QBE Insurance Group

2020
Annual 
Report

QBE INSURANCE GROUP LIMITED

Table of contents

A N N UA L   R E P O R T   2 02 0

Performance overview

Interim Group Chief Executive Officer’s report 

SECTION 1

Chair’s message 

2020 snapshot 

SECTION 2

Operating and financial review

Group Chief Financial Officer’s report 

North America business review 

International business review 

Australia Pacific business review 

Climate change – our approach to risks and opportunities 

SECTION 3

Governance

Managing risk – our business 

Board of Directors 

Group Executive Committee 

Corporate governance statement 

SECTION 4

Directors’ Report

Directors’ Report 

Remuneration Report 

Auditor’s independence declaration 

SECTION 5

Financial Report

Financial Report contents 

Financial statements 

Notes to the financial statements 

Directors’ declaration 

Independent auditor’s report 

SECTION 6

Other information

Shareholder information 

Financial calendar 

10-year history 

Glossary 

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QBE Insurance Group Limited  |  ABN 28 008 485 014

All amounts in this report are US dollars unless otherwise stated.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
1

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Table of contents

A N N UA L   R E P O R T  2 02 0

SECTION 1

Performance overview
Chair’s message 
2020 snapshot 
Interim Group Chief Executive Officer’s report 

SECTION 2

Operating and financial review
Group Chief Financial Officer’s report 
North America business review 
International business review 
Australia Pacific business review 

SECTION 3

Governance
Climate change – our approach to risks and opportunities 
Managing risk – our business 
Board of Directors 
Group Executive Committee 
Corporate governance statement 

SECTION 4

Directors’ Report
Directors’ Report 
Remuneration Report 
Auditor’s independence declaration 

SECTION 5

Financial Report
Financial Report contents 
Financial statements 
Notes to the financial statements 
Directors’ declaration 
Independent auditor’s report 

SECTION 6

Other information
Shareholder information 
Financial calendar 
10-year history 
Glossary 

QBE Insurance Group Limited  |  ABN 28 008 485 014

All amounts in this report are US dollars unless otherwise stated.

2
4
6

10 
22
24
26

28
36
38
40
42

50
54
78

79
80
84
156
157

165
168
169
170

 
 
 
 
 
 
 
 
 
 
 
 
 
 
2

 CHAIR’S MESSAGE

Evolving and transforming 
our business

The COVID-19 pandemic coupled with increased catastrophe activity and 
a shifting global geopolitical landscape provided a challenging backdrop in 
2020. Although the lowest point of the crisis may be behind us, the effects 
of the pandemic are likely to reverberate for some time, creating ongoing 
uncertainty for our business, our customers and society at large. 

The pandemic had far-reaching 
consequences beyond the spread of the 
disease itself. Global economies face 
long-term repercussions with higher 
unemployment, equity market volatility 
and ongoing downward pressure on 
interest rates. Like most industries, the 
insurance industry has been impacted 
by the pandemic, with higher claims 
costs and lower investment returns. 
Nonetheless, QBE is well placed 
to benefit as economies recover in the 
markets in which we operate, and we are 
able to leverage our global diversification 
and a continuing strong rate environment. 

Amid the pandemic, we also saw social 
unrest and a year of significantly higher 
than normal catastrophe events around 
the world, including an extremely active 

wildfire season as well as a record number 
of named storms in the US, extreme 
bushfires and storm activity including hail 
damage in Australia, and typhoons in Asia. 

Notwithstanding this period of volatility 
and unrest, QBE remained focused on 
delivering sound underlying performance 
as well as supporting the wellbeing and 
safety of our people, our customers, our 
business partners and the communities 
in which we operate. This focus remains 
relevant for the here and now as well 
as underpinning our plans for the future.

The strength and resilience of our business 
are evident in the Group’s underlying 
financial performance for the year ended 
December 2020. While your Board 
recognises the disappointing headline 

statutory loss reported for the 2020 
financial year, both our capital position 
and our underlying business fundamentals 
remain strong. Actions taken early on as 
the pandemic crisis unfolded stood us in 
good stead, ensuring we retained a strong 
balance sheet while maintaining underlying 
earnings momentum. Further details of our 
full year results are explored in the reports 
of both the Interim Group Chief Executive 
Officer and Group Chief Financial Officer 
on subsequent pages.

QBE remains focused on the key drivers 
of business performance and the 
maintenance of the underlying disciplines 
that are fundamental for long-term 
success. To this end, cell reviews and 
Brilliant Basics remain important, as is our 
ongoing operational efficiency program. 

3

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In light of the substantial 2020 statutory 

to drive these initiatives. Supporting this 

to sustainable insurance and investment. 

loss, the Board has elected not to 

is our global Culture Advisory Group, 

The framework further supports the 

declare a final dividend. In making the 

which will work with our external partners 

integration of environmental, social and 

decision, we have been conscious of 

to help us build on our leadership capability 

governance (ESG) considerations into our 

maintaining a strong balance sheet which 

and identify any gaps and levers to further 

core business and increased transparency 

provides us with considerable flexibility 

enhance our culture. 

with our customers.

Looking ahead

We commence the 2021 year with 

optimism; however, we acknowledge that 

challenges remain from an economic and 

industry perspective. While it is unclear 

how long it will take for economies and 

society more generally to fully recover 

from the pandemic, we remain focused 

on transforming our business, processes 

and technology to deliver better outcomes 

for all of our stakeholders.

We will continue to work with governments 

and regulators to better prepare for, 

and to respond to, low probability, 

high impact events like the COVID-19 

pandemic. This has prompted a broad 

discussion within the industry as to how 

we provide appropriate support to our 

customers during this extraordinary and 

challenging time. QBE remains determined 

to play an active and constructive role 

in these discussions.

QBE responded decisively in 2020 to 

establish solid foundations for the future. 

I am very proud of our people who work 

every day to deliver outstanding outcomes 

for our customers. We have a hardworking 

and talented team, a sound balance sheet 

and a program of work that allow us to 

better serve our customers, shareholders 

Given the considerable uncertainty as 

a result of the pandemic and its impact 

on economies, QBE has determined not 

to provide results targets for the 2021 

financial year, at this stage. We will 

continue to review this decision and 

will update the market accordingly.

Mike Wilkins AO

Independent Chair

for future investment in, and growth of, 

our business.

Leadership 

In 2020, we saw changes to the Group 

Executive Committee and this year we 

are pleased to announce the appointments 

of Fiona Larnach, as our new Group Chief 

Risk Officer, and Sue Houghton, as our 

new Chief Executive Officer Australia 

Pacific. These appointments highlight our 

commitment to diversity and in 2021 the 

Group Executive Committee will comprise 

45% women.

The Board is also committed to ensuring 

we continue to invest in our leaders, with 

succession planning a key area. In 2021, 

we will accelerate our focus on the 

development of existing leaders to prepare 

them for their next role and invest in the 

development of our talent pipeline. Board 

renewal is also an important part of setting 

QBE up for the future. As such, we were 

pleased to welcome Tan Le and Eric Smith 

who both joined our Board in September 

2020, supporting our digital agenda 

and broadening our skills in the North 

American insurance market respectively.

During 2020, we also saw the departure 

of our Group Chief Executive Officer, Pat 

Operating sustainably

Regan, following an external investigation 

We continue to integrate sustainability 

concerning workplace communications 

across all facets of the business. 

that the Board concluded did not meet 

In a year of major natural disasters 

the standards set out in the Group Code 

and the COVID-19 pandemic, we have 

of Ethics and Conduct. While this was 

scaled up our support for our customers 

a setback, the fundamentals of the 

and communities through disaster 

business remain strong and importantly 

relief and risk management education. 

our strategy and priorities remain 

We also became a signatory to the United 

unchanged. In October, we announced 

Nations Global Compact and are working 

that Richard Pryce would assume the 

to advance the 10 principles related 

role of Interim Group Chief Executive 

to human rights, labour, environment 

Officer while a search is underway for 

and anti-corruption by embedding them 

a permanent replacement, providing 

into our strategy, culture and day-to-day 

important continuity as we execute 

operations at QBE.

on our strategic priorities.

Our sustainability scorecard, outlined in 

work and dedication of our people. I am 

progress against our key sustainability 

proud of how our teams have responded 

objectives. We also remain committed to 

in this time of uncertainty and their ability 

advancing the United Nations Sustainable 

to continue to deliver the best possible 

Development Goals, with a focus on our 

outcomes and solutions for our customers. 

five priority goals where we can have the 

On behalf of the Board, I extend my 

greatest impact.

sincere thanks to Richard and the entire 

executive team as well as all our people 

for their demonstrated adaptability and 

flexibility around new ways of working and 

their continued commitment to meeting 

the needs of our customers and the 

communities in which we operate.

Throughout the year, we continued 

to deliver against our Climate Change 

Action Plan. We have set metrics 

and targets to measure and monitor 

climate-related risks and opportunities 

as outlined in our climate change 

disclosures on pages 28 to 35 of this 

Following the departure of Pat Regan, 

Annual Report. This includes recently 

we announced that we would undertake 

joining the UN-convened Net-Zero 

a review of QBE’s culture. This review will 

Asset Owner Alliance and committing 

seek to build on the many strong elements 

to transition our investment portfolios 

of our culture while also identifying the 

to net-zero greenhouse gas emissions 

target culture that we need for the future. 

by 2050. In 2020, we also developed 

We remain committed to providing 

an environmental and social (E&S) risk 

a respectful and inclusive environment 

framework which identifies the sectors 

for all of our people and continue to build 

and issues that present an increased 

a stronger, better QBE. With this in mind, 

E&S risk to our business, including 

we have put in place a series of initiatives 

energy and biodiversity, and outlines 

that will add to our existing QBE DNA 

our approach to managing those risks. 

framework. John Green, Deputy Chair 

The framework has been developed 

and Tan Le, non-executive director, have 

to promote informed decision making 

been appointed by the Board as sponsors 

that is consistent with our commitment 

Our business is supported by the hard 

our 2020 Sustainability Report, highlights 

and communities. 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
2

3

 CHAIR’S MESSAGE

Evolving and transforming 

our business

The COVID-19 pandemic coupled with increased catastrophe activity and 

a shifting global geopolitical landscape provided a challenging backdrop in 

2020. Although the lowest point of the crisis may be behind us, the effects 

of the pandemic are likely to reverberate for some time, creating ongoing 

uncertainty for our business, our customers and society at large. 

The pandemic had far-reaching 

wildfire season as well as a record number 

statutory loss reported for the 2020 

consequences beyond the spread of the 

of named storms in the US, extreme 

financial year, both our capital position 

disease itself. Global economies face 

bushfires and storm activity including hail 

and our underlying business fundamentals 

damage in Australia, and typhoons in Asia. 

remain strong. Actions taken early on as 

long-term repercussions with higher 

unemployment, equity market volatility 

and ongoing downward pressure on 

interest rates. Like most industries, the 

insurance industry has been impacted 

by the pandemic, with higher claims 

costs and lower investment returns. 

Nonetheless, QBE is well placed 

to benefit as economies recover in the 

markets in which we operate, and we are 

able to leverage our global diversification 

and a continuing strong rate environment. 

Amid the pandemic, we also saw social 

unrest and a year of significantly higher 

than normal catastrophe events around 

the world, including an extremely active 

Notwithstanding this period of volatility 

and unrest, QBE remained focused on 

delivering sound underlying performance 

as well as supporting the wellbeing and 

safety of our people, our customers, our 

business partners and the communities 

in which we operate. This focus remains 

relevant for the here and now as well 

as underpinning our plans for the future.

The strength and resilience of our business 

are evident in the Group’s underlying 

financial performance for the year ended 

December 2020. While your Board 

recognises the disappointing headline 

the pandemic crisis unfolded stood us in 

good stead, ensuring we retained a strong 

balance sheet while maintaining underlying 

earnings momentum. Further details of our 

full year results are explored in the reports 

of both the Interim Group Chief Executive 

Officer and Group Chief Financial Officer 

on subsequent pages.

QBE remains focused on the key drivers 

of business performance and the 

maintenance of the underlying disciplines 

that are fundamental for long-term 

success. To this end, cell reviews and 

Brilliant Basics remain important, as is our 

ongoing operational efficiency program. 

In light of the substantial 2020 statutory 
loss, the Board has elected not to 
declare a final dividend. In making the 
decision, we have been conscious of 
maintaining a strong balance sheet which 
provides us with considerable flexibility 
for future investment in, and growth of, 
our business.

Leadership 

In 2020, we saw changes to the Group 
Executive Committee and this year we 
are pleased to announce the appointments 
of Fiona Larnach, as our new Group Chief 
Risk Officer, and Sue Houghton, as our 
new Chief Executive Officer Australia 
Pacific. These appointments highlight our 
commitment to diversity and in 2021 the 
Group Executive Committee will comprise 
45% women.

During 2020, we also saw the departure 
of our Group Chief Executive Officer, Pat 
Regan, following an external investigation 
concerning workplace communications 
that the Board concluded did not meet 
the standards set out in the Group Code 
of Ethics and Conduct. While this was 
a setback, the fundamentals of the 
business remain strong and importantly 
our strategy and priorities remain 
unchanged. In October, we announced 
that Richard Pryce would assume the 
role of Interim Group Chief Executive 
Officer while a search is underway for 
a permanent replacement, providing 
important continuity as we execute 
on our strategic priorities.

Our business is supported by the hard 
work and dedication of our people. I am 
proud of how our teams have responded 
in this time of uncertainty and their ability 
to continue to deliver the best possible 
outcomes and solutions for our customers. 
On behalf of the Board, I extend my 
sincere thanks to Richard and the entire 
executive team as well as all our people 
for their demonstrated adaptability and 
flexibility around new ways of working and 
their continued commitment to meeting 
the needs of our customers and the 
communities in which we operate.

Following the departure of Pat Regan, 
we announced that we would undertake 
a review of QBE’s culture. This review will 
seek to build on the many strong elements 
of our culture while also identifying the 
target culture that we need for the future. 
We remain committed to providing 
a respectful and inclusive environment 
for all of our people and continue to build 
a stronger, better QBE. With this in mind, 
we have put in place a series of initiatives 
that will add to our existing QBE DNA 
framework. John Green, Deputy Chair 
and Tan Le, non-executive director, have 
been appointed by the Board as sponsors 

to drive these initiatives. Supporting this 
is our global Culture Advisory Group, 
which will work with our external partners 
to help us build on our leadership capability 
and identify any gaps and levers to further 
enhance our culture. 

to sustainable insurance and investment. 
The framework further supports the 
integration of environmental, social and 
governance (ESG) considerations into our 
core business and increased transparency 
with our customers.

Looking ahead

We commence the 2021 year with 
optimism; however, we acknowledge that 
challenges remain from an economic and 
industry perspective. While it is unclear 
how long it will take for economies and 
society more generally to fully recover 
from the pandemic, we remain focused 
on transforming our business, processes 
and technology to deliver better outcomes 
for all of our stakeholders.

We will continue to work with governments 
and regulators to better prepare for, 
and to respond to, low probability, 
high impact events like the COVID-19 
pandemic. This has prompted a broad 
discussion within the industry as to how 
we provide appropriate support to our 
customers during this extraordinary and 
challenging time. QBE remains determined 
to play an active and constructive role 
in these discussions.

QBE responded decisively in 2020 to 
establish solid foundations for the future. 
I am very proud of our people who work 
every day to deliver outstanding outcomes 
for our customers. We have a hardworking 
and talented team, a sound balance sheet 
and a program of work that allow us to 
better serve our customers, shareholders 
and communities. 

Given the considerable uncertainty as 
a result of the pandemic and its impact 
on economies, QBE has determined not 
to provide results targets for the 2021 
financial year, at this stage. We will 
continue to review this decision and 
will update the market accordingly.

Mike Wilkins AO
Independent Chair

The Board is also committed to ensuring 
we continue to invest in our leaders, with 
succession planning a key area. In 2021, 
we will accelerate our focus on the 
development of existing leaders to prepare 
them for their next role and invest in the 
development of our talent pipeline. Board 
renewal is also an important part of setting 
QBE up for the future. As such, we were 
pleased to welcome Tan Le and Eric Smith 
who both joined our Board in September 
2020, supporting our digital agenda 
and broadening our skills in the North 
American insurance market respectively.

