North American Operations business review

North American Operations more than doubled underwriting profit in 2016, reflecting a strong Crop performance and continued profitable growth in Specialty. Ongoing cost efficiencies, coupled with a more focused Property & Casualty portfolio, bodes well for further margin improvement.

Russ Johnston
Chief Executive Officer   •   North American Operations

Gross written
premium (US$M)


2% from 2015 2
Net earned
premium 1 (US$M)


1% from 2015 2
Gross written chart, net earned premium

  1. Adjusted for transactions to reinsure run-off liabilities.
  2. Prior period comparable figures exclude premium associated with the sale of M&LS in 2015.
  3. Comparability of prior period data is diminished as a result of the sale of M&LS and the adoption of a significantly revised crop premium earning pattern in 2015.

2016 in review

A number of growth and margin‑enhancing initiatives are currently underway and North American Operations remains confident of delivering a mid-90s combined operating ratio by 2018. North American Operations continues its focus on building a leading specialist franchise that delivers profitable organic growth by building market leading and proprietary products tailored to customer needs. Since 2013, Specialty has launched nine new business units and has developed a culture of innovation and excellence with over 30 new products brought to market. We have a well-diversified portfolio, anchored around accident and health and errors and omissions, augmented with offerings across directors and officers, transactional liability, aviation and inland marine. This has allowed us to develop an organic growth capability that we are now leveraging across the Property & Casualty portfolio. We have launched an “excess and surplus lines” business and are building out our existing personal lines platform to further enhance portfolio diversification. The Property & Casualty franchise is moving forward with a more focused distribution footprint. Our value proposition is centred around the scale of our Specialty and Property & Casualty product offerings and our delivery of integrated capabilities to customers. Our high quality Crop and Reinsurance businesses are also integral, providing additional portfolio diversification and confidence in posting a further improved underwriting result in 2017.

Implementation of a series of initiatives focused on claims, analytics and human capital are well underway as we continue to build sustainable financial results and brand value. In 2016, we started deploying advanced analytics to enable claims triage, subrogation and anti-fraud capabilities to improve recoveries as well as third party management to ensure we drive a positive customer experience with efficient and effective practices. In addition, utilisation of machine learning is improving our analytical capabilities with respect to customer analysis and underwriting which is driving improved decision making at a transactional and portfolio level across our businesses. The introduction of drone technology in our crop business has enabled us to better serve our customers. Over the course of 2017, we will increase our deployment of analytics and technology to improve business optimisation throughout the North American Operation. Moreover, continued development of a performance-driven and results-focused culture, while building in house technical expertise through the launch of our underwriting academy, further underpins our confidence in delivering on our medium‑term financial targets.

Outlook for 2017

North American Operations aims to be a top quartile, diversified specialty insurer in the markets in which we compete. The goal is to deliver sustainable, profitable growth with a strong underwriting margin.

During 2016, we further strengthened the depth and breadth of our management team while building a truly national platform, both of which are essential to remaining a profitable and growing operation. Although faced with competitive industry challenges, the outlook for 2017 remains positive. Improvements in underlying business trends indicate that the North American transformation is on track and our expanded field operations are well established with highly respected and recognised industry executives which bodes well for future growth and industry relevance.

Despite headwinds in resetting our Property & Casualty business, the growth of our Specialty franchise and diversification from our high quality Crop and Reinsurance businesses underpin our confidence in sustaining a mid-90s combined operating ratio over the medium‑term.

In North America, QBE’s deep expertise and industry experience meets the specialised and unique risk management needs of Aviation policyholders and Aviation trading partners.

Our customers, such as Wisconsin Aviation, whose aircraft, aviation school and hangar we insure, cite both QBE’s expertise and integrated products and service capabilities as the reasons why QBE is their insurer of choice. From underwriters, to loss control and claims teams, we focus on understanding their business from a 360 degree perspective, delivering proactive solutions to potential risks.

By placing our customers at the centre of our thinking, we ensure we meet their expectations in a highly integrated fashion. In addition, our own people are the most critical part of our service offering to all our customers and this has allowed us to leverage a specialist-to-specialist underwriting model in Aviation. As a result, QBE has risen to become a market leader, delivering future-ready products and safety services that are contemporary, creative and relevant to policyholders and producer partners.

Insuring US agriculture:

QBE insures 12% of all production agriculture in the United States, including over 100,000 farmers and nearly 50 million acres of rural farmland.

“Our performance-driven culture underpins our confidence in delivering on our medium-term targets.”


GWP received to date (US$M)


Committed to invest (US$M)


Following the launch in 2015, North American Operations received positive feedback by brokers and QBE’s Specialty community during 2016 on the new way for our customers to consciously invest in a better world through Premiums4Good.

In the community: 'Habitat for Humanity' of Dane County

More than 100 employees in Sun Prairie, Wisconsin, participated in a build for 'Habitat for Humanity', providing affordable housing for a family that may not otherwise have had the opportunity to become homeowners. Volunteers built all interior and exterior wall panels for the home at QBE’s campus, which were then transported to the build site. As Sun Prairie’s largest employer, QBE believes it’s important to give back to the local community and provide employees with the opportunity to make a difference outside of their work environment.