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QBE Insurance Group Limited ABN 28 008 485 014 Level 18, 388 George Street, SYDNEY NSW 2000 Australia GPO Box 82, Sydney NSW 2001 telephone + 612 9375 4444 • facsimile + 612 9231 6104 www.qbe.com

12 August 2021

The Manager Market Announcements Office ASX Limited Level 4 Exchange Centre 20 Bridge Street SYDNEY NSW 2000

Dear Sir/Madam,

Report on results and financial statements for the half year ended 30 June 2021

The Directors of QBE Insurance Group Limited announce the financial results for the half year ended 30 June 2021.

The following documents are attached:

1. Appendix 4D – half year report; and

2. QBE’s half year report including financial statements for the half year ended 30 June 2021.

This release has been authorised by the QBE Board of Directors.

Yours faithfully

Carolyn Scobie Company Secretary

Attachments

QBE Insurance Group Limited Appendix 4D – Half year report for the period to 30 June 2021

Results for announcement to the market

2021 2020 FOR THE HALF YEAR ENDED 30 JUNE UP / DOWN % CHANGE US$M US$M Revenue from ordinary activities Up 14% 9,126 7,985 Profit (loss) from ordinary activities after income tax attributable to equity holders of the company Up N/A 441 (712) Net profit (loss) for the period attributable to ordinary equity holders of the company Up N/A 441 (712) Net profit after income tax for the half year ended 30 June 2021 was $441 million compared with a loss of $712 million in the prior period. The current period result reflects a material turnaround from the prior period which was impacted by underwriting losses due to COVID-19 and a net investment loss as a result of extreme investment market volatility. The Group reported an underwriting profit of $642 million compared with a loss of $524 million in the prior period, equating to a combined operating ratio of 90.2% compared with 109.5%. Excluding the impacts of changes in risk-free rates in both periods, the combined operating ratio was 93.3% compared with 103.4% in the prior period. The current period benefited from the strong rate environment, improved retention and new business growth, partly offset by increased reinsurance expense and large individual risk and catastrophe claims, particularly due to winter storm Uri in Texas. The combined commission and expense ratio decreased to 29.0% from 31.3% in the prior period. The net commission ratio decreased to 15.3% from 16.4% primarily due to business mix changes in North America and Australia Pacific. The Group’s expense ratio decreased to 13.7% from 14.9% mainly reflecting disciplined cost management and operating leverage driven by strong premium growth. Net investment and other income was $58 million compared with a net loss of $90 million in the prior period. The current period result reflects narrower credit spreads and increased returns on growth assets partly offset by the adverse impact of higher risk-free rates, whilst the prior period was severely impacted by COVID-19 related market volatility. The Group’s effective tax rate was 16% compared with 9% in the prior period, reflecting the mix of corporate tax rates in the jurisdictions in which QBE operates and the utilisation of previously unrecognised tax losses in the North American tax group.

AMOUNT FRANKED AMOUNT PER SECURITY PER SECURITY DIVIDENDS (AUSTRALIAN CENTS) (AUSTRALIAN CENTS) Interim dividend 11 1.1

The Board is announcing an interim dividend of 11 Australian cents per share for the half year ended 30 June 2021, up from the 2020 interim dividend of 4 Australian cents per share. Whilst recognising QBE’s improving profitability and earnings resilience, the Board has also had regard to typically higher catastrophe incidence and Crop result variability in the second half as well as QBE's stated intention to retain capital to support growth ambitions and facilitate the gradual normalisation of QBE’s investment asset risk profile. The Dividend Reinvestment Plan and Bonus Share Plan will be satisfied by the issue of shares with no discount applicable. The interim dividend will be 10% franked. The unfranked part of the dividend is declared to be conduit foreign income. The share issue price for the Dividend Reinvestment Plan and the Bonus Share Plan will be based on a volume weighted average in the 10 trading days between 27 August 2021 and 9 September 2021 (both dates inclusive). The record date for determining shareholder entitlements to the dividend is 20 August 2021. The last date for receipt of election notices applicable to the Dividend Reinvestment Plan and the Bonus Share Plan will be 23 August 2021. The interim dividend will be paid on 24 September 2021.