Operating sustainably

We continue to integrate sustainability 
across all facets of the business. 
In a year of major natural disasters 
and the COVID-19 pandemic, we have 
scaled up our support for our customers 
and communities through disaster 
relief and risk management education. 
We also became a signatory to the United 
Nations Global Compact and are working 
to advance the 10 principles related 
to human rights, labour, environment 
and anti-corruption by embedding them 
into our strategy, culture and day-to-day 
operations at QBE.

Our sustainability scorecard, outlined in 
our 2020 Sustainability Report, highlights 
progress against our key sustainability 
objectives. We also remain committed to 
advancing the United Nations Sustainable 
Development Goals, with a focus on our 
five priority goals where we can have the 
greatest impact.

Throughout the year, we continued 
to deliver against our Climate Change 
Action Plan. We have set metrics 
and targets to measure and monitor 
climate-related risks and opportunities 
as outlined in our climate change 
disclosures on pages 28 to 35 of this 
Annual Report. This includes recently 
joining the UN-convened Net-Zero 
Asset Owner Alliance and committing 
to transition our investment portfolios 
to net-zero greenhouse gas emissions 
by 2050. In 2020, we also developed 
an environmental and social (E&S) risk 
framework which identifies the sectors 
and issues that present an increased 
E&S risk to our business, including 
energy and biodiversity, and outlines 
our approach to managing those risks. 
The framework has been developed 
to promote informed decision making 
that is consistent with our commitment 

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4

2020 snapshot 1

Shareholder highlights

Dividend payout (A$M)

59

 91% from 2019

4
5

2
5

0
5

6
2

A¢
60

45

30

15

0

A$M
1,500

1,125

750

375

4

0

2016

2017

2018

2019

2020

Dividend per share (A¢)

Dividend payout (A$M)

Adjusted cash (loss) profit return on average 
shareholders’ equity 2

(10.9)%

2019  8.9%

Earnings (loss) profit per 
share (US¢)

(108.5)

2019  41.8

Dividend per share (A¢)

4

Financial highlights 3

Gross written premium  

by class of business (US$M)

Net earned premium (US$M)

Net earned premium by type 

14,643

 10% from 2019 4,5

(cid:31) Commercial & 

domestic property 

30.4 

29.2

2020  2019

% 

%

(cid:31) Agriculture 

(cid:31)  Motor & motor casualty 

(cid:31)  Public/product liability 

(cid:31)  Professional indemnity 

(cid:31)  Marine, energy & aviation 

(cid:31)  Workers' compensation 

(cid:31)  Accident & health 

(cid:31)  Financial & credit 

(cid:31)  Other 

14.1 

12.1 

11.9 

9.2 

8.2 

5.8 

4.8 

3.2 

0.3 

13.7

14.4

11.9

8.4

6.6

7.1

5.3

3.3

0. 1

 4% from 2019 4,5

Accident & health

Insurance profit and 

Workers' compensation

underwriting result (US$M)

Marine energy & aviation

11,708 

Other

Financial & credit

Marine energy & aviation

Combined operating ratio 6 

Professional indemnity

Public/product liability

104.2% 

Motor & motor casualty

2019  97.5% 7

Agriculture

Commercial & domestic property

Other

90% direct and 

insurance

facultative 

Financial & credit

  10% inward 

Accident & health

reinsurance

Insurance (loss) profit (US$M)

Workers' compensation

Professional indemnity

(727) 

Public/product liability

8

0

7

0

9

2

2019 708 7

Agriculture

Motor & motor casualty

Underwriting  

(loss) profit 6 (US$M) 

Commercial & domestic property

)

7

2

7

(

)

8

8

4

(

9

1

0

2

0

2

0

2

  Insurance 

(loss) profit

  Underwriting 

(loss) profit

Net (loss) profit after tax (US$M)

(1,517) 

2019 622 7

Insurance

(loss) profit

Underwriting

result

(488)

4%

2019 290 7

6%

Sustainability highlights

Operational highlights 3

Climate action

Joined the 
UN‑convened 
Net‑Zero Asset 
Owner Alliance

our investment portfolio 
is targeting net-zero 
greenhouse gas 
emissions by 2050

CDP climate change  
disclosure score

A-

  from B in 2019

Operational renewable electricity use

Target by 2025

Currently

100%

97%

2019  63%

Gross written 

premium growth 5

Average renewal premium rate increase 8

Premium retention

Group 

Segment

 10% 4

2019  4%

9.8%

2019  6.3%

North America

International

10.2%

12.8%

Australia Pacific

5.4%

82%

2019  78%

Premiums4Good (US$B)

Building an inclusive workplace and culture

2025 ambition  

$2.0B

Total invested

$1.1B

QBE Voice survey result: 
Engagement 

Insurance Business Asia: 
Top insurance workplace

Included as a member of the 2021 
Bloomberg Gender‑Equality Index

76%

as at 31 December 2020

2019  70%

1	 Financial	information	in	the	tables	above	is	extracted	or	derived	from	the	Group’s	audited	financial	statements	included	on	pages	80	to	164	of	this	

Annual	Report.	The	Group	Chief	Financial	Officer’s	report	sets	out	further	analysis	of	the	results.

2	 2020	adjusted	cash	loss	return	on	average	shareholders’	equity	excludes	non-cash	and	material	non-recurring	items	such	as	restructuring	costs,	
losses	on	disposals,	and	adjusts	for	Additional	Tier	1	capital	(AT1)	coupons.	2019	adjusted	cash	profit	return	on	average	shareholders’	equity	
excludes	restructuring	costs,	losses	on	disposals,	the	impact	of	the	Ogden	decision	in	the	UK,	and	discontinued	operations.

Attritional claims ratio 4,9

Group 

Segment

44.6% 

2019  47.5%

North America

International

Australia Pacific

Large individual 

risk claims 4 (US$M)

Catastrophe 

claims 4 (US$M)

46.3%

40.2%

49.4%

932 

688 

  2% from 2019

 62% from 2019

3	 2019	figures	reflect	results	for	continuing	operations	only.

4	 Excludes	impact	of	COVID-19.	

5	 Constant	currency	basis	and	excluding	impact	of	2019	disposals.

6	 Excludes	the	impact	of	changes	in	risk-free	rates	used	to	discount	net	outstanding	claims.

7	 Excludes	one-off	impact	of	the	Ogden	decision	in	the	UK.

8	 Excludes	premium	rate	changes	relating	to	North	America	Crop	and/or	Australian	compulsory	third	party	motor	(CTP).

9	 Excludes	Crop	and/or	lenders’	mortgage	insurance	(LMI).

5

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4

5

2020 snapshot 1

Financial highlights 3

Gross written premium  
by class of business (US$M)

Net earned premium (US$M)

Net earned premium by type 

Dividend payout (A$M)

Adjusted cash (loss) profit return on average 

Shareholder highlights

4

5

2

5

0

5

59

 91% from 2019

6

2

A¢

60

45

30

15

0

A$M

1,500

1,125

750

375

4

0

2016

2017

2018

2019

2020

Dividend per share (A¢)

Dividend payout (A$M)

shareholders’ equity 2

(10.9)%

2019  8.9%

Earnings (loss) profit per 

Dividend per share (A¢)

share (US¢)

(108.5)

2019  41.8

4

14,643
 10% from 2019 4,5

(cid:31) Commercial & 

2020  2019
%

% 

domestic property 

30.4 

29.2

(cid:31) Agriculture 
(cid:31)  Motor & motor casualty 
(cid:31)  Public/product liability 
(cid:31)  Professional indemnity 
(cid:31)  Marine, energy & aviation 
(cid:31)  Workers' compensation 
(cid:31)  Accident & health 
(cid:31)  Financial & credit 
(cid:31)  Other 

14.1 

12. 1 

11.9 

9.2 

8.2 

5.8 

4.8 

3.2 

0.3 

13.7

14.4

11.9

8.4

6.6

7.1

5.3

3.3

0. 1

11,708 

Other

Financial & credit

 4% from 2019 4,5

Accident & health

Other

Financial & credit

facultative 
insurance

90% direct and 
  10% inward 

Accident & health

Marine energy & aviation

reinsurance

Workers' compensation

Insurance profit and 
underwriting result (US$M)

Marine energy & aviation
Combined operating ratio 6 

Professional indemnity

Public/product liability

104.2% 

Motor & motor casualty

2019  97.5% 7

Agriculture

Commercial & domestic property

Net (loss) profit after tax (US$M)

Insurance (loss) profit (US$M)

Workers' compensation

Professional indemnity

(727) 

Public/product liability

8
0
7

0
9
2

2019 708 7

Agriculture

Motor & motor casualty

Underwriting  
(loss) profit 6 (US$M) 

Commercial & domestic property

)
7
2
7
(

)
8
8
4
(

(1,517) 

2019 622 7

Insurance
(loss) profit
Underwriting
result

(488)
4%
6%

2019 290 7

9
1
0
2

0
2
0
2

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(loss) profit
  Underwriting 
(loss) profit

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Sustainability highlights

Operational highlights 3

'

Climate action

Joined the 

UN‑convened 

Net‑Zero Asset 

Owner Alliance

our investment portfolio 

is targeting net-zero 

greenhouse gas 

emissions by 2050

CDP climate change  

disclosure score

A-

  from B in 2019

Operational renewable electricity use

Target by 2025

Currently

100%

97%

2019  63%

Gross written 
premium growth 5

Average renewal premium rate increase 8

Premium retention

Group 

Segment

 10% 4

2019  4%

9.8%

2019  6.3%

North America

International

10.2%

12.8%

Australia Pacific

5.4%

82%

2019  78%

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Premiums4Good (US$B)

Building an inclusive workplace and culture

QBE Voice survey result: 

Engagement 

Insurance Business Asia: 

Top insurance workplace

Included as a member of the 2021 

Bloomberg Gender‑Equality Index

2025 ambition  

$2.0B

Total invested

$1.1B

76%

as at 31 December 2020

2019  70%

Attritional claims ratio 4,9

Group 

Segment

44.6% 

2019  47.5%

North America

International

Australia Pacific

Large individual 
risk claims 4 (US$M)

Catastrophe 
claims 4 (US$M)

o
n

46.3%

40.2%

49.4%

932 

688 

  2% from 2019

 62% from 2019

1	 Financial	information	in	the	tables	above	is	extracted	or	derived	from	the	Group’s	audited	financial	statements	included	on	pages	80	to	164	of	this	

Annual	Report.	The	Group	Chief	Financial	Officer’s	report	sets	out	further	analysis	of	the	results.

2	 2020	adjusted	cash	loss	return	on	average	shareholders’	equity	excludes	non-cash	and	material	non-recurring	items	such	as	restructuring	costs,	

losses	on	disposals,	and	adjusts	for	Additional	Tier	1	capital	(AT1)	coupons.	2019	adjusted	cash	profit	return	on	average	shareholders’	equity	

excludes	restructuring	costs,	losses	on	disposals,	the	impact	of	the	Ogden	decision	in	the	UK,	and	discontinued	operations.

3	 2019	figures	reflect	results	for	continuing	operations	only.
4	 Excludes	impact	of	COVID-19.	
5	 Constant	currency	basis	and	excluding	impact	of	2019	disposals.
6	 Excludes	the	impact	of	changes	in	risk-free	rates	used	to	discount	net	outstanding	claims.
7	 Excludes	one-off	impact	of	the	Ogden	decision	in	the	UK.
8	 Excludes	premium	rate	changes	relating	to	North	America	Crop	and/or	Australian	compulsory	third	party	motor	(CTP).
9	 Excludes	Crop	and/or	lenders’	mortgage	insurance	(LMI).

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6

INTERIM GROUP CHIEF EXECUTIVE OFFICER’S REPORT

Delivering value for 
our customers 

The last 12 months have been dominated by COVID-19 and an elevated level of 
catastrophe activity, resulting in one of the most challenging years in recent history 
for many industries and communities. QBE is no exception, and we navigated multiple 
challenges while continuing to support our customers, people and communities. 
The impact of COVID-19 has been widespread and unparalleled and, while some 
economic uncertainties remain, we commence 2021 with more optimism.

Customer focus

Building a culture of 
consistent, proactive and 
insightful engagement.

Building better 
relationships to generate 
sustainable growth.

The insurance industry started 2020 
managing the effects of a deep and 
protracted soft market which contributed 
to claims reserve deficiencies across the 
sector. This continued during the year 
and, combined with the ongoing effects 
of social inflation, is one of the reasons 
we are seeing meaningful premium rate 
increases in casualty lines, particularly 
in the northern hemisphere. We also 
witnessed an extreme sequence of 
adverse weather events, with an estimated 
global insurance industry catastrophe 
cost of $97 billion, making 2020 the 
fifth‑costliest year since 1970. More 
than three quarters of all insured natural 
catastrophe losses in 2020 occurred 
in the United States which saw a record 
30 named storms and approximately 
50,000 wildfires burning 8.5 million acres. 

Australia was also a major contributor 
to the global losses, with extreme 
bushfires burning close to 46 million 
acres throughout 2019 and 2020, 
destroying over 3,500 homes. Australia 
also witnessed increased storm activity in 
2020 including severe hailstorms. These 
events are having an impact on pricing 
for property business with the possibility 
of further increases if we continue to see 
higher than normal catastrophe activity. 

Given the acceleration of premium rate 
increases in many of our geographies 
and products in response to the generally 
unfavourable claims environment, 
QBE is well positioned to maximise the 
opportunity presented by improving 
market conditions globally. We have 
an excellent range of products across 
an extended geographical footprint, 

7

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to do so and in limited numbers, to allow 

The net combined operating ratio 

supported by a quality claims service. 

adapted the way we operate in response 

In addition, our global reinsurance 

business, QBE Re, is expected to 

to the pandemic to ensure the safety 

and wellbeing of our customers, people 

grow as reinsurance pricing continues 

and communities. 

to improve. We continue to invest 

in analytical risk selection and pricing 

tools that will enable our underwriting 

teams to deploy capital in the most 

beneficial way for shareholders.

Throughout 2020, our 11,000 strong 

workforce moved seamlessly to operate 

remotely as various government directives 

impacted our ways of working. Despite 

these challenges, we continued to deliver 

I am also pleased that we were able 

on our customer commitments with service 

to renew the Group’s 2021 reinsurance 

levels remaining relatively unchanged. We 

structure broadly in line with the 2020 

provided a wide range of additional support 

expiring program and at better terms 

and financial relief, such as premium 

than initially expected.

Sustainability

The frequency of weather events in 2020 

continued to remind us of the challenge 

that climate change presents and the 

need for an ongoing focus on managing 

climate‑related risks. We recognise the 

important part we play in our customers’ 

lives when such events occur and we are 

working closely with governments, the 

insurance industry and the community 

to address or mitigate some of the 

issues through disaster relief and risk 

management education. We continue 

to advance our Climate Change Action 

Plan and have set metrics and targets 

to measure and monitor climate‑related 

risks and opportunities as outlined in our 

climate disclosures on pages 28 to 35 

of this Annual Report.

rebates and payment holidays, and 

continue to pay legitimate claims as quickly 

as possible. In 2020, we paid $101 million 

of COVID‑19 related claims. We also put 

in place a range of initiatives that helped 

alleviate financial pressures to support 

our customers throughout the period.

The safety of our people remains 

paramount. At the start of the pandemic, 

we successfully set up our people to work 

remotely. We are starting to return to 

offices in certain locations where it is safe 

for social distancing. We continue to 

support our people in these new ways 

of working and offer a range of benefits 

and support, including a regular check 

in through our Group‑wide wellbeing 

survey, wellbeing‑focused activities 

and access to the employee assistance 

programs. We know that 2020 was 

a challenging year for our people, 

We were pleased to join the UN‑convened 

impacted as they were by the pandemic 

Net‑Zero Asset Owners Alliance, further 

supporting the transition to a lower carbon 

and changes in the Group’s senior 

leadership as outlined in the Chair’s 

economy, and we became a signatory 

to the United Nations Global Compact. 

We are also working closely with many 

of our customers as they manage their 

transition towards clean energy. One 

message on pages 2 to 3. We are working 

with our Board sponsors to build on our 

QBE DNA with the Culture Accelerator 

framework now underway, to ensure we 

continue to provide a safe, respectful and 

example of this is the support we provided 

inclusive environment for our people.

through insurance of the Dogger Bank 

wind farm project off the north east coast 

of England. This joint venture by two of our 

customers resulted in the world’s largest 

offshore wind farm with capacity to power 

up to 4.5 million homes. In Europe, we 

have increased our renewable energy book 

of business by around 50% to $33 million. 

