QBE Europe profit drops as trading conditions worsen

Australian insurer QBE’s European operations made an insurance profit before tax of $314m (£252m) in 2016, down 32% on the $464m profit reported in 2015.

The combined operating ratio worsened by 4.5 percentage points to 93.6% (2015: 89.1%) because of a combination of increased catastrophe claims and an increase in the attritional loss ratio from the “dramatic” devaluing of sterling.

Gross written premiums (GWP) were down 7% to $4.1bn (2015: $4.4bn). QBE said the GWP “fell short of expectations” because of its commitment to underwriting discipline and “the lack of acceptable new business opportunities”.

It pointed out that rates had fallen by 2.4% in the year, better than the 3.4% drop seen in 2015 thanks to an improvement in the second half of the year.

The company also said that it was looking “increasingly likely” that it would no longer be able to access the European Union effectively from the UK post-Brexit, and that the company is “well advanced in our business restructure planning” as a result of this.

Despite the deterioration in the QBE Europe profit, the division’s chief executive Richard Pryce (pictured) described the result as “another strong underwriting performance during a year of further deterioration in trading conditions, an industry-wide increase in large risk and catastrophe claims activity and unprecedented currency fluctuation.”