Additional disclosures Additional Appendix 4D disclosure requirements can be found in the QBE Insurance Group Limited Half Year Report for the period to 30 June 2021 (Attachment A). The Half Year Report should be read in conjunction with any market or public announcements made by QBE Insurance Group Limited during the period in accordance with the continuous disclosure requirements of the Corporations Act 2001 and the ASX Listing Rules. The independent auditor’s review report is included at page 47 of the Half Year Report. Other information During the period, QBE Insurance Group Limited held an interest in Mitti Insurance Pty Ltd (50%), Chrysalis Management Ltd (25%) and Raheja QBE General Insurance Company (49%). The Group’s aggregate share of profits of these entities is not material. On 6 July 2020, QBE announced the sale of its share of Raheja QBE Insurance Company. The transaction is awaiting regulatory approval in India.

QBE Insurance Group Limited ABN 28 008 485 014 1

QBE Insurance Group Limited Attachment A: Half year report for the period ended 30 June 2021

QBE Insurance Group Limited ABN 28 008 485 014 2 2021 Half Year Report

QBE INSURANCE GROUP LIMITED 1 Half Year Report 30 June 2021 June 30 Year Report Half Group Insurance QBE

Table of contents

HALF YEAR REPORT TO 30 JUNE 2021

overview 1Performance

SECTION 1 Performance overview

2021 half year snapshot 2 review 2financial and Operating Interim Group Chief Executive Officer’s report 4

SECTION 2 Operating and financial review Group Chief Financial Officer’s report 8 North America business review 20

International business review 22 3Report Directors’ Australia Pacific business review 24

SECTION 3 Directors’ Report Directors’ Report 26 Auditor’s independence declaration 29

4Report Financial SECTION 4

Financial Report Financial statements 30 Notes to the financial statements 34 Directors’ declaration 46 Independent auditor’s review report 47

5information Other SECTION 5

Other information Historical review 48

QBE Insurance Group Limited | ABN 28 008 485 014 All amounts in this report are US dollars unless otherwise stated. 1 Half Year Report 30 June 2021 June 30 Year Report Half Group Insurance QBE

Table of contents

HALF YEAR REPORT TO 30 JUNE 2021

overview 1Performance

SECTION 1 Performance overview

2021 half year snapshot 2 review 2financial and Operating Interim Group Chief Executive Officer’s report 4

SECTION 2 Operating and financial review Group Chief Financial Officer’s report 8 North America business review 20

International business review 22 3Report Directors’ Australia Pacific business review 24

SECTION 3 Directors’ Report Directors’ Report 26 Auditor’s independence declaration 29

4Report Financial SECTION 4

Financial Report Financial statements 30 Notes to the financial statements 34 Directors’ declaration 46 Independent auditor’s review report 47

5information Other SECTION 5

Other information Historical review 48

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QBE Insurance Group Limited | ABN 28 008 485 014 All amounts in this report are US dollars unless otherwise stated. 2 3 Half Year Report 30 June 2021 June 30 Year Report Half Group Insurance QBE

1 2021 half year snapshot Financial highlights Gross written premium Net earned premium (US$M) Net earned premium by type byGr osclasss writ of businessten premiu (US$M)m by class of business direct and facultative

overview 1Performance 6,571 90.4% insurance inward 10% from 2020 3,4 9.6% reinsurance Shareholder highlights 10,203 20% from 2020 3,4 Combined operating ratio 5 InsuranceInsurance profit pro (loss)t (los (US$M)s) (US$M) Dividend payout (A$M) A¢ Adjusted cash profit (loss) return on average 2 financial review financial and Operating 8 shareholders’ equity 2 60 /27 4 25 67 7 22/2 2021 2020 % 674 43 93.3 )