Supporting our customers, 

people and communities

At QBE, we recognise the significant 

hardship many of our customers and 

communities are facing, and we have 

Through the pandemic, the QBE 

Foundation has remained active in 

supporting the communities in which 

we work, partnering with impactful 

not‑for‑profit organisations around the 

world to safeguard vulnerable communities, 

enabling financial resilience and 

strengthening their health and wellbeing. 

We responded proactively to the 

challenges presented by COVID‑19, 

pivoting where required to support our 

existing partners, Red Cross and 

Save the Children, as they experienced 

increased demand for their services and 

a reduction in funding and donations. 

Financial performance 

As the pandemic emerged, we took 

pre‑emptive action to strengthen our 

capital position, executing a capital plan 

to protect the balance sheet against 

potential downside scenarios. This action 

enables us to take advantage of profitable 

growth opportunities as they arise, as well 

as supporting our target regulatory capital 

range and reducing gearing.

In December 2020, we updated the market 

of our revised 2020 result expectations 

and subsequently announced a full year 

statutory loss of $1,517 million, a result 

we all recognise as disappointing and 

well below expectations. In addition 

to a disappointing underwriting 

performance, the result was impacted 

by significantly reduced investment 

income and a number of material one‑off 

and/or non‑cash charges including an 

impairment of goodwill and deferred tax 

assets in North America as well as IT 

and real estate related charges. 

increased to 104.2% 1 from 97.5% 1,2,3 

in 2019, largely as a result of material 

COVID‑19 related costs, adverse prior 

accident year claims development 

(including the impact of social inflation) 

and elevated catastrophe claims. 

As is explained in more detail in the Group 

Chief Financial Officer’s report, despite 

the poor headline underwriting result the 

underlying current accident year combined 

operating ratio improved to 94.0% 4,5 from 

98.4% 2,3,5 in 2019. This was primarily 

due to a further material improvement 

in our attritional claims ratio and a modest 

improvement in our large individual risk 

claims ratio, and reflects significant 

premium rate increases. 

Gross written premium increased 10% 4,6 

year‑on‑year, underpinned by an average 

renewal premium rate increase of 9.8% 7, 

particularly in our North America and 

International divisions where we saw 

premium rates accelerate further during 

the second half of 2020. 

After a significant first half investment loss, 

our investment return rebounded strongly 

in the second half of the year with credit 

spread losses fully recovered by year end. 

We intend to retain a conservative asset 

allocation while there remains significant 

ongoing economic uncertainty associated 

with the pandemic. 

1  Excludes impact of changes in risk‑free rates used to discount net outstanding claims.

2  Excludes one‑off impact of the Ogden decision in the UK.

3  Continuing operations basis.

4  Excludes impact of COVID‑19.

5  Normalised for above plan catastrophe claims and changes in risk margin increase. 

6  Constant currency basis and excludes impact of 2019 disposals.

7  Excludes premium rate changes relating to North America Crop and/or Australian CTP.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
6

7

INTERIM GROUP CHIEF EXECUTIVE OFFICER’S REPORT

Delivering value for 

our customers 

The last 12 months have been dominated by COVID-19 and an elevated level of 

catastrophe activity, resulting in one of the most challenging years in recent history 

for many industries and communities. QBE is no exception, and we navigated multiple 

challenges while continuing to support our customers, people and communities. 

The impact of COVID-19 has been widespread and unparalleled and, while some 

economic uncertainties remain, we commence 2021 with more optimism.

Customer focus

Building a culture of 

consistent, proactive and 

insightful engagement.

Building better 

relationships to generate 

sustainable growth.

The insurance industry started 2020 

Australia was also a major contributor 

managing the effects of a deep and 

to the global losses, with extreme 

protracted soft market which contributed 

bushfires burning close to 46 million 

to claims reserve deficiencies across the 

acres throughout 2019 and 2020, 

sector. This continued during the year 

and, combined with the ongoing effects 

of social inflation, is one of the reasons 

we are seeing meaningful premium rate 

increases in casualty lines, particularly 

in the northern hemisphere. We also 

witnessed an extreme sequence of 

destroying over 3,500 homes. Australia 

also witnessed increased storm activity in 

2020 including severe hailstorms. These 

events are having an impact on pricing 

for property business with the possibility 

of further increases if we continue to see 

higher than normal catastrophe activity. 

adverse weather events, with an estimated 

global insurance industry catastrophe 

cost of $97 billion, making 2020 the 

fifth‑costliest year since 1970. More 

Given the acceleration of premium rate 

increases in many of our geographies 

and products in response to the generally 

unfavourable claims environment, 

than three quarters of all insured natural 

QBE is well positioned to maximise the 

catastrophe losses in 2020 occurred 

opportunity presented by improving 

in the United States which saw a record 

market conditions globally. We have 

30 named storms and approximately 

an excellent range of products across 

50,000 wildfires burning 8.5 million acres. 

an extended geographical footprint, 

supported by a quality claims service. 
In addition, our global reinsurance 
business, QBE Re, is expected to 
grow as reinsurance pricing continues 
to improve. We continue to invest 
in analytical risk selection and pricing 
tools that will enable our underwriting 
teams to deploy capital in the most 
beneficial way for shareholders.

I am also pleased that we were able 
to renew the Group’s 2021 reinsurance 
structure broadly in line with the 2020 
expiring program and at better terms 
than initially expected.

Sustainability

The frequency of weather events in 2020 
continued to remind us of the challenge 
that climate change presents and the 
need for an ongoing focus on managing 
climate‑related risks. We recognise the 
important part we play in our customers’ 
lives when such events occur and we are 
working closely with governments, the 
insurance industry and the community 
to address or mitigate some of the 
issues through disaster relief and risk 
management education. We continue 
to advance our Climate Change Action 
Plan and have set metrics and targets 
to measure and monitor climate‑related 
risks and opportunities as outlined in our 
climate disclosures on pages 28 to 35 
of this Annual Report.

We were pleased to join the UN‑convened 
Net‑Zero Asset Owners Alliance, further 
supporting the transition to a lower carbon 
economy, and we became a signatory 
to the United Nations Global Compact. 
We are also working closely with many 
of our customers as they manage their 
transition towards clean energy. One 
example of this is the support we provided 
through insurance of the Dogger Bank 
wind farm project off the north east coast 
of England. This joint venture by two of our 
customers resulted in the world’s largest 
offshore wind farm with capacity to power 
up to 4.5 million homes. In Europe, we 
have increased our renewable energy book 
of business by around 50% to $33 million. 

Supporting our customers, 
people and communities

At QBE, we recognise the significant 
hardship many of our customers and 
communities are facing, and we have 

adapted the way we operate in response 
to the pandemic to ensure the safety 
and wellbeing of our customers, people 
and communities. 

Throughout 2020, our 11,000 strong 
workforce moved seamlessly to operate 
remotely as various government directives 
impacted our ways of working. Despite 
these challenges, we continued to deliver 
on our customer commitments with service 
levels remaining relatively unchanged. We 
provided a wide range of additional support 
and financial relief, such as premium 
rebates and payment holidays, and 
continue to pay legitimate claims as quickly 
as possible. In 2020, we paid $101 million 
of COVID‑19 related claims. We also put 
in place a range of initiatives that helped 
alleviate financial pressures to support 
our customers throughout the period.

The safety of our people remains 
paramount. At the start of the pandemic, 
we successfully set up our people to work 
remotely. We are starting to return to 
offices in certain locations where it is safe 
to do so and in limited numbers, to allow 
for social distancing. We continue to 
support our people in these new ways 
of working and offer a range of benefits 
and support, including a regular check 
in through our Group‑wide wellbeing 
survey, wellbeing‑focused activities 
and access to the employee assistance 
programs. We know that 2020 was 
a challenging year for our people, 
impacted as they were by the pandemic 
and changes in the Group’s senior 
leadership as outlined in the Chair’s 
message on pages 2 to 3. We are working 
with our Board sponsors to build on our 
QBE DNA with the Culture Accelerator 
framework now underway, to ensure we 
continue to provide a safe, respectful and 
inclusive environment for our people.

Through the pandemic, the QBE 
Foundation has remained active in 
supporting the communities in which 
we work, partnering with impactful 
not‑for‑profit organisations around the 
world to safeguard vulnerable communities, 
enabling financial resilience and 
strengthening their health and wellbeing. 
We responded proactively to the 
challenges presented by COVID‑19, 
pivoting where required to support our 
existing partners, Red Cross and 
Save the Children, as they experienced 
increased demand for their services and 
a reduction in funding and donations. 

Financial performance 

As the pandemic emerged, we took 
pre‑emptive action to strengthen our 
capital position, executing a capital plan 
to protect the balance sheet against 
potential downside scenarios. This action 
enables us to take advantage of profitable 
growth opportunities as they arise, as well 
as supporting our target regulatory capital 
range and reducing gearing.

In December 2020, we updated the market 
of our revised 2020 result expectations 
and subsequently announced a full year 
statutory loss of $1,517 million, a result 
we all recognise as disappointing and 
well below expectations. In addition 
to a disappointing underwriting 
performance, the result was impacted 
by significantly reduced investment 
income and a number of material one‑off 
and/or non‑cash charges including an 
impairment of goodwill and deferred tax 
assets in North America as well as IT 
and real estate related charges. 

The net combined operating ratio 
increased to 104.2% 1 from 97.5% 1,2,3 
in 2019, largely as a result of material 
COVID‑19 related costs, adverse prior 
accident year claims development 
(including the impact of social inflation) 
and elevated catastrophe claims. 
As is explained in more detail in the Group 
Chief Financial Officer’s report, despite 
the poor headline underwriting result the 
underlying current accident year combined 
operating ratio improved to 94.0% 4,5 from 
98.4% 2,3,5 in 2019. This was primarily 
due to a further material improvement 
in our attritional claims ratio and a modest 
improvement in our large individual risk 
claims ratio, and reflects significant 
premium rate increases. 

Gross written premium increased 10% 4,6 
year‑on‑year, underpinned by an average 
renewal premium rate increase of 9.8% 7, 
particularly in our North America and 
International divisions where we saw 
premium rates accelerate further during 
the second half of 2020. 

After a significant first half investment loss, 
our investment return rebounded strongly 
in the second half of the year with credit 
spread losses fully recovered by year end. 
We intend to retain a conservative asset 
allocation while there remains significant 
ongoing economic uncertainty associated 
with the pandemic. 

1  Excludes impact of changes in risk‑free rates used to discount net outstanding claims.
2  Excludes one‑off impact of the Ogden decision in the UK.
3  Continuing operations basis.
4  Excludes impact of COVID‑19.
5  Normalised for above plan catastrophe claims and changes in risk margin increase. 
6  Constant currency basis and excludes impact of 2019 disposals.
7  Excludes premium rate changes relating to North America Crop and/or Australian CTP.

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8

Strategic focus

Modernisation

In 2021, we will remain focused 
on creating a customer‑centric business 
that is more digitally enabled and 
supported by a modern technology 
infrastructure. We are streamlining 
and modernising our technology estate 
to better support the evolving needs 
of our customers, people and business. 
As we do this, we are mindful of our digital 
customer interactions and are further 
automating underwriting, distribution 
and claims processes, and introducing 
analytical tools. Internally, we are looking 
at digitisation and process automation 
to improve performance, drive efficiency 
and reduce risk.

Talent & culture

We will accelerate our talent and 
leadership strategy, developing our 
future cohort of leaders and preparing 
them for bigger and more complex 
roles. We are concurrently focused 
on deepening our talent pool, with 
continued succession planning to build 
our future talent pipeline. 

We will focus on enhancing our culture 
and reinforcing a positive risk culture 
through the Culture Accelerator, building 
upon our existing DNA values given 
their strong resonance with our people. 
Through this, we are seeking to create 
an environment where people always 
know and feel that it is safe to speak up, 
and where we welcome and embrace 
diversity in all of its many forms. 

All of our activities throughout 2021 and 
the longer term are anchored around our 
four strategic priorities: performance, 
customer focus, modernisation and talent 
& culture, underpinned by our DNA. 

Performance 

In 2018, we laid the foundations for our cell 
review and Brilliant Basics programs, both 
of which are now well embedded throughout 
QBE. Recognising that there is still more 
work to be done to improve the performance 
of some portfolios, we are evolving and 
reinvigorating the cell review process with 
a greater focus on speedy execution and 
portfolio optimisation. In Brilliant Basics, 
we continue to invest in enhancing our 
capabilities in pricing, risk selection and 
claims management across QBE. As a key 
Brilliant Basics initiative, we are accelerating 
the completion of the remaining phases 
of work associated with our global property 
pricing project. We are focused on targeted 
and sustainable growth and maximising the 
benefits of the favourable rate environment, 
underpinned by strong performance 
discipline built through cell reviews and 
Brilliant Basics. We also remain committed 
to delivering on our climate‑related and 
sustainability targets.

Customer focus 

Central to our overall strategy is an 
imperative to better understand our 
customers, their industries and needs, 
and to embed a culture of consistent, 
proactive and insightful customer 
engagement. To support this, we officially 
launched Customer@QBE in 2020. 

Customer@QBE is our global approach 
to delivering value for our customers 
in a responsible and accountable way 
through a focus on three key elements: 
mindset (how we think about our 
customers), insights (the knowledge 
we have about our customers combined 
with our insurance expertise) and 
delivery (what and how we deliver to our 
customers). Our focus for 2021 is to create 
and embed a consistent customer mindset 
to support an understanding of our 
customers, how we can add the greatest 
value to them and how we can build 
a solid pipeline. By helping our customers 
manage risk well, we manage risk well.

Conclusion

I am proud of the support 
we provided our customers, 
people and the communities 
during a difficult year. I would 
like to thank our teams around 
the world for their dedication, 
resilience and hard work. 
I would also like to thank 
our customers, brokers and 
partners for their loyalty and 
ongoing support of QBE.

As we saw in 2020, we 
are able to adapt quickly 
in a dynamic environment 
and, while our operating 
environment remains 
uncertain, we are even more 
committed and focused 
on delivering our strategic 
priorities; we remain confident 
in the strength of our business, 
our franchise and our people. 

We are well positioned 
to maximise many of the 
opportunities created by the 
currently favourable trading 
environment. While the value 
of insurance in managing 
or transferring risk has 
never been more evident, 
we must ensure we receive 
an appropriate return 
for the risk we take. 

Richard Pryce 
Interim Group Chief 
Executive Officer

9

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2021

Strategic priorities

Performance

Customer Focus

Evolve and reinvigorate cell 

reviews and Brilliant Basics+ to 

further enhance performance 

discipline and drive portfolio 

optimisation

Targeted, sustainable, profitable 

growth, maximising the 

favourable rate environment

Deliver against our sustainability 

and climate commitments

Continued focus on 

shareholder returns

Deliver value and exceed 

customer expectations through 

Customer@QBE

Better understanding of our 

customers’ industries and needs

Embed a culture of proactive, 

insightful customer engagement

Fully embed the use of Salesforce 

and related analytical tools across 

the business, central to all our 

customer activity

Modernisation

Talent & Culture

Deliver on our program 

of work to accelerate our 

technology infrastructure 

modernisation

Continued automation across 

underwriting, distribution and 

claims to support the evolving 

needs of our customers 

and partners

Accelerate adoption of 

machine learning models 

across pricing and claims

Enhance the QBE culture and 

reinforce a positive risk culture 

by building on the QBE DNA 

through the Culture Accelerator

Accelerate our talent and leadership 

strategy by developing our people 

and building a diverse talent pipeline

Focus on embedding performance 

through ME@QBE and retaining 

and motivating people through 

our Reward approach

Define our future ways  

of working

 
 
 
 
 
 
 
 
 
 
 
 
 
 
8

9

Strategic focus

Modernisation

All of our activities throughout 2021 and 

the longer term are anchored around our 

four strategic priorities: performance, 

customer focus, modernisation and talent 

& culture, underpinned by our DNA. 

