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QBE logs higher net profit YOY in FY'19 despite underwriting loss

QBE Insurance Group Ltd. reported statutory net profit after tax of US$550 million, or 41.5 cents per share, for 2019, up 41% from US$390 million, or 28.6 cents per share, in 2018.

The group's continuing operations logged statutory net profit after tax of US$568 million, up from US$555 million in the prior year. The group attributed the increase to significantly stronger investment returns that offset the reduced underwriting result, which was negatively affected by its severely weather-impacted North American crop business.

The group recorded an underwriting loss of US$2 million in 2019, compared with an underwriting profit of US$480 million in 2018.

Excluding noncash and material nonrecurring items, the group's adjusted cash profit was US$733 million, up 6% from US$692 million in the prior year. The 2019 adjusted result excludes a US$61 million increase in the group's net central estimate of outstanding claims reflecting the reduction in statutory discount rates applicable to U.K. personal injury liabilities with an associated US$10 million tax impact.

The group's combined operating ratio slightly deteriorated to 97.5% in 2019 from 95.7% in 2018.The group said its improved attritional claims ratio, excluding its crop and Australian lenders' mortgage insurance business, and efficiency gains, were offset by significantly reduced crop profitability, a reduced level of positive prior accident year claims development and an expected increase in the net cost of large individual risk and catastrophe claims after it restructured its reinsurance program.

QBE's North American operations saw its combined operating ratio deteriorate to 106.5% in 2019 from 98.7% in 2018 as severe weather adversely affected crop results. Adverse prior-accident-year developments also put downward pressure on the operations.

The group's international operations recorded a combined operating ratio of 95.4% in 2019, a slight year-over-year improvement from 95.9% in 2018. Australia Pacific had a combined operating ratio of 90.0%, compared with 90.3% in the prior year.

Gross written premium was US$13.44 billion in 2019, compared with US$13.66 billion in 2018. Gross earned premium was US$13.26 billion, compared with US$13.60 billion. Net earned premium stood at US$11.61 billion in 2019, compared with US$11.64 billion in 2018.

The group's board declared a final dividend of 27 Australian cents per share. When combined with the dividend declared for the first half of 2019, the full-year dividend amounts to 52 Australian cents per share, up from the 50 Australian cents per share paid out in 2018.