45 ) 162 11.9% % % 2020 % 2020 Commercial & 103.4 (584) (584 (189 /4 2020 (16.6)% % from 2020 domestic property 28.1 28.9 175 30 22 Agriculture 20.4 17.7 Public/product liability 11.6 11.5 Underwriting 5 (US$M) 15 11 Motor & motor casualty 10.5 11.1 profit (loss) – Net profit (loss) after tax (US$M) 3Report Directors’ Professional indemnity 7.9 7.6

4/ HY20 HY21 Basic earnings (loss) per Dividend per share (A¢) Marine energy & aviation 7.2 8.6 0 share (US¢) Workers' compensation 6.0 5.6 2017 2018 2019 2020 2021

Accident & health 5.1 5.8 437 Insurance Financial & credit 3.0 2.7 441 pro it (loss)

Dividend per share (A¢) inal Other 0.2 0.5 2020 (189) Underwriting 28.2 11 result Dividend per share (A¢) interim 2020 (712) 2020 (51.9) 2020 4

4Report Financial Sustainability highlights Operational highlights

Gross written Average renewal premium rate increase 6 Premium retention Recognised in the Published Group Human Launched QBE’s first premium growth 3,4 Top 100 of Equileap 2021 Rights Policy syndicated sustainability Group Segment linked loan

Gender Equality Global Report Outlining our commitment 5information Other and Ranking, for progressing to the integration of human Linked to renewable electricity, North America 10.2%

our gender equality agenda rights across the business women in leadership and 20% 9.7% International 10.5% 83% Premiums4Good impact 2020 investments Australia Paciic 7.7% 79% 2020 10% 2020 8.7%

Certified as a Green Insurer of the Year: Maintained inclusion Attritional claims ratio 7 Large individual Catastrophe claims Family Friendly Workplace Finder Green Awards 2021 in the FTSE4Good Index risk claims (US$M) (US$M) for the second year Series in 2021 Group Segment

North America 44.2% International 39.1% 43.7% Australia Paciic 49.6% 535 462 2020 45.5% 4 29% from 2020 4 50% from 2020 4

3 Constant currency basis. 4 Excludes impact of COVID-19 in 2020. 5 Excludes impact of changes in risk-free rates used to discount net outstanding claims. 1 Financial information in the tables above is extracted or derived from the Group’s half year financial statements and notes thereto on pages 30 to 45 of this Half Year Report. 6 Excludes premium rate changes relating to North America Crop and/or Australian compulsory third party motor (CTP). 2 Adjusted cash profit (loss) return on average shareholders’ equity excludes non-cash and material non-recurring items such as restructuring costs 7 Excludes Crop and/or lenders’ mortgage insurance (LMI). and losses on disposals, and adjusts for Additional Tier 1 capital (AT1) coupons. 2 3 Half Year Report 30 June 2021 June 30 Year Report Half Group Insurance QBE

4/ HY20 HY21 Basic earnings (loss) per Dividend per share (A¢) Marine energy & aviation 7.2 8.6 0 share (US¢) Workers' compensation 6.0 5.6 2017 2018 2019 2020 2021

Accident & health 5.1 5.8 437 Insurance Financial & credit 3.0 2.7 441 pro it (loss)

Dividend per share (A¢) inal Other 0.2 0.5 2020 (189) Underwriting 28.2 11 result Dividend per share (A¢) interim 2020 (712) 2020 (51.9) 2020 4

4Report Financial Sustainability highlights Operational highlights

Gender Equality Global Report Outlining our commitment 5information Other and Ranking, for progressing to the integration of human Linked to renewable electricity, North America 10.2% our gender equality agenda rights across the business women in leadership and 20% 9.7% International 10.5% 83% Premiums4Good impact 2020 investments Australia Paciic 7.7% 79% 2020 10% 2020 8.7%