Performance 

In 2018, we laid the foundations for our cell 

review and Brilliant Basics programs, both 

of which are now well embedded throughout 

QBE. Recognising that there is still more 

work to be done to improve the performance 

of some portfolios, we are evolving and 

reinvigorating the cell review process with 

a greater focus on speedy execution and 

portfolio optimisation. In Brilliant Basics, 

we continue to invest in enhancing our 

capabilities in pricing, risk selection and 

claims management across QBE. As a key 

Brilliant Basics initiative, we are accelerating 

the completion of the remaining phases 

of work associated with our global property 

pricing project. We are focused on targeted 

and sustainable growth and maximising the 

benefits of the favourable rate environment, 

underpinned by strong performance 

discipline built through cell reviews and 

Brilliant Basics. We also remain committed 

to delivering on our climate‑related and 

sustainability targets.

Customer focus 

Central to our overall strategy is an 

imperative to better understand our 

In 2021, we will remain focused 

on creating a customer‑centric business 

that is more digitally enabled and 

supported by a modern technology 

infrastructure. We are streamlining 

and modernising our technology estate 

to better support the evolving needs 

of our customers, people and business. 

As we do this, we are mindful of our digital 

customer interactions and are further 

automating underwriting, distribution 

and claims processes, and introducing 

analytical tools. Internally, we are looking 

at digitisation and process automation 

to improve performance, drive efficiency 

and reduce risk.

Talent & culture

We will accelerate our talent and 

leadership strategy, developing our 

future cohort of leaders and preparing 

them for bigger and more complex 

roles. We are concurrently focused 

on deepening our talent pool, with 

continued succession planning to build 

our future talent pipeline. 

We will focus on enhancing our culture 

and reinforcing a positive risk culture 

through the Culture Accelerator, building 

upon our existing DNA values given 

their strong resonance with our people. 

Through this, we are seeking to create 

an environment where people always 

know and feel that it is safe to speak up, 

customers, their industries and needs, 

and where we welcome and embrace 

and to embed a culture of consistent, 

diversity in all of its many forms. 

proactive and insightful customer 

engagement. To support this, we officially 

launched Customer@QBE in 2020. 

Customer@QBE is our global approach 

to delivering value for our customers 

in a responsible and accountable way 

through a focus on three key elements: 

mindset (how we think about our 

customers), insights (the knowledge 

we have about our customers combined 

with our insurance expertise) and 

delivery (what and how we deliver to our 

customers). Our focus for 2021 is to create 

and embed a consistent customer mindset 

to support an understanding of our 

customers, how we can add the greatest 

value to them and how we can build 

a solid pipeline. By helping our customers 

manage risk well, we manage risk well.

Conclusion

I am proud of the support 

we provided our customers, 

people and the communities 

during a difficult year. I would 

like to thank our teams around 

the world for their dedication, 

resilience and hard work. 

I would also like to thank 

our customers, brokers and 

partners for their loyalty and 

ongoing support of QBE.

As we saw in 2020, we 

are able to adapt quickly 

in a dynamic environment 

and, while our operating 

environment remains 

uncertain, we are even more 

committed and focused 

on delivering our strategic 

priorities; we remain confident 

in the strength of our business, 

our franchise and our people. 

We are well positioned 

to maximise many of the 

opportunities created by the 

currently favourable trading 

environment. While the value 

of insurance in managing 

or transferring risk has 

never been more evident, 

we must ensure we receive 

an appropriate return 

for the risk we take. 

Richard Pryce 

Interim Group Chief 

Executive Officer

2021
Strategic priorities

Performance

Customer Focus

Evolve and reinvigorate cell 
reviews and Brilliant Basics+ to 
further enhance performance 
discipline and drive portfolio 
optimisation

Targeted, sustainable, profitable 
growth, maximising the 
favourable rate environment

Deliver against our sustainability 
and climate commitments

Continued focus on 
shareholder returns

Deliver value and exceed 
customer expectations through 
Customer@QBE

Better understanding of our 
customers’ industries and needs

Embed a culture of proactive, 
insightful customer engagement

Fully embed the use of Salesforce 
and related analytical tools across 
the business, central to all our 
customer activity

Modernisation

Talent & Culture

Deliver on our program 
of work to accelerate our 
technology infrastructure 
modernisation

Continued automation across 
underwriting, distribution and 
claims to support the evolving 
needs of our customers 
and partners

Accelerate adoption of 
machine learning models 
across pricing and claims

Enhance the QBE culture and 
reinforce a positive risk culture 
by building on the QBE DNA 
through the Culture Accelerator

Accelerate our talent and leadership 
strategy by developing our people 
and building a diverse talent pipeline

Focus on embedding performance 
through ME@QBE and retaining 
and motivating people through 
our Reward approach

Define our future ways  
of working

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10

Operating and  
financial review

Group Chief Financial 
Officer’s report

2020 proved to be a very 
challenging year and we 
are disappointed with our 
financial result. In addition 
to COVID-19, the result was 
impacted by above average 
catastrophe claims and 
prior accident year claims 
development. However, we 
enter 2021 with confidence 
and are well placed to 
maximise opportunities in the 
best global insurance trading 
conditions in over a decade. 

Normalised for above plan catastrophe 
experience and excluding COVID-19 and 
the increase in risk margins, the current 
accident year combined operating ratio 
improved to 94.0% from 98.4% in 2019. 

This is a pleasing uplift in underlying 
profitability and is primarily due to a further 
2.9% 6 improvement in the attritional 
claims ratio and a modest improvement 
in the large individual risk claims ratio.

Given market conditions, it was pleasing 
to renew the Group’s main reinsurance 
program broadly in line with the 2020 
expiring program and on terms in line with 
or better than expectations. As noted at 
the time, following heightened catastrophe 
experience we have increased our 
catastrophe allowance to provide greater  
confidence in our 2021 earnings profile.

As discussed on page 12, our operational 
efficiency program is running ahead 
of schedule and we are now entering 
the next phase of our efficiency journey.

Gross written premium  (US$M)

Financial performance 

QBE reported a statutory net loss after 
tax of $1,517 million compared with 
a $550 million profit in 2019. 

The disappointing result reflects 
a deterioration in the underwriting result 
coupled with a significant reduction 
in investment income, an impairment 
of goodwill and deferred tax assets 
in North America and write-downs 
related to rationalisation of legacy IT 
platforms and our real estate footprint.

Gross written premium increased  
10% 1,2 due to strong premium rate 
increases, improved premium retention 
and new business growth, especially 
in North America and International. 

The combined operating ratio increased 
to 104.2% 3 from 97.5% 3,4 in 2019, 
reflecting COVID-19 impacts, adverse 
prior accident year claims development 
and elevated catastrophe claims.

14,643

  10% from 2019 1,2 

Net earned premium  (US$M)

11,708

  4% from 2019 1,2 

Combined operating ratio 3 

104.2%

2019  97.5% 4 

Net (loss) profit   
after tax (US$M)

(1,517)

2019  622 4,5

1  Constant currency basis and excluding impact of 2019 disposals. 
2  Excludes impact of COVID-19.
3  Excludes impact of changes in risk-free rates used to discount net outstanding claims.
4  Excludes one-off impact of the Ogden decision in the UK.
5  Continuing operations basis.
6  Excludes Crop and/or LMI. 

11

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Financial strength and 

capital management

The onset of COVID-19 in early 2020 

triggered widespread dislocation in social, 

economic and investment market conditions. 

In response, QBE executed a capital plan 

to raise $813 million of ordinary equity 

and $500 million of Additional Tier 1 

capital, and reduced risk by repositioning 

the investment portfolio and purchasing 

additional reinsurance. These initiatives 

were executed in April and May 2020. 

The Group also issued A$500 million 

of capital-qualifying Tier 2 subordinated 

debt in August to finance the redemption 

of A$200 million of Tier 2 subordinated 

debt in September and $200 million of  

subordinated Tier 2 debt in March 2021. 

At 31 December 2020, QBE’s APRA 

PCA multiple was 1.72x, slightly above 

the midpoint of the Group’s 1.6–1.8x 

target range. 

The PCA multiple is largely unchanged 

from 2019, reflecting the benefit of the 

capital actions largely offset by the loss 

for the year, balance sheet growth and 

dividends paid during calendar year 2020.

Allowing for subordinated debt to be 

gearing was 32.4%, down significantly from 

38.0% at 31 December 2019 and within the 

Group’s benchmark range of 25–35%.

On the same basis, pro forma Group 

Head Office liquidity was $1.2 billion.  

The probability of adequacy (PoA) of net 

outstanding claims increased to 92.5%, 

the top end of our 87.5–92.5% target 

range, reflecting a $344 million risk margin 

strengthening, including $300 million 

directly related to COVID-19 uncertainty. 

 Investment performance and strategy

Investment market volatility heavily 

impacted investment returns during the 

first half of 2020. A strong second half 

recovery contributed to a 2020 investment 

return of 0.9%, reflecting falling bond 

yields and the resilience of our real assets 

(property and infrastructure).

The portfolio remains conservatively 

positioned with only 7% in growth assets, 

comprised of real assets, coupled with 

a small amount of gold and private equity. 

Reflecting very strong premium rate 

momentum, we intend to maintain a cautious 

asset allocation in the near term as we see 

better opportunities for capital deployment 

redeemed in March of 2021, pro forma 

across the Group’s underwriting business.

1  Divisional split excludes Corporate and other.

2  Constant currency basis and excludes impact of 2019 disposals.

3  Excludes impact of COVID-19.

Summary income statement and underwriting performance

Gross written   

premium 1 (US$M)

14,643

	North America 

	International 

4,744

5,845

	Australia Pacific  4,079

Gross written 

premium  growth 2,3 

10%

	North America 

	International 

	Australia Pacific 

13% 

12% 

6% 

FOR THE YEAR ENDED 31 DECEMBER

Gross written premium 

Gross earned premium 

Net earned premium

Net claims expense

Net commission

Underwriting and other expenses

Underwriting result

Net investment income on policyholders’ funds

Insurance (loss) profit 

Net investment income on shareholders’ funds

Financing and other costs

Loss on sale of entities and businesses

Share of net loss of associates

Restructuring and related expenses 

Amortisation and impairment of intangibles

(Loss) profit before income tax from continuing operations

Income tax expense

(Loss) profit after income tax from continuing operations

Loss after income tax from discontinued operations

Non-controlling interests

Net (loss) profit after income tax

KEY RATIOS

Net claims ratio

Net commission ratio

Expense ratio

Combined operating ratio

Adjusted combined operating ratio 2

Insurance (loss) profit margin

STATUTORY RESULT

ADJUSTMENTS

ADJUSTED RESULT

2020

US$M

2019

US$M

2020

US$M

14,643

14,008

11,708

(8,934)

(1,891)

(1,752)

(869)

142

(727)

84

(252)

(2)

(5)

(104)

(466)

(1,472)

(39)

(1,511)

–

(6)

(1,517)

%

76.3

16.1

15.0

107.4

104.2

(6.2)

2019

US$M

13,442

13,257

11,609

(8,102)

(1,819)

(1,690)

(2)

649

647

387

(257)

(8)

(3)

(43)

(51)

672

(104)

568

(21)

550

3

%

69.8

15.6

14.6

100.0

98.0

5.6

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

61

61

–

61

–

–

–

–

–

–

–

–

–

–

–

61

(10)

51

–

–

51

2020 

US$M

14,643

14,008

11,708

(8,934)

(1,891)

(1,752)

(869)

142

(727)

84

(252)

(2)

(5)

(104)

(466)

(1,472)

(39)

(1,511)

–

(6)

(1,517)

%

76.3

16.1

15.0

107.4

104.2

(6.2)

2019 1

US$M

13,442

13,257

11,609

(8,041)

(1,819)

(1,690)

59

649

708

387

(257)

(8)

(3)

(43)

(51)

733

(114)

619

(21)

601

3

%

69.3

15.6

14.6

99.5

97.5

6.1

1  Excludes one-off impact of the Ogden decision in the UK. 

2  Excludes impact of changes in risk-free rates used to discount net outstanding claims.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10

11

Operating and  

financial review

Financial strength and 
capital management

The onset of COVID-19 in early 2020 
triggered widespread dislocation in social, 
economic and investment market conditions. 
In response, QBE executed a capital plan 
to raise $813 million of ordinary equity 
and $500 million of Additional Tier 1 
capital, and reduced risk by repositioning 
the investment portfolio and purchasing 
additional reinsurance. These initiatives 
were executed in April and May 2020. 

The Group also issued A$500 million 
of capital-qualifying Tier 2 subordinated 
debt in August to finance the redemption 
of A$200 million of Tier 2 subordinated 
debt in September and $200 million of  
subordinated Tier 2 debt in March 2021. 

At 31 December 2020, QBE’s APRA 
PCA multiple was 1.72x, slightly above 
the midpoint of the Group’s 1.6–1.8x 
target range. 

The PCA multiple is largely unchanged 
from 2019, reflecting the benefit of the 
capital actions largely offset by the loss 
for the year, balance sheet growth and 
dividends paid during calendar year 2020.

Allowing for subordinated debt to be 
redeemed in March of 2021, pro forma 

gearing was 32.4%, down significantly from 
38.0% at 31 December 2019 and within the 
Group’s benchmark range of 25–35%.

On the same basis, pro forma Group 
Head Office liquidity was $1.2 billion.  

The probability of adequacy (PoA) of net 
outstanding claims increased to 92.5%, 
the top end of our 87.5–92.5% target 
range, reflecting a $344 million risk margin 
strengthening, including $300 million 
directly related to COVID-19 uncertainty. 

 Investment performance and strategy

Investment market volatility heavily 
impacted investment returns during the 
first half of 2020. A strong second half 
recovery contributed to a 2020 investment 
return of 0.9%, reflecting falling bond 
yields and the resilience of our real assets 
(property and infrastructure).

The portfolio remains conservatively 
positioned with only 7% in growth assets, 
comprised of real assets, coupled with 
a small amount of gold and private equity. 

Reflecting very strong premium rate 
momentum, we intend to maintain a cautious 
asset allocation in the near term as we see 
better opportunities for capital deployment 
across the Group’s underwriting business.

1  Divisional split excludes Corporate and other.
2  Constant currency basis and excludes impact of 2019 disposals.
3  Excludes impact of COVID-19.

Gross written   
premium 1 (US$M)

14,643

4,744
	North America 
	International 
5,845
	Australia Pacific  4,079

Gross written 
premium  growth 2,3 

10%

	North America 
	International 
	Australia Pacific 

13% 
12% 
6% 

Group Chief Financial 

Officer’s report

2020 proved to be a very 

challenging year and we 

are disappointed with our 

financial result. In addition 

to COVID-19, the result was 

impacted by above average 

catastrophe claims and 

prior accident year claims 

development. However, we 

enter 2021 with confidence 

and are well placed to 

maximise opportunities in the 

best global insurance trading 

conditions in over a decade. 

A
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Summary income statement and underwriting performance

'

Gross written premium  (US$M)

Financial performance 

14,643

  10% from 2019 1,2 

Net earned premium  (US$M)

11,708

  4% from 2019 1,2 

Combined operating ratio 3 

104.2%

2019  97.5% 4 

Net (loss) profit   

after tax (US$M)

(1,517)

2019  622 4,5

QBE reported a statutory net loss after 

tax of $1,517 million compared with 

a $550 million profit in 2019. 

The disappointing result reflects 

a deterioration in the underwriting result 

coupled with a significant reduction 

in investment income, an impairment 

of goodwill and deferred tax assets 

in North America and write-downs 

related to rationalisation of legacy IT 

platforms and our real estate footprint.

Gross written premium increased  

10% 1,2 due to strong premium rate 

increases, improved premium retention 

and new business growth, especially 

in North America and International. 

The combined operating ratio increased 

to 104.2% 3 from 97.5% 3,4 in 2019, 

reflecting COVID-19 impacts, adverse 

prior accident year claims development 

and elevated catastrophe claims.

Normalised for above plan catastrophe 

experience and excluding COVID-19 and 

the increase in risk margins, the current 

accident year combined operating ratio 

improved to 94.0% from 98.4% in 2019. 

This is a pleasing uplift in underlying 

profitability and is primarily due to a further 

2.9% 6 improvement in the attritional 

claims ratio and a modest improvement 

in the large individual risk claims ratio.

