Insurance group also announces a $1bn share buy-back programme in its annual results

John Neal, QBE

Australian insurer QBE saw its share price climb today after reporting a 5% jump in its 2016 net profit and a $1bn share buy-back programme.

The insurer, which reports in US dollars, posted net profit after tax of $844m for the year ended 31 December, up from $807m the prior year.

Its gross written premium fell 2% to $14.1bn, while its combined operating ratio (COR) improved to 93.2% from 94.3%.

The company said it would launch a $1bn share buyback over three years in recognition of the strength of its balance sheet and expected retained earnings growth.

The buyback was the “most appropriate application of QBE’s emerging surplus capital, rewarding shareholders while maintaining capital efficiency”, the company said.

QBE chief executive John Neal (pictured) said the result was a “testament to the strength and diversity of our global franchise underpinned by a strong underwriting culture and supported by a high quality balance sheet”.

Net profit after tax jumped 23% from 2015 when expenses from that year including losses from its sold Argentine workers compensation business and other write-downs were factored in.

The annual report also stated that Neal’s short-term incentive (STI) bonus was cut from an expected $2.76m, based on a scorecard performance, to $2.21m due to “personal decisions” he had taken.

The $550,000 cut to his bonus was for not disclosing to the board a romantic relationship with his executive assistant in a timely manner.

The insurer also announced that David McMillan would become group chief operating officer following the departure of Colin Fagen earlier this month.

McMillan, previously with Aviva, will join QBE towards the end of the year, based in London.