North America 44.2% International 39.1% 43.7% Australia Paciic 49.6% 535 462 2020 45.5% 4 29% from 2020 4 50% from 2020 4

3 Constant currency basis. 4 Excludes impact of COVID-19 in 2020. 5 Excludes impact of changes in risk-free rates used to discount net outstanding claims. 1 Financial information in the tables above is extracted or derived from the Group’s half year financial statements and notes thereto on pages 30 to 45 of this Half Year Report. 6 Excludes premium rate changes relating to North America Crop and/or Australian compulsory third party motor (CTP). 2 Adjusted cash profit (loss) return on average shareholders’ equity excludes non-cash and material non-recurring items such as restructuring costs 7 Excludes Crop and/or lenders’ mortgage insurance (LMI). and losses on disposals, and adjusts for Additional Tier 1 capital (AT1) coupons. 4 5 Half Year Report 30 June 2021 June 30 Year Report Half Group Insurance QBE

INTERIM GROUP CHIEF EXECUTIVE OFFICER’S REPORT

ongoing premium rate increases coupled Australia Pacific reported a combined Strategic focus with improved Group-wide customer operating ratio of 91.0% 1, down from retention and targeted new business 95.3% 1,2 in the prior period, due to lower Our future success is anchored in a growth. Growth in our Crop portfolio was (albeit above allowance) catastrophe costs disciplined approach to delivery against especially strong reflecting materially relative to especially severe experience our key strategic priorities: performance, higher commodity prices coupled with in the prior period, coupled with improved customer focus, modernisation and talent targeted organic growth initiatives. commission and expense ratios. and culture. overview 1Performance The combined operating ratio improved Despite mark-to-market losses on fixed We are making significant progress materially to 93.3% 1 from 103.4% 1 in the income securities as a result of the on each of these priorities while prior period. This was due to a number significant increase in risk-free rates continuously challenging ourselves of factors including significantly reduced during the period, investment income to build a better business. COVID-19 costs, the non-recurrence rebounded strongly to $58 million of adverse prior accident year claims from a loss of $90 million in the prior Performance development, a further improvement in period. Returns on growth assets were Our overarching priority for the half was the attritional claims ratio and a material particularly strong. to deliver on the performance elements financial review 2financial and Operating reduction in the combined commission of our strategic agenda, with a focus on The Group’s financial position remains and expense ratio. We have commenced building upon our underwriting capability strong with most balance sheet metrics the next phase of our operating efficiency and portfolio optimisation. Central to this improving during the half. The debt to program, including the rationalisation has been the reinvigoration of our cell equity ratio improved to 31.1% from 34.8% and modernisation of our IT estate, review process, evidenced by the fewer at 31 December 2020, closer to the which I discuss further overleaf. This will underperforming portfolios remaining and midpoint of the Group’s 25–35% target contribute to an expected expense ratio the more challenging conversations we range. Similarly and notwithstanding of 13% by 2023 compared with 13.7% have had around portfolio optimisation. significant growth during the half, QBE’s in the current half. The business is benefiting from this 3Report Directors’ indicative APRA PCA multiple improved heightened focus, both in terms of margin The industry experienced another period slightly to 1.73x from 1.72x at the end of improvement and targeted growth. of elevated catastrophe activity during the 2020 and remains above the midpoint of half, with catastrophe costs dominated our 1.6–1.8x target range. We are reviewing our more by winter storm Uri in Texas, widespread catastrophe-exposed portfolios and The interim dividend for 2021 is 11 flooding on the east coast of Australia and upgrading our models to reflect more Australian cents per share, an increase Cyclone Seroja in Western Australia. The recent and more volatile trends. We from the 2020 interim dividend of 4 Building momentum net cost of catastrophe claims increased remain cautious of increasing catastrophe Australian cents per share. to $462 million or 7.0% of net earned exposures and will continue to look for 4Report Financial premium compared with 5.5% 2 in the first opportunities to enhance returns for the half of 2020. This exceeded the Group’s Supporting our customers, catastrophe aggregate that we deploy.