Given market conditions, it was pleasing 

to renew the Group’s main reinsurance 

program broadly in line with the 2020 

expiring program and on terms in line with 

or better than expectations. As noted at 

the time, following heightened catastrophe 

experience we have increased our 

catastrophe allowance to provide greater  

confidence in our 2021 earnings profile.

As discussed on page 12, our operational 

efficiency program is running ahead 

of schedule and we are now entering 

the next phase of our efficiency journey.

1  Constant currency basis and excluding impact of 2019 disposals. 

2  Excludes impact of COVID-19.

3  Excludes impact of changes in risk-free rates used to discount net outstanding claims.

4  Excludes one-off impact of the Ogden decision in the UK.

5  Continuing operations basis.

6  Excludes Crop and/or LMI. 

FOR THE YEAR ENDED 31 DECEMBER

Gross written premium 
Gross earned premium 
Net earned premium
Net claims expense
Net commission
Underwriting and other expenses
Underwriting result
Net investment income on policyholders’ funds
Insurance (loss) profit 
Net investment income on shareholders’ funds
Financing and other costs
Loss on sale of entities and businesses
Share of net loss of associates
Restructuring and related expenses 
Amortisation and impairment of intangibles
(Loss) profit before income tax from continuing operations
Income tax expense
(Loss) profit after income tax from continuing operations
Loss after income tax from discontinued operations
Non-controlling interests
Net (loss) profit after income tax

KEY RATIOS

Net claims ratio
Net commission ratio
Expense ratio
Combined operating ratio
Adjusted combined operating ratio 2
Insurance (loss) profit margin

STATUTORY RESULT

ADJUSTMENTS

ADJUSTED RESULT

2020
US$M

14,643
14,008
11,708
(8,934)
(1,891)
(1,752)
(869)
142
(727)
84
(252)
(2)
(5)
(104)
(466)
(1,472)
(39)
(1,511)
–
(6)
(1,517)

%

76.3
16.1
15.0
107.4
104.2
(6.2)

2019
US$M
13,442
13,257
11,609
(8,102)
(1,819)
(1,690)
(2)
649
647
387
(257)
(8)
(3)
(43)
(51)
672
(104)
568
(21)
3
550

%

69.8
15.6
14.6
100.0
98.0
5.6

2020
US$M

–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–

2019
US$M
–
–
–
61
–
–
61
–
61
–
–
–
–
–
–
61
(10)
51
–
–
51

2020 
US$M

14,643
14,008
11,708
(8,934)
(1,891)
(1,752)
(869)
142
(727)
84
(252)
(2)
(5)
(104)
(466)
(1,472)
(39)
(1,511)
–
(6)
(1,517)

%

76.3
16.1
15.0
107.4
104.2
(6.2)

2019 1
US$M
13,442
13,257
11,609
(8,041)
(1,819)
(1,690)
59
649
708
387
(257)
(8)
(3)
(43)
(51)
733
(114)
619
(21)
3
601

%

69.3
15.6
14.6
99.5
97.5
6.1

1  Excludes one-off impact of the Ogden decision in the UK. 
2  Excludes impact of changes in risk-free rates used to discount net outstanding claims.

5

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12

COVID-19 impact

2020 impact (US$M)

655

	Premium 
	Acquisition costs 
	Claims 
	Risk margins 

77
18
260
300

COVID-19 was declared a pandemic by 
the World Health Organisation in March 
2020. The virus itself, and the measures 
to contain its spread have had a profound 
impact on the global economy which 
resulted in extreme investment market 
volatility and coordinated action by central 
banks to dramatically reduce interest rates. 

The Group estimates the ultimate net cost 
(including risk margin) of COVID-19 to be 
around $785 million pre-tax, comprising 
the $655 million 2020 charge coupled with 
an allowance for a further $130 million 
of potential net claims that could emerge 
over the next 12 to 18 months, primarily 
in trade credit, casualty lines and LMI. 

In addition to materially impacting 
QBE’s investment returns, COVID-19 
impacted the Group’s underwriting 
result by $655 million. 

Significant risk margins and extensive 
reinsurance protections, particularly 
for business interruption insurance, 
give us confidence in this estimate.

COVID-19 underwriting result impacts

FOR THE YEAR ENDED 31 DECEMBER 

Gross written premium 
Gross earned premium 
Net earned premium
Net claims expense
Net commission
Underwriting and other expenses
Underwriting result

2020 
STATUTORY 
RESULT
US$M

14,643 
14,008 
11,708 
(8,934)
(1,891)
(1,752)
(869) 

NORTH
AMERICA
US$M

INTER-
NATIONAL
US$M

AUSTRALIA
PACIFIC
US$M

CORPORATE 
& OTHER
US$M

COVID-19
TOTAL
US$M

(31)
(31) 
(31)
(57) 
6 
(13) 
(95) 

(11) 
(11) 
(46) 
(123) 
3 
7 
(159) 

– 
– 
(1) 
(163) 
– 
(17) 
(181) 

– 
– 
1 
(217) 
–
(4) 
(220) 

(42)
(42) 
(77) 
(560) 
9 
(27) 
(655) 

2020 
ADJUSTED
EX-COVID
US$M

14,685
14,050
11,785
(8,374)
(1,900)
(1,725)
(214)

Operational efficiency

Underwriting and other 
expenses  (US$M)

1,725 1

  2% from 2019

Expense  ratio

14.6% 1

Unchanged from 2019

In December 2018, QBE announced 
a three-year operational efficiency program 
targeting gross cost savings of $200 million 
by 2021, translating into net savings 
of $130 million after allowing for inflation 
and further investment in technology, 
digitisation and Brilliant Basics.

As a result of these initiatives, we have 
now achieved recurring net cost savings 
of around $125 million. To support the 
program and as previously foreshadowed, 
we incurred a $41 million restructuring 
charge that was not reported as part 
of the Group’s underwriting expenses.

From a 2018 cost base of $1.8 billion 2 and 
an expense ratio of 15.2% 2, we are targeting 
an expense ratio of “less than 14%” by 2021. 

Two years into a three-year schedule 
of work, the program has progressed 
ahead of plan. Meaningful progress has 
been made in technology rationalisation 
and modernisation as we simplify our 
technology estate. Additional savings were 
realised from the disposal of the retail 
personal lines business in North America, 
operating model efficiencies across 
Australia, New Zealand and Asia, and 
further reductions in third party consulting, 
travel and other discretionary costs.

Excluding $47 million of elevated risk and 
regulatory costs as well as a $61 million 
NSW CTP profit normalisation charge, 
but adjusting for well below plan variable 
remuneration costs and other one-off 
net savings, run-rate costs are estimated 
at $1,690 million which equates to 
an underlying expense ratio of 14.3%. 

We have commenced the next phase 
of our operational efficiency program 
focused on IT modernisation and are 
targeting an expense ratio of 13% by 2023. 
To support the program, we will incur 
a restructuring charge of $150 million 
to be expensed over three years.

13

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Segment performance 

Gross written premium 

North America

by segment 1,2 (US$M)

14,685

4,775

5,856

4,079

Net earned premium 

by segment 1,2 (US$M)

11,785

3,351

4,812

3,626

98.6%

112.7%

91.3%

92.8%

	North America 

	International 

	Australia Pacific 

Combined operating 

ratio by segment 1,3

International

North America reported a combined 

operating ratio of 115.7% 3, up from 

105.6% 3,4 in 2019, due to COVID-19 costs, 

elevated catastrophe claims and adverse 

prior accident year claims development. 

Excluding COVID-19, the current 

accident year combined operating ratio 

was unchanged at 103.7%. While the 

attritional claims ratio improved, 

significant catastrophe claims and a Crop 

result well below average contributed 

to a disappointing underwriting loss. 

Premium rate momentum accelerated 

in 2020, with North America achieving 

an annual average renewal rate increase 

of 10.2% 4 compared with 5.7% 4,5 in 2019, 

which contributed to underlying gross 

written premium growth of 13% 6.

International recorded a very strong 

underlying result. 

Despite material COVID-19 related 

costs and a modest amount of adverse 

prior accident year claims development, 

the combined operating ratio improved 

to 94.5% 3 from 96.8% 3,4,7 in 2019.

Excluding COVID-19, the current accident 

year combined operating ratio improved 

to 89.6% from 95.4% 4,7 in the prior year, 

largely reflecting a further significant 

Premium rate momentum accelerated 

across 2020, with International achieving 

an annual average renewal premium rate 

increase of 12.8% compared with 6.0% 4 

in 2019, which contributed to underlying 

gross written premium growth of 12% 6. 

Australia Pacific

Australia Pacific reported a combined 

operating ratio of 97.8% 3, up from  

90.0% 3 in 2019, largely due to COVID-19 

claims costs, a reduced level of positive 

prior accident year claims development 

and adverse catastrophe experience. 

Excluding COVID-19, the current accident 

year combined operating ratio increased 

marginally to 93.3% from 92.9% in 

the prior year. This included a further 

improvement in the attritional claims ratio 

which was more than offset by adverse 

catastrophe experience and an increase 

in the expense ratio due to heightened risk 

and regulatory costs, as well as a material 

NSW CTP profit normalisation charge. 

Premium rate momentum slowed in 2020 

following the decision to suspend rate 

increases (as a COVID-19 relief measure) 

in certain classes of business during 2Q20 

and 3Q20. Australia Pacific achieved 

an annual average renewal premium rate 

increase of 5.4% 5 compared with 7.3% 

5 in 2019, which supported underlying 

gross written premium growth of 6% 6.

improvement in the attritional claims ratio 

Australia Pacific reinstated premium rate 

and favourable catastrophe experience.

increases effective 1 October 2020.

1  Excludes impact of COVID-19.

2  Divisional split excludes Corporate and other.

3  Excludes impact of changes in risk-free rates used to discount net outstanding claims.

4  Restated for transfer of North America’s inward reinsurance business to International.

5  Excludes premium rate changes relating to North America Crop and/or Australian CTP.

6  Constant currency basis and excluding impact of 2019 disposals. 

7  Excludes one-off impact of the Ogden decision in the UK. 

GROSS WRITTEN 

PREMIUM

NET EARNED 

PREMIUM

COMBINED OPERATING 

RATIO

INSURANCE (LOSS) 

PROFIT BEFORE 

INCOME TAX

2020

US$M

4,775

5,856

4,079

(25)

(42)

–

–

2019

US$M

4,361

5,200

3,920

(39)

–

–

–

2020

US$M

3,351

4,812

3,626

(4)

(77)

–

–

2019

US$M

3,692

4,339

3,568

10

–

–

–

14,685

13,442

11,785

11,609

14,643

13,226

1,417

14,643

13,442

12,263

1,179

13,442

11,708

10,508

1,200

11,708

11,609

10,641

968

11,609

2020

%

112.7 3

91.3 3

92.8 3

–

98.6 3

3.2

5.6

–

107.4

107.2

109.1

107.4

2019

%

105.6 3

96.8 3,4

90.0 3

–

97.5 3,4

2.0

–

0.5

100.0

99.7

103.7

100.0

2020

US$M

(488)

265

252

(101)

(72)

–

–

(655)

(727)

(633)

(94)

(727)

2019

US$M

(137)

341 4

487

17

708 4

–

–

(61)

647

629

18

647

FOR THE YEAR ENDED 31 DECEMBER

Corporate and other adjustments 1

North America 1,2

International 1,2

Australia Pacific 1 

Group adjusted 1

Risk-free rate impact

COVID-19 impact

Ogden decision impact

Group statutory

Direct and facultative

Inward reinsurance

Group statutory

1  Excludes impact of COVID-19.

1  Excludes impact of COVID-19. 
2  Continuing operations basis.

2  The 2019 results have been restated to reflect the transfer of North America’s inward reinsurance business to QBE Re, part of International.  

3   Excludes impact of changes in risk-free rates used to discount net outstanding claims.

4  Excludes one-off impact of the Ogden decision in the UK.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
12

COVID-19 impact

Segment performance 

2020 impact (US$M)

655

	Premium 

	Acquisition costs 

	Claims 

	Risk margins 

77

18

260

300

COVID-19 was declared a pandemic by 

The Group estimates the ultimate net cost 

the World Health Organisation in March 

(including risk margin) of COVID-19 to be 

2020. The virus itself, and the measures 

around $785 million pre-tax, comprising 

to contain its spread have had a profound 

the $655 million 2020 charge coupled with 

impact on the global economy which 

an allowance for a further $130 million 

resulted in extreme investment market 

of potential net claims that could emerge 

volatility and coordinated action by central 

over the next 12 to 18 months, primarily 

banks to dramatically reduce interest rates. 

in trade credit, casualty lines and LMI. 

In addition to materially impacting 

Significant risk margins and extensive 

QBE’s investment returns, COVID-19 

reinsurance protections, particularly 

impacted the Group’s underwriting 

result by $655 million. 

for business interruption insurance, 

give us confidence in this estimate.

COVID-19 underwriting result impacts

FOR THE YEAR ENDED 31 DECEMBER 

2020 

STATUTORY 

Gross written premium 

Gross earned premium 

Net earned premium

Net claims expense

Net commission

Underwriting and other expenses

Underwriting result

RESULT

US$M

14,643 

14,008 

11,708 

(8,934)

(1,891)

(1,752)

(869) 

NORTH

AMERICA

US$M

INTER-

NATIONAL

US$M

AUSTRALIA

PACIFIC

CORPORATE 

& OTHER

US$M

US$M

COVID-19

TOTAL

US$M

(31)

(31) 

(31)

(57) 

6 

(13) 

(95) 

(11) 

(11) 

(46) 

(123) 

3 

7 

(159) 

– 

– 

(1) 

(163) 

– 

(17) 

(181) 

– 

– 

1 

(217) 

–

(4) 

(220) 

2020 

ADJUSTED

EX-COVID

US$M

14,685

14,050

11,785

(8,374)

(1,900)

(1,725)

(214)

(42)

(42) 

(77) 

(560) 

9 

(27) 

(655) 

Operational efficiency

Underwriting and other 

expenses  (US$M)

1,725 1

  2% from 2019

Expense  ratio

14.6% 1

Unchanged from 2019

In December 2018, QBE announced 

As a result of these initiatives, we have 

a three-year operational efficiency program 

now achieved recurring net cost savings 

targeting gross cost savings of $200 million 

of around $125 million. To support the 

by 2021, translating into net savings 

program and as previously foreshadowed, 

of $130 million after allowing for inflation 

we incurred a $41 million restructuring 

and further investment in technology, 

charge that was not reported as part 

digitisation and Brilliant Basics.

of the Group’s underwriting expenses.

From a 2018 cost base of $1.8 billion 2 and 

Excluding $47 million of elevated risk and 

an expense ratio of 15.2% 2, we are targeting 

regulatory costs as well as a $61 million 

an expense ratio of “less than 14%” by 2021. 

NSW CTP profit normalisation charge, 

Two years into a three-year schedule 

of work, the program has progressed 

ahead of plan. Meaningful progress has 

been made in technology rationalisation 

and modernisation as we simplify our 

but adjusting for well below plan variable 

remuneration costs and other one-off 

net savings, run-rate costs are estimated 

at $1,690 million which equates to 

an underlying expense ratio of 14.3%. 

technology estate. Additional savings were 

We have commenced the next phase 

realised from the disposal of the retail 

of our operational efficiency program 

personal lines business in North America, 

focused on IT modernisation and are 

operating model efficiencies across 

targeting an expense ratio of 13% by 2023. 

Australia, New Zealand and Asia, and 

To support the program, we will incur 

further reductions in third party consulting, 

a restructuring charge of $150 million 

travel and other discretionary costs.

to be expensed over three years.

Gross written premium 
by segment 1,2 (US$M)

14,685

4,775

5,856

4,079

Net earned premium 
by segment 1,2 (US$M)

11,785

3,351

4,812

3,626

Combined operating 
ratio by segment 1,3

98.6%

112.7%

91.3%
92.8%

	North America 
	International 
	Australia Pacific 

FOR THE YEAR ENDED 31 DECEMBER

North America 1,2
International 1,2
Australia Pacific 1 
Corporate and other adjustments 1
Group adjusted 1
Risk-free rate impact
COVID-19 impact
Ogden decision impact
Group statutory
Direct and facultative
Inward reinsurance
Group statutory

North America

North America reported a combined 
operating ratio of 115.7% 3, up from 
105.6% 3,4 in 2019, due to COVID-19 costs, 
elevated catastrophe claims and adverse 
prior accident year claims development. 

