 0.2% in 2017. But he said further rate adjustments were needed in poorer performing portfolios across the market.

“There are some portfolios that still need significant pricing correction and I think that should continue,” he said.

“We are obviously impacted by market pricing. The areas where we are seeing the most pronounced pricing are property, marine, financial lines and UK motor. All those classes need it.

“Our view is that they do still need to carry on because the margins are still not sufficient in those particular classes of business.”

In the UK, besides motor, Pryce said there had not been a lot of increase, and said he expected to see most rate increases in the London market this year.

Pryce added: “We benefit from having a diverse portfolio. Across the whole company next year we may not get the same level, we’ll probably get the same if not more in the London market.”

He put the overall underwriting performance down to a lower contribution from risk-free rates to discount net outstanding claims liabilities. 

Once this factor is excluded, the European arm’s combined operating ratio improved to 94.8% from 95.2% last year.

This adjustment equated to a net underwriting result of £137m, an improvement of 13% on 2017.

The insurer also posted a strong increase in GWP - up 4% to £3.27bn on a constant currency basis, with net earned premium up 5% to £2.63bn.

Pryce added: “Last year’s excellent performance is the result of an unwavering focus on delivering positive outcomes for our customers, a continued strong stance on pricing and cost control and an uplift in market conditions. 

“Our investment in and deployment of technology across our risk selection, pricing and claims functions is yielding considerable benefit both in terms of performance of our portfolios and the enhanced levels of service we are providing our customers.”