Excluding COVID-19, the current 
accident year combined operating ratio 
was unchanged at 103.7%. While the 
attritional claims ratio improved, 
significant catastrophe claims and a Crop 
result well below average contributed 
to a disappointing underwriting loss. 

Premium rate momentum accelerated 
in 2020, with North America achieving 
an annual average renewal rate increase 
of 10.2% 4 compared with 5.7% 4,5 in 2019, 
which contributed to underlying gross 
written premium growth of 13% 6.

International

International recorded a very strong 
underlying result. 

Despite material COVID-19 related 
costs and a modest amount of adverse 
prior accident year claims development, 
the combined operating ratio improved 
to 94.5% 3 from 96.8% 3,4,7 in 2019.

Excluding COVID-19, the current accident 
year combined operating ratio improved 
to 89.6% from 95.4% 4,7 in the prior year, 
largely reflecting a further significant 
improvement in the attritional claims ratio 
and favourable catastrophe experience.

Premium rate momentum accelerated 
across 2020, with International achieving 
an annual average renewal premium rate 
increase of 12.8% compared with 6.0% 4 
in 2019, which contributed to underlying 
gross written premium growth of 12% 6. 

Australia Pacific

Australia Pacific reported a combined 
operating ratio of 97.8% 3, up from  
90.0% 3 in 2019, largely due to COVID-19 
claims costs, a reduced level of positive 
prior accident year claims development 
and adverse catastrophe experience. 

Excluding COVID-19, the current accident 
year combined operating ratio increased 
marginally to 93.3% from 92.9% in 
the prior year. This included a further 
improvement in the attritional claims ratio 
which was more than offset by adverse 
catastrophe experience and an increase 
in the expense ratio due to heightened risk 
and regulatory costs, as well as a material 
NSW CTP profit normalisation charge. 

Premium rate momentum slowed in 2020 
following the decision to suspend rate 
increases (as a COVID-19 relief measure) 
in certain classes of business during 2Q20 
and 3Q20. Australia Pacific achieved 
an annual average renewal premium rate 
increase of 5.4% 5 compared with 7.3% 
5 in 2019, which supported underlying 
gross written premium growth of 6% 6.

Australia Pacific reinstated premium rate 
increases effective 1 October 2020.

1  Excludes impact of COVID-19.
2  Divisional split excludes Corporate and other.
3  Excludes impact of changes in risk-free rates used to discount net outstanding claims.
4  Restated for transfer of North America’s inward reinsurance business to International.
5  Excludes premium rate changes relating to North America Crop and/or Australian CTP.
6  Constant currency basis and excluding impact of 2019 disposals. 
7  Excludes one-off impact of the Ogden decision in the UK. 

GROSS WRITTEN 
PREMIUM

NET EARNED 
PREMIUM

COMBINED OPERATING 
RATIO

2020
US$M

4,775
5,856
4,079
(25)
14,685
–
(42)
–
14,643
13,226
1,417
14,643

2019
US$M

4,361
5,200
3,920
(39)
13,442
–
–
–
13,442
12,263
1,179
13,442

2020
US$M

3,351
4,812
3,626
(4)
11,785
–
(77)
–
11,708
10,508
1,200
11,708

2019
US$M

3,692
4,339
3,568
10
11,609
–
–
–
11,609
10,641
968
11,609

2020
%
112.7 3
91.3 3
92.8 3
–
98.6 3
3.2
5.6
–
107.4
107.2
109.1
107.4

2019
%
105.6 3
96.8 3,4
90.0 3
–
97.5 3,4
2.0
–
0.5
100.0
99.7
103.7
100.0

INSURANCE (LOSS) 
PROFIT BEFORE 
INCOME TAX

2020
US$M

2019
US$M

(488)
265
252
(101)
(72)
–
(655)
–
(727)
(633)
(94)
(727)

(137)
341 4
487
17
708 4
–
–
(61)
647
629
18
647

1  Excludes impact of COVID-19. 

2  Continuing operations basis.

1  Excludes impact of COVID-19.
2  The 2019 results have been restated to reflect the transfer of North America’s inward reinsurance business to QBE Re, part of International.  
3   Excludes impact of changes in risk-free rates used to discount net outstanding claims.
4  Excludes one-off impact of the Ogden decision in the UK.

13

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14

Cash profit and dividends

Premium income

Reconciliation of cash profit 

FOR THE YEAR ENDED 31 DECEMBER 

Net (loss) profit after tax
Amortisation and impairment of intangibles after tax 1
Write-off of deferred tax assets
Write-off of capitalised IT assets
Reclassification of foreign currency translation reserve after tax 2
Net cash (loss) profit after tax
Restructuring and related expenses after tax
Net loss on disposals after tax
Additional Tier 1 capital coupon accrual 3
Ogden decision after tax
Loss from discontinued operations after tax (excluding reclassification of FCTR)
Adjusted net cash (loss) profit after tax

Return on average shareholders’ equity – adjusted cash basis (%) 
Basic (loss) earnings per share – cash basis (US cents)
Dividend payout ratio (percentage of adjusted cash profit) 4

2020
US$M

(1,517)
455
120
27
– 
(915)
75 
2
(25)
–
–
(863)

(10.9)
(64.1)
N/A

2019
US$M

550
71
–
–
16
637
32 
8
–
51
5
733

8.9 
48.4
65%

1  $50 million of pre-tax amortisation expense is included in underwriting expenses (2019 $43 million).
2  The sale of certain operations gave rise to a foreign currency translation reserve (FCTR) reclassification charge which was a non-cash item 

and did not impact shareholders’ equity or QBE’s regulatory or rating agency capital base.

3  Additional Tier 1 capital pays distributions out of after tax profits and thus impacts adjusted cash profit for the purposes of assessing ordinary 

dividend capacity.

4  Dividend payout ratio is calculated as the total AUD dividend divided by adjusted cash profit converted to AUD at the period average rate of exchange.

Dividends per share  (A¢)

Dividends

Our dividend policy is designed to ensure 
that we reward shareholders relative 
to adjusted cash profit and maintain 
sufficient capital for future investment 
and growth of the business.

In light of the substantial 2020 statutory 
loss, the Board has elected not to declare 
a final dividend. 

The combined 2020 interim and final 
dividend of 4 Australian cents per share 
is down substantially from 52 Australian 
cents per share in 2019. 

Subject to global economic conditions not 
deteriorating materially, the Board expects 
to resume dividend payments – up to 65% 
of adjusted cash profit – in conjunction 
with the 2021 interim result.

4

4.0

2020

2019

2018

2017

2016

26

52
50

54

Dividend payout  (A$M)

59

Statutory result versus management result

In order to more directly compare Group 
and divisional underwriting results with 
the prior year, the Group’s underwriting 
results are tabled on page 12 including 
and excluding the estimated impact 
of COVID-19. 

While QBE has separately identified 
obvious COVID-19 underwriting revenue 
and expense impacts, there will be other 
less significant impacts, both positive and 
negative, that are not readily identifiable 
or quantifiable.

Similarly, the underwriting results in the 
standalone divisional result commentaries 
are disclosed on the same basis.

The 2019 adjusted result in the summary 
income statement on page 11 excludes 
a $61 million increase in the Group’s net 
central estimate of outstanding claims 

reflecting the reduction in statutory 
discount rates applicable to UK personal 
injury liabilities (the Ogden decision) with 
an associated $10 million tax impact.

Unless otherwise stated, the commentary 
following refers to the Group’s result 
on an ex-COVID-19 and adjusted basis 
as described above.

15

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Gross written 

premium  (US$M) 

14,685 

  10% from 2019 1 

Net earned 

premium  (US$M) 

11,785

  4% from 2019 1  

Average renewal 

premium rate 

increase 2 

Group

+9.8% 

North America 

International 

Australia Pacific 

+10.2% 

+12.8%

+5.4% 

North America 

Australia Pacific

North America reported a 9% increase 

Australia Pacific reported a 6% 1 increase 

in gross written premium, underpinned by 

in gross written premium reflecting an 

an average renewal premium rate increase 

of 10.2% 2  compared with 5.7% 2,3 in 2019. 

average renewal premium rate increase 

of 5.4% 2 compared with 7.3% 2 in 2019. 

Adjusting for the disposal of the personal 

lines business in 2019, underlying 

growth was 13%, reflecting premium rate 

increases coupled with strong growth 

in Crop, property programs and Accident 

& Health (A&H). 

International 

Rate-driven growth was offset by 

moderation in CTP, the 2019 sale of the 

travel insurance business and the impact 

of the economic slowdown on the Pacific 

Islands business. Excluding CTP and 

travel insurance, underlying growth was 

around 8% reflecting growth in strata, 

LMI, householders and New Zealand.

International reported a 12% 1 uplift in gross 

written premium, underpinned by an average 

renewal premium rate increase of 12.8% 

compared with 6.0% 3 in 2019. 

European operations achieved gross 

written premium growth of 14% 1 reflecting 

accelerating pricing momentum and 

emerging new business opportunities, 

particularly in International Markets, QBE 

Re and Continental European insurance. 

Growth in European operations was 

partly offset by a 7% 1 contraction in 

Asia, primarily due to COVID-19 impacts, 

particularly in travel insurance, trade credit 

and marine cargo insurance. 

Reinsurance expense

Reinsurance expense increased 40% 

to $2,300 million from $1,648 million in 2019.

Additional Crop quota share reinsurance, 

and significantly reduced MPCI recoveries 

relative to the especially poor Crop result 

in 2019, increased reinsurance expense 

by $438 million relative to 2019. 

Reinsurance expense was also impacted by 

the North America peak zone catastrophe 

buydown announced in April 2020 as well 

as growth in portfolios protected by quota 

share reinsurance, including Equator Re, 

and additional facultative and retrocession 

purchases, particularly in International.

1  Constant currency basis and excludes impact of 2019 disposals.

2  Excludes premium rate changes relating to North America Crop and/or Australian CTP. 

3  Restated for transfer of North America’s inward reinsurance business to International.

Underwriting expenses, commission and tax

Expense ratio

14.6%

2019  14.6%

Net commission ratio

16.1%

2019  15.6%

Tax rate

(3)%

2019  16%

The Group’s expense ratio was stable 

due to strong growth in higher commission 

Underwriting and 

other expenses

at 14.6%. 

Improvement in International was offset 

by deterioration in North America and 

Australia Pacific, the latter reflecting 

a material NSW CTP profit normalisation 

charge. While North America reduced 

costs in absolute terms, the expense ratio 

was impacted by a greater reduction in 

net earned premium due to the sale of the 

retail personal lines business and material 

de-risking (reinsurance) initiatives. 

As discussed on page 12, run-rate 

costs are $1,690 million which equates 

rates are higher due to the specialised 

nature of the business. At the same time, 

International’s commission ratio increased 

London Market Specialty business where 

rate increases were especially strong. 

Income tax expense

The effective statutory tax rate of negative 

3% compares with 16% in the prior year 

and is distorted by a $120 million write-off 

of deferred tax assets and impairment 

of goodwill in North America of which only 

a portion was tax effected. The tax rate 

otherwise reflects the mix of corporate tax 

rates in the countries where we operate, 

with limitations on recognition of losses 

to an underlying expense ratio of 14.3%. 

in North America and Bermuda.

Net commission

The commission ratio increased to 16.1% 

from 15.6% in 2019, in part due to relative 

growth in International where commission 

The dividend franking account balance 

stood at A$71 million as at 31 December 

2020, enabling the Group to fully frank 

A$165 million of dividends. 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
14

15

Cash profit and dividends

Premium income

Reconciliation of cash profit 

FOR THE YEAR ENDED 31 DECEMBER 

Net (loss) profit after tax

Amortisation and impairment of intangibles after tax 1

Write-off of deferred tax assets

Write-off of capitalised IT assets

Reclassification of foreign currency translation reserve after tax 2

Net cash (loss) profit after tax

Restructuring and related expenses after tax

Net loss on disposals after tax

Additional Tier 1 capital coupon accrual 3

Ogden decision after tax

Loss from discontinued operations after tax (excluding reclassification of FCTR)

Adjusted net cash (loss) profit after tax

Return on average shareholders’ equity – adjusted cash basis (%) 

Basic (loss) earnings per share – cash basis (US cents)

Dividend payout ratio (percentage of adjusted cash profit) 4

2020

US$M

(1,517)

455

120

27

– 

(915)

75 

(25)

2

–

–

(863)

(10.9)

(64.1)

N/A

2019

US$M

550

71

–

–

16

637

32 

8

–

51

5

733

8.9 

48.4

65%

1  $50 million of pre-tax amortisation expense is included in underwriting expenses (2019 $43 million).

2  The sale of certain operations gave rise to a foreign currency translation reserve (FCTR) reclassification charge which was a non-cash item 

and did not impact shareholders’ equity or QBE’s regulatory or rating agency capital base.

3  Additional Tier 1 capital pays distributions out of after tax profits and thus impacts adjusted cash profit for the purposes of assessing ordinary 

dividend capacity.

4  Dividend payout ratio is calculated as the total AUD dividend divided by adjusted cash profit converted to AUD at the period average rate of exchange.

Dividends per share  (A¢)

Dividends

Our dividend policy is designed to ensure 

The combined 2020 interim and final 

that we reward shareholders relative 

dividend of 4 Australian cents per share 

to adjusted cash profit and maintain 

is down substantially from 52 Australian 

sufficient capital for future investment 

cents per share in 2019. 

and growth of the business.

In light of the substantial 2020 statutory 

deteriorating materially, the Board expects 

loss, the Board has elected not to declare 

to resume dividend payments – up to 65% 

Subject to global economic conditions not 

a final dividend. 

of adjusted cash profit – in conjunction 

with the 2021 interim result.

4.0

4

2020

2019

2018

2017

2016

59

26

52

50

54

Dividend payout  (A$M)

Statutory result versus management result

In order to more directly compare Group 

While QBE has separately identified 

reflecting the reduction in statutory 

and divisional underwriting results with 

obvious COVID-19 underwriting revenue 

discount rates applicable to UK personal 

the prior year, the Group’s underwriting 

and expense impacts, there will be other 

injury liabilities (the Ogden decision) with 

results are tabled on page 12 including 

less significant impacts, both positive and 

an associated $10 million tax impact.

and excluding the estimated impact 

negative, that are not readily identifiable 

of COVID-19. 

or quantifiable.

Unless otherwise stated, the commentary 

following refers to the Group’s result 

Similarly, the underwriting results in the 

The 2019 adjusted result in the summary 

on an ex-COVID-19 and adjusted basis 

standalone divisional result commentaries 

income statement on page 11 excludes 

as described above.

are disclosed on the same basis.

a $61 million increase in the Group’s net 

central estimate of outstanding claims 

Gross written 
premium  (US$M) 

14,685 

  10% from 2019 1 

Net earned 
premium  (US$M) 

11,785

  4% from 2019 1  

Average renewal 
premium rate 
increase 2 

Group

+9.8% 

North America 
International 
Australia Pacific 

+10.2% 
+12.8%
+5.4% 

North America 

Australia Pacific

North America reported a 9% increase 
in gross written premium, underpinned by 
an average renewal premium rate increase 
of 10.2% 2  compared with 5.7% 2,3 in 2019. 

Australia Pacific reported a 6% 1 increase 
in gross written premium reflecting an 
average renewal premium rate increase 
of 5.4% 2 compared with 7.3% 2 in 2019. 

Adjusting for the disposal of the personal 
lines business in 2019, underlying 
growth was 13%, reflecting premium rate 
increases coupled with strong growth 
in Crop, property programs and Accident 
& Health (A&H). 

International 

Rate-driven growth was offset by 
moderation in CTP, the 2019 sale of the 
travel insurance business and the impact 
of the economic slowdown on the Pacific 
Islands business. Excluding CTP and 
travel insurance, underlying growth was 
around 8% reflecting growth in strata, 
LMI, householders and New Zealand.

International reported a 12% 1 uplift in gross 
written premium, underpinned by an average 
renewal premium rate increase of 12.8% 
compared with 6.0% 3 in 2019. 

European operations achieved gross 
written premium growth of 14% 1 reflecting 
accelerating pricing momentum and 
emerging new business opportunities, 
particularly in International Markets, QBE 
Re and Continental European insurance. 

Growth in European operations was 
partly offset by a 7% 1 contraction in 
Asia, primarily due to COVID-19 impacts, 
particularly in travel insurance, trade credit 
and marine cargo insurance. 

Reinsurance expense

Reinsurance expense increased 40% 
to $2,300 million from $1,648 million in 2019.

Additional Crop quota share reinsurance, 
and significantly reduced MPCI recoveries 
relative to the especially poor Crop result 
in 2019, increased reinsurance expense 
by $438 million relative to 2019. 

Reinsurance expense was also impacted by 
the North America peak zone catastrophe 
buydown announced in April 2020 as well 
as growth in portfolios protected by quota 
share reinsurance, including Equator Re, 
and additional facultative and retrocession 
purchases, particularly in International.

1  Constant currency basis and excludes impact of 2019 disposals.
2  Excludes premium rate changes relating to North America Crop and/or Australian CTP. 
3  Restated for transfer of North America’s inward reinsurance business to International.

Underwriting expenses, commission and tax

Expense ratio

14.6%

2019  14.6%

Net commission ratio

16.1%

2019  15.6%

Tax rate

(3)%

2019  16%

Underwriting and 
other expenses

The Group’s expense ratio was stable 
at 14.6%. 

Improvement in International was offset 
by deterioration in North America and 
Australia Pacific, the latter reflecting 
a material NSW CTP profit normalisation 
charge. While North America reduced 
costs in absolute terms, the expense ratio 
was impacted by a greater reduction in 
net earned premium due to the sale of the 
retail personal lines business and material 
de-risking (reinsurance) initiatives. 

As discussed on page 12, run-rate 
costs are $1,690 million which equates 
to an underlying expense ratio of 14.3%. 

Net commission

The commission ratio increased to 16.1% 
from 15.6% in 2019, in part due to relative 
growth in International where commission 

rates are higher due to the specialised 
nature of the business. At the same time, 
International’s commission ratio increased 
due to strong growth in higher commission 
London Market Specialty business where 
rate increases were especially strong. 

Income tax expense

The effective statutory tax rate of negative 
3% compares with 16% in the prior year 
and is distorted by a $120 million write-off 
of deferred tax assets and impairment 
of goodwill in North America of which only 
a portion was tax effected. The tax rate 
otherwise reflects the mix of corporate tax 
rates in the countries where we operate, 
with limitations on recognition of losses 
in North America and Bermuda.

The dividend franking account balance 
stood at A$71 million as at 31 December 
2020, enabling the Group to fully frank 
A$165 million of dividends. 

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16

Claims

Attritional claims ratio 1 

Incurred claims

Attritional claims ratio

44.6% 

46.3%

40.2%

49.4%

Large individual risk 
claims ratio

7.9% 

8.3%

10.9%

3.5%

Catastrophe claims ratio 

5.8% 

4.3%

7.1%

6.7%

	North America 
	International 
	Australia Pacific 

The Group’s net claims ratio increased 
to 71.1% from 69.3% 2 in 2019, largely 
reflecting a further material reduction 
in risk-free rates used to discount net 
outstanding claims liabilities.

Excluding Crop and LMI, the attritional 
claims ratio improved a further 2.9% 
to 44.6% from 47.5% in the prior year, 
reflecting improvement across all divisions 
but especially International.

Risk-free rate movements aside, 
a further significant improvement 
in the attritional claims ratio and 
a modest reduction in the large 
individual risk claims ratio were more 
than offset by a material increase 
in catastrophe claims coupled 
with adverse prior accident year 
claims development.

The additional Crop quota share 
and North American catastrophe 
reinsurance adversely impacted 
the net claims ratio (especially the 
large individual risk and catastrophe 
claims ratios) relative to the prior 
year by reducing net earned premium 
by $325 million.

The major components of the 
net claims ratio are summarised 
in the table below.

Excluding Crop, North America’s attritional 
claims ratio improved 2.4% relative 
to the prior year. The benefit of earned 
rate increases, as well as the sale of the 
retail (independent agency) personal 
lines business, were partly offset by the 
adoption of more prudent current accident 
year actuarial assumptions, increased 
reinsurance spend to reduce North 
America peak zone catastrophe exposure 
and strong growth in A&H, which operates 
on a materially higher attritional claims 
ratio than the portfolio average.

International’s attritional claims ratio improved 
4.0% relative to the prior year, reflecting an 
increasingly favourable pricing landscape.

Excluding LMI, Australia Pacific’s 
attritional claims ratio reduced by a further 
1.7%, with improvement observed across 
most portfolios except for householders 
which was impacted by adverse weather.

1  Excludes Crop and/or LMI.
2  Excludes one-off impact of the Ogden decision in the UK.

Weighted average risk‑free rates 

Net incurred claims

FOR THE YEAR ENDED 31 DECEMBER

2020

2019

Attritional claims
Large individual risk and catastrophe claims
Claims settlement costs
Claims discount
Net incurred central estimate claims ratio 
(current accident year)
Changes in undiscounted prior accident year 
central estimate
Impact of Ogden decision
Impact of changes in risk-free rates
Movement in risk margins
Other (including unwind of prior year discount)
Net claims ratio

1  Excludes one-off impact of the Ogden decision in the UK.

Attritional claims ratio 

STATUTORY
%

EX-COVID
%

STATUTORY
%

ADJUSTED 1
%

47.8
16.0
3.5
(0.3)

67.0

3.1
–
3.3
2.9
–
76.3

47.6
13.7
3.5
(0.3)

64.5

2.9
–
3.2
0.4
0.1
71.1

52.5
11.9
3.3
(1.4)

66.3

(0.8)
0.5
2.0
(0.2)
2.0
69.8

52.5
11.9
3.3
(1.4)

66.3

(0.8)
–
2.0
(0.2)
2.0
69.3

FOR THE YEAR ENDED 31 DECEMBER

2020

2019

Rest of portfolio
Crop insurance
LMI
QBE Group adjusted

NEP
US$M

10,760
876
149
11,785

ATTRITIONAL 
%

44.6
86.8
32.9
47.6

NEP 
US$M

10,251
1,197
161
11,609

ATTRITIONAL 
%

47.5
97.7
34.8
52.5

17

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Total catastrophe 

claims (US$M)

688

5.8% of NEP

2019  426

Total large individual 

risk  claims (US$M)

932

7.9% of NEP

2019  955

Total large individual 

risk  and catastrophe 

claims (US$M)

1,620

13.7% of NEP

2019  1,381

Prior accident year 

claims development 

(US$M)

(366)

2020

2019

2018

2017

2016

(366)

(22)

92

17

366

Large individual risk 

and catastrophe claims

Weighted average 

risk‑free rates

The net cost of catastrophe claims 

As summarised in the table below, 

increased to $688 million or 5.8% of net 

the currency weighted average risk-free 

earned premium compared with 3.7% 

rate used to discount net outstanding 

in 2019. This was $134 million or 1.1% 

claims liabilities decreased to 0.30% 

above our allowance reflecting particularly 

at 31 December 2020 from 1.05% 

adverse experience in Australia due 

at 31 December 2019. 

Risk-free rates decreased appreciably 

across all currencies resulting in 

a $381 million underwriting charge that 

increased the net claims ratio by 3.2% 

compared with a $231 million charge 

in 2019 that increased the net claims 

ratio by 2.0%. 

The $381 million adverse risk-free 

rate impact on the underwriting result 

was more than offset by a $481 million 

benefit in investment income due to the 

maintenance of a surplus duration position 

for the first half of 2020.

to widespread bushfires and significant 

Australian east coast hail and storm 

claims, coupled with a record number 

of Atlantic hurricanes. Catastrophe 

experience was better than expected 

in International, albeit worse than the 

especially benign prior year.

The net cost of large individual risk claims 

reduced to $932 million or 7.9% of net 

earned premium from 8.2% in the prior year. 

This is a pleasing outcome with significant 

improvement in International partly offset 

by higher than expected claims severity 

in North America aviation and NSW CTP.

The 2021 catastrophe allowance is $685 

million, up from $554 million in 2020, reflecting 

a small increase in aggregate due to growth, 

the impact of changes to our reinsurance 

structure and our prudent response to 

the elevated level of catastrophe claims 

in more recent years. 

CURRENCY 

31 DECEMBER

30 JUNE

31 DECEMBER

Australian dollar

US dollar

Sterling

Euro

Group weighted

%

%

%

%

%

Estimated risk-free rate charge US$M

2020 

0.41

0.82

0.07

(0.59)

0.30

(381)

2020

0.50

0.69

0.16

(0.34)

0.31

(335)

2019

1.11

1.95

0.80

(0.08)

1.05

(231)

Prior accident year claims development

Excluding $20 million of positive prior 

International reported $80 million 

accident year claims development 

pertaining to North America Crop 

of adverse development, primarily 

reflecting development on the 

insurance that is matched by additional 

North America inward reinsurance 

premium cessions under the MPCI 

business (now part of QBE Re), 2019 

scheme, adverse prior accident year 

Japanese typhoons and higher than 

claims development was $366 million 

anticipated claims inflation in European 

or 3.1% of net earned premium, compared 

financial lines.

with $22 million or 0.2% in the prior year.

Australia Pacific reported $18 million 

Disappointingly, North America reported 

of positive prior accident year claims 

$305 million of adverse development 

development. Favourable development 

spanning the closed excess and surplus 

in NSW CTP, commercial property and 

lines (E&S) portfolio, aviation, industry-wide 

workers’ compensation was partly offset 

development on Hurricane Irma and an 

by modest development in householders, 

additional explicit allowance to address 

liability classes and in New Zealand.

systemic risks including social inflation 

and higher severity trends in casualty lines.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
16

Claims

Attritional claims ratio 1 

Incurred claims

Attritional claims ratio

44.6% 

46.3%

40.2%

49.4%

Large individual risk 

claims ratio

7.9% 

8.3%

10.9%

3.5%

The Group’s net claims ratio increased 

Excluding Crop and LMI, the attritional 

to 71.1% from 69.3% 2 in 2019, largely 

claims ratio improved a further 2.9% 

reflecting a further material reduction 

to 44.6% from 47.5% in the prior year, 

in risk-free rates used to discount net 

reflecting improvement across all divisions 

outstanding claims liabilities.

but especially International.

Risk-free rate movements aside, 

a further significant improvement 

in the attritional claims ratio and 

a modest reduction in the large 

Excluding Crop, North America’s attritional 

claims ratio improved 2.4% relative 

to the prior year. The benefit of earned 

rate increases, as well as the sale of the 

individual risk claims ratio were more 

retail (independent agency) personal 

than offset by a material increase 

in catastrophe claims coupled 

with adverse prior accident year 

claims development.

The additional Crop quota share 

and North American catastrophe 

reinsurance adversely impacted 

the net claims ratio (especially the 

lines business, were partly offset by the 

adoption of more prudent current accident 

year actuarial assumptions, increased 

reinsurance spend to reduce North 

America peak zone catastrophe exposure 

and strong growth in A&H, which operates 

on a materially higher attritional claims 

ratio than the portfolio average.

Catastrophe claims ratio 

large individual risk and catastrophe 

International’s attritional claims ratio improved 

claims ratios) relative to the prior 

4.0% relative to the prior year, reflecting an 

year by reducing net earned premium 

increasingly favourable pricing landscape.

by $325 million.

The major components of the 

net claims ratio are summarised 

in the table below.

Excluding LMI, Australia Pacific’s 

attritional claims ratio reduced by a further 

1.7%, with improvement observed across 

most portfolios except for householders 

which was impacted by adverse weather.

1  Excludes Crop and/or LMI.

2  Excludes one-off impact of the Ogden decision in the UK.

5.8% 

4.3%

7.1%

6.7%

	North America 

	International 

	Australia Pacific 

Net incurred claims

FOR THE YEAR ENDED 31 DECEMBER

2020

2019

STATUTORY

EX-COVID

STATUTORY

ADJUSTED 1

Attritional claims

Large individual risk and catastrophe claims

Claims settlement costs

Claims discount

Net incurred central estimate claims ratio 

(current accident year)

Changes in undiscounted prior accident year 

central estimate

Impact of Ogden decision

Impact of changes in risk-free rates

Movement in risk margins

Other (including unwind of prior year discount)

Net claims ratio

1  Excludes one-off impact of the Ogden decision in the UK.

Attritional claims ratio 

Rest of portfolio

Crop insurance

LMI

QBE Group adjusted

%

47.8

16.0

3.5

(0.3)

67.0

3.1

–

3.3

2.9

–

76.3

NEP

US$M

10,760

876

149

11,785

%

47.6

13.7

3.5

(0.3)

64.5

2.9

–

3.2

0.4

0.1

71.1

%

44.6

86.8

32.9

47.6

%

52.5

11.9

3.3

(1.4)

66.3

(0.8)

0.5

2.0

(0.2)

2.0

69.8

NEP 

US$M

10,251

1,197

161

11,609

%

52.5

11.9

3.3

(1.4)

66.3

(0.8)

–

2.0

(0.2)

2.0

69.3

%

47.5

97.7

34.8

52.5

FOR THE YEAR ENDED 31 DECEMBER

2020

2019

ATTRITIONAL 

ATTRITIONAL 

Large individual risk 
and catastrophe claims

Weighted average 
risk‑free rates

As summarised in the table below, 
the currency weighted average risk-free 
rate used to discount net outstanding 
claims liabilities decreased to 0.30% 
at 31 December 2020 from 1.05% 
at 31 December 2019. 

Risk-free rates decreased appreciably 
across all currencies resulting in 
a $381 million underwriting charge that 
increased the net claims ratio by 3.2% 
compared with a $231 million charge 
in 2019 that increased the net claims 
ratio by 2.0%. 

The $381 million adverse risk-free 
rate impact on the underwriting result 
was more than offset by a $481 million 
benefit in investment income due to the 
maintenance of a surplus duration position 
for the first half of 2020.

The net cost of catastrophe claims 
increased to $688 million or 5.8% of net 
earned premium compared with 3.7% 
in 2019. This was $134 million or 1.1% 
above our allowance reflecting particularly 
adverse experience in Australia due 
to widespread bushfires and significant 
Australian east coast hail and storm 
claims, coupled with a record number 
of Atlantic hurricanes. Catastrophe 
experience was better than expected 
in International, albeit worse than the 
especially benign prior year.

The net cost of large individual risk claims 
reduced to $932 million or 7.9% of net 
earned premium from 8.2% in the prior year. 
This is a pleasing outcome with significant 
improvement in International partly offset 
by higher than expected claims severity 
in North America aviation and NSW CTP.

The 2021 catastrophe allowance is $685 
million, up from $554 million in 2020, reflecting 
a small increase in aggregate due to growth, 
the impact of changes to our reinsurance 
structure and our prudent response to 
the elevated level of catastrophe claims 
in more recent years. 

Weighted average risk‑free rates 

CURRENCY 

31 DECEMBER
2020 

30 JUNE
2020

31 DECEMBER
2019

Total catastrophe 
claims (US$M)

688

5.8% of NEP
2019  426

Total large individual 
risk  claims (US$M)

932

7.9% of NEP
2019  955

Total large individual 
risk  and catastrophe 
claims (US$M)

1,620

13.7% of NEP
2019  1,381

%

Australian dollar
US dollar
Sterling
Euro
Group weighted
%
Estimated risk-free rate charge US$M

%

%

%

0.41
0.82
0.07
(0.59)
0.30
(381)

0.50
0.69
0.16
(0.34)
0.31
(335)

1.11
1.95
0.80
(0.08)
1.05
(231)

Prior accident year claims development

Excluding $20 million of positive prior 
accident year claims development 
pertaining to North America Crop 
insurance that is matched by additional 
premium cessions under the MPCI 
scheme, adverse prior accident year 
claims development was $366 million 
or 3.1% of net earned premium, compared 
with $22 million or 0.2% in the prior year.

Disappointingly, North America reported 
$305 million of adverse development 
spanning the closed excess and surplus 
lines (E&S) portfolio, aviation, industry-wide 
development on Hurricane Irma and an 
additional explicit allowance to address 
systemic risks including social inflation 
and higher severity trends in casualty lines.

International reported $80 million 
of adverse development, primarily 
reflecting development on the 
North America inward reinsurance 
business (now part of QBE Re), 2019 
Japanese typhoons and higher than 
anticipated claims inflation in European 
financial lines.

Australia Pacific reported $18 million 
of positive prior accident year claims 
development. Favourable development 
in NSW CTP, commercial property and 
workers’ compensation was partly offset 
by modest development in householders, 
liability classes and in New Zealand.

Prior accident year 
claims development 
(US$M)

(366)

2020

2019

2018

2017

2016

(366)
(22)

92

17

366

17

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18

Balance sheet and capital management

PCA multiple

Capital management

Prescribed capital amount

Net outstanding claims

Borrowings

Total borrowings  (US$M)

1.72x

2019  1.71x 

Target PCA multiple

1.6–1.8x

Debt to equity

32.4% 1

2019  38.0% 

Target debt to equity

25–35%

The PCA multiple increased marginally 
to 1.72x at 31 December 2020 from 
1.71x at 31 December 2019, reflecting:

•  execution of the capital actions 
announced on 14 April 2020;

•  a reduced insurance concentration 

risk charge (ICRC) mainly due to the 
purchase of additional catastrophe 
reinsurance protection for the North 
America region; largely offset by

•  the full year cash operating loss and 
payment of the 2019 final and 2020 
interim dividends;

•  a higher insurance risk charge due 

to an increase in outstanding claims 
and premium liabilities as a result 
of lower risk-free rates, prior accident 
year claims development and an 
allowance for significant COVID-19 
claims within outstanding claims and 
premium liabilities; and 

•  a higher asset risk charge reflecting the 
material increase in investment assets 
which more than offset the benefit 
of de-risking initiatives.

The $200 million subordinated debt 
redemption to be completed in March 
2021, does not materially impact the PCA 
multiple as only $37 million was regulatory 
capital qualifying at the balance date.  

During 2020, QBE undertook significant 
capital management initiatives including:

•  a $750 million equity raising 

via an institutional placement 
at A$8.25 per share; 

•  a $63 million equity raising via 

a Share Purchase Plan for retail 
investors at A$7.51 per share;

•  a $500 million AT1 securities 

issuance; and

•  net A$300 million of Tier 2 

subordinated debt issuance.

In May 2020, QBE issued $500 million 
of perpetual fixed rate resetting capital 
notes that are AT1 qualifying under 
APRA’s capital adequacy framework.

The notes are classified as equity, pay 
franked after tax distributions and do not 
impact the weighted average number of 
shares for earnings per share calculations 
(since the notes are written off in whole 
or in part if APRA determines QBE is, 
or would become, non-viable).

Together with the reclassified 2017 
perpetual fixed rate capital notes, the 
annual after tax distribution on QBE’s 
AT1 capital will be $50 million, while 
the reclassification of the 2017 notes 
will result in annual financing and other 
costs reducing by $21 million.

Allowing for subordinated debt to be 
repaid in March 2021, pro forma gearing 
was 32.4%, down significantly from 
38.0% at 31 December 2019 and within 
the Group’s internal benchmark range 
of 25–35%.

1  Pro forma adjusting for $200 million pre-funded debt repayment to be completed in March 2021.

Capitalisation and capital metrics

AS AT 31 DECEMBER

Net assets
Less: intangible assets
Net tangible assets 
Add: borrowings
Total tangible capitalisation

Debt to equity 1
Debt to tangible equity 1
Premium solvency 2

QBE's regulatory capital base
APRA's PCA 
PCA multiple 3

US$M

US$M

US$M

US$M

US$M

%

%

%

US$M

US$M

BENCHMARK

25–35

1.6–1.8x

2020

8,492
(2,534)
5,958
2,955
8,913

32.4
46.2
50.6

9,348
5,436
1.72x

2019

8,153
(2,791)
5,362
3,095
8,457

38.0
57.7
46.2

8,502
4,966
1.71x

1  Pro forma adjusting for $200 million pre-funded debt repayment to be completed in March 2021.
2  The ratio of net tangible assets to adjusted net earned premium. 
3  Indicative APRA PCA calculation at 31 December 2020. 

19

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2,955 1

	Less than one year 

	One to five years 

	More than five years 

200

1,848

907

Borrowings profile

2,955 

	Senior debt 2 

	Subordinated debt 

–

100%

2,107

	North America 

	International 

	Australia Pacific 

358

546

1,203

Net outstanding claims liabilities are 

As at 31 December 2020, total borrowings 

discounted using sovereign bond rates as 

were $2,955 million, down $140 million 

a proxy for risk-free interest rates and not 

from $3,095 million at 31 December 2019. 

the actual earning rate on our investments.

In July 2020, the Group reclassified $400 

At 31 December 2020, risk margins in 

million of perpetual fixed rate capital notes 

net outstanding claims were $1,537 million 

out of borrowings into equity following 

or 9.7% of the net central estimate of 

a successful consent solicitation to amend 

outstanding claims compared with $1,136 

the terms of the capital notes. 

million or 8.3% of the net central estimate 

at 31 December 2019. Excluding foreign 

exchange movements, risk margins 

increased $344 million in 2020 compared 

with a $23 million decrease in 2019.

In August 2020, the Group issued A$500 

million of subordinated notes to pre-fund 

the redemption of A$200 million of 

subordinated notes in September 2020 

and $200 million of subordinated notes 

The PoA of net outstanding claims 

in March 2021.

increased to 92.5% from 90.0% 

at 31 December 2019, primarily due 

to a $300 million uplift in risk margins 

reflecting heightened reserve uncertainty 

arising from COVID-19, particularly with 

respect to business interruption claims.

Gross interest expense on long-term 

borrowings for the year was $185 million, 

down from $195 million in the prior year. 

The average annualised cash cost 

of borrowings at 31 December 2020 

was 6.1%, down slightly from 6.3% 

AS AT 31 DECEMBER

2020

2019

as at 31 December 2019. 

Net central estimate US$M 15,797 13,675

Risk margin

US$M 1,537 1,136

Net outstanding claims  US$M 17,334 14,811

PoA

Risk margins to  

central estimate

%

%

92.5

90.0

9.7

8.3

As at 31 December 2020, all but $169 million 

of the Group’s borrowings continued 

to count towards regulatory capital.

1  Based on first call date. 

2  Senior debt outstanding at 31 December 2020 is $6 million.

The carrying value of identifiable 

As at 31 December 2020, QBE recognised 

intangibles and goodwill at 31 December 

a North America goodwill impairment 

2020 was $2,534 million, down from 

charge of $390 million reflecting 

$2,791 million at 31 December 2019. 

a combination of factors including: 

During the year, the carrying value of 

•  lower investment return expectations 

intangibles reduced by $257 million due 

that reflect market conditions, including 

to amortisation and impairment expense 

lower long-term return assumptions and 

of $512 million, which more than offset 

an updated strategic asset allocation 

a $188 million foreign exchange impact 

that was determined as part of our 

and net additions in the period, being 

annual planning process; 

mainly the capitalisation of software 

in relation to various information 

technology projects. 

•  an increase in the 10-year average 

Crop combined ratio that resulted from 

the deterioration in performance of 

the business in the second half of the 

year, principally due to the impact of the 

California wildfires; and

•  an increase in North America’s 

catastrophe allowance as a result 

of elevated catastrophe experience 

in the second half of the year.

Identifiable intangibles and goodwill

Goodwill  (US$M)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
18

19

PCA multiple

Capital management

Prescribed capital amount

Net outstanding claims

Borrowings

Total borrowings  (US$M)

Net outstanding claims liabilities are 
discounted using sovereign bond rates as 
a proxy for risk-free interest rates and not 
the actual earning rate on our investments.

At 31 December 2020, risk margins in 
net outstanding claims were $1,537 million 
or 9.7% of the net central estimate of 
outstanding claims compared with $1,136 
million or 8.3% of the net central estimate 
at 31 December 2019. Excluding foreign 
exchange movements, risk margins 
increased $344 million in 2020 compared 
with a $23 million decrease in 2019.

The PoA of net outstanding claims 
increased to 92.5% from 90.0% 
at 31 December 2019, primarily due 
to a $300 million uplift in risk margins 
reflecting heightened reserve uncertainty 
arising from COVID-19, particularly with 
respect to business interruption claims.

2020

AS AT 31 DECEMBER
2019
Net central estimate US$M 15,797 13,675
US$M 1,537 1,136
Risk margin
Net outstanding claims  US$M 17,334 14,811
90.0
PoA
Risk margins to  
central estimate

92.5

8.3

%

%

9.7

As at 31 December 2020, total borrowings 
were $2,955 million, down $140 million 
from $3,095 million at 31 December 2019. 

In July 2020, the Group reclassified $400 
million of perpetual fixed rate capital notes 
out of borrowings into equity following 
a successful consent solicitation to amend 
the terms of the capital notes. 

In August 2020, the Group issued A$500 
million of subordinated notes to pre-fund 
the redemption of A$200 million of 
subordinated notes in September 2020 
and $200 million of subordinated notes 
in March 2021.

Gross interest expense on long-term 
borrowings for the year was $185 million, 
down from $195 million in the prior year. 
The average annualised cash cost 
of borrowings at 31 December 2020 
was 6.1%, down slightly from 6.3% 
as at 31 December 2019. 

As at 31 December 2020, all but $169 million 
of the Group’s borrowings continued 
to count towards regulatory capital.

2,955 1

	Less than one year 
	One to five years 
	More than five years 

200
1,848
907

Borrowings profile

2,955 

	Senior debt 2 
	Subordinated debt 

–
100%

1  Based on first call date. 
2  Senior debt outstanding at 31 December 2020 is $6 million.

Identifiable intangibles and goodwill

Goodwill  (US$M)

The carrying value of identifiable 
intangibles and goodwill at 31 December 
2020 was $2,534 million, down from 
$2,791 million at 31 December 2019. 

As at 31 December 2020, QBE recognised 
a North America goodwill impairment 
charge of $390 million reflecting 
a combination of factors including: 

Balance sheet and capital management

1.72x

2019  1.71x 

Target PCA multiple

1.6–1.8x

Debt to equity

32.4% 1

2019  38.0% 

Target debt to equity

25–35%

During 2020, QBE undertook significant 

The PCA multiple increased marginally 

capital management initiatives including:

to 1.72x at 31 December 2020 from 

•  a $750 million equity raising 

via an institutional placement 

at A$8.25 per share; 

•  a $63 million equity raising via 

a Share Purchase Plan for retail 

investors at A$7.51 per share;

•  a $500 million AT1 securities 

issuance; and

•  net A$300 million of Tier 2 

subordinated debt issuance.

In May 2020, QBE issued $500 million 

of perpetual fixed rate resetting capital 

notes that are AT1 qualifying under 

APRA’s capital adequacy framework.

1.71x at 31 December 2019, reflecting:

•  execution of the capital actions 

announced on 14 April 2020;

•  a reduced insurance concentration 

risk charge (ICRC) mainly due to the 

purchase of additional catastrophe 

reinsurance protection for the North 

America region; largely offset by

•  the full year cash operating loss and 

payment of the 2019 final and 2020 

interim dividends;

•  a higher insurance risk charge due 

to an increase in outstanding claims 

and premium liabilities as a result 

of lower risk-free rates, prior accident 

The notes are classified as equity, pay 

year claims development and an 

franked after tax distributions and do not 

allowance for significant COVID-19 

impact the weighted average number of 

claims within outstanding claims and 

shares for earnings per share calculations 

premium liabilities; and 

•  a higher asset risk charge reflecting the 

material increase in investment assets 

which more than offset the benefit 

of de-risking initiatives.

The $200 million subordinated debt 

redemption to be completed in March 

2021, does not materially impact the PCA 

multiple as only $37 million was regulatory 

capital qualifying at the balance date.  

(since the notes are written off in whole 

or in part if APRA determines QBE is, 

or would become, non-viable).

Together with the reclassified 2017 

perpetual fixed rate capital notes, the 

annual after tax distribution on QBE’s 

AT1 capital will be $50 million, while 

the reclassification of the 2017 notes 

will result in annual financing and other 

costs reducing by $21 million.

Allowing for subordinated debt to be 

repaid in March 2021, pro forma gearing 

was 32.4%, down significantly from 

38.0% at 31 December 2019 and within 

the Group’s internal benchmark range 

of 25–35%.

1  Pro forma adjusting for $200 million pre-funded debt repayment to be completed in March 2021.

Capitalisation and capital metrics

AS AT 31 DECEMBER

Net assets

Less: intangible assets

Net tangible assets 

Add: borrowings

Total tangible capitalisation

Debt to equity 1

Debt to tangible equity 1

Premium solvency 2

QBE's regulatory capital base

APRA's PCA 

PCA multiple 3

US$M

US$M

US$M

US$M

US$M

%

%

%

US$M

US$M

BENCHMARK

25–35

1.6–1.8x

2020

8,492

(2,534)

5,958

2,955

8,913

32.4

46.2

50.6

9,348

5,436

1.72x

2019

8,153

(2,791)

5,362

3,095

8,457

38.0

57.7

46.2

8,502

4,966

1.71x

1  Pro forma adjusting for $200 million pre-funded debt repayment to be completed in March 2021.

2  The ratio of net tangible assets to adjusted net earned premium. 

3  Indicative APRA PCA calculation at 31 December 2020. 

During the year, the carrying value of 
intangibles reduced by $257 million due 
to amortisation and impairment expense 
of $512 million, which more than offset 
a $188 million foreign exchange impact 
and net additions in the period, being 
mainly the capitalisation of software 
in relation to various information 
technology projects. 

•  lower investment return expectations 

that reflect market conditions, including 
lower long-term return assumptions and 
an updated strategic asset allocation 
that was determined as part of our 
annual planning process; 

•  an increase in the 10-year average 

Crop combined ratio that resulted from 
the deterioration in performance of 
the business in the second half of the 
year, principally due to the impact of the 
California wildfires; and

•  an increase in North America’s 

catastrophe allowance as a result 
of elevated catastrophe experience 
in the second half of the year.

2,107

	North America 
	International 
	Australia Pacific 

358
546
1,203

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20

Investment performance and strategy

Closing remarks

At 31 December 2020, total cash 
and investments was $27,735 million, 
up significantly from the prior year, 
reflecting strong operating cash flow 
coupled with depreciation of the US dollar 
against our other major currencies such 
as GBP, AUD and Euro.

The portfolio remains conservatively 
positioned with around 7% invested 
in growth assets, comprised of real estate, 
coupled with a small amount of gold and 
private equity.

With sovereign bond yields anchored near 
historical lows, we intend to broadly match 
the interest rate sensitivity of our fixed 
income assets with our net outstanding 
claims liabilities, implying an asset 
duration of, or modestly above, 2.2 years.

Funds under 
management (US$M)

25,670

22,058

2020
2019

2020
2019

2,065
2,316

	Fixed income
	Growth assets

Net investment  
income (US$M)

226

  78% from 2019

Net investment return

0.9%

2019  4.4%

Fixed 
income

Vs

Growth 
assets

1.9%

(4.8)%

2019  3.7% 

2019  11.8% 

Having been heavily impacted by market 
volatility in March 2020, the investment 
portfolio subsequently experienced strong 
gains as substantial and coordinated 
monetary and fiscal policy stimuli helped 
bolster risk sentiment. The net investment 
return for 2020 was 0.9%, down materially 
from 4.4% in the prior year. 

Our fixed income portfolio returned 1.9% 
compared with 3.7% in 2019, as sovereign 
bond yields fell to and remained anchored 
at historic lows. After initially widening 
substantially, credit spreads eventually 
retraced back toward or in some cases 
beyond their pre-COVID-19 levels. 

Despite a challenging environment 
for corporate credit, our portfolio has 
remained resilient with no downgrades into 
high yield and a broadly lower incidence of 
downgrades relative to the wider market.

Growth assets returned a loss of 4.8% 
compared with income of 11.8% in 2019, 
largely reflecting the equity market 
sell-off in March 2020. Unlisted assets 
remained resilient over the course of 
2020; unlisted property experienced only 
modest weakness, infrastructure assets 
just managed a positive return and private 
equity enjoyed strong gains as momentum 
gathered in the second half.

Interest bearing financial assets 
– S&P security grading

Currency mix of investments 

AS AT 31 DECEMBER

Rating
AAA
AA
A