recently increased catastrophe allowance people and communities Recognising there is always more by 1.6% of net earned premium. to do to improve performance, the I am proud of how our people have The first half of 2021 has seen a rebound in global economic performance with This elevated level of catastrophe activity focus for the second half will be on focused on delivering quality outcomes is concerning and we continue to view all portfolio optimisation especially in the International Monetary Fund maintaining global growth projections at 6% for our customers and partners, adapting catastrophe exposure with caution. As we catastrophe-exposed areas, the evolution to changing ways of working and further for 2021. While uncertainty remains regarding the long-term health, societal and still consider the pricing of catastrophe of our Brilliant Basics program and the 5information Other embracing new opportunities. economic impacts of COVID-19, the vaccine rollout and ongoing government risk to be merely adequate rather than delivery of our commercial property margin enhancing, we have not increased This year QBE has further embraced a pricing project. A more sophisticated and stimulus continue to play a key role in supporting economic recovery. catastrophe exposure during the half. hybrid working model, providing greater granular assessment of risk (including flexibility for our people to work from home reserve, underwriting, catastrophe, Turning now to divisional performance. or the office depending on the nature of credit and operational risk) is expected to North America reported a combined work required. The Group continues to improve capital allocation by cell and by operating ratio of 100.9% 1, down from explore ways to help our people thrive, so region, thus facilitating a more accurate 103.8% 1,2,3 in the prior period. While the they can remain focused on delivering the assessment of premium rate adequacy Nonetheless, this recovery is likely Interim result result was impacted by materially elevated best outcomes for our customers, partners upon implementation. Performance and shareholders. to be uneven with some economies catastrophe costs, the early signs of In terms of broader performance QBE continues to make encouraging reserving stability are encouraging as was and industries experiencing stronger I am also proud of the way QBE measures, our ongoing commitment to Build on our progress, with momentum building the further improvement in the attritional growth than others. Given high levels responded to our customers and integrating sustainability into the way we underwriting across the business. We experienced claims and acquisition cost ratios. of government stimulus, this has led to communities following catastrophic do business was evidenced by the release a strong recovery in profitability during capability and heightened concerns around the potential events, providing a number of support of our new Environmental and Social Risk the first half of 2021, underpinned by a International recorded a very strong result continue portfolio for a material increase in inflation. measures and paying claims promptly, Framework. QBE was also included in the material improvement in both underwriting underpinned by significant compound rate helping them return to their homes Dow Jones Sustainability Index (DJSI)/ optimisation Against this backdrop, insurance profitability and investment returns. increases, with a combined operating ratio industry trading conditions remain of 89.1% 1, down from 92.8% 1,2,3 in the first and restore their business activities Corporate Sustainability Yearbook for Capitalise on the favourable. Premium rate increases have QBE reported an adjusted cash profit half of 2020. as quickly as possible. the second year in a row. favourable premium continued in virtually all our products and after tax for the half of $463 million which equates to a return on equity of 11.9%. rate environment geographies, and have contributed to the strong recovery in QBE’s underwriting On a constant currency basis, gross with targeted and profitability during the first half of 2021. 1 selective growth written premium increased 20% relative to the prior period, underpinned by

1 Excludes impact of changes in risk-free rates used to discount net outstanding claims. 2 Excludes impact of COVID-19 in 2020. 1 Excludes impact of COVID-19 in 2020. 3 Restated for transfer of North America’s inward reinsurance business to International. 4 5 Half Year Report 30 June 2021 June 30 Year Report Half Group Insurance QBE

INTERIM GROUP CHIEF EXECUTIVE OFFICER’S REPORT

1 Excludes impact of changes in risk-free rates used to discount net outstanding claims. 2 Excludes impact of COVID-19 in 2020. 1 Excludes impact of COVID-19 in 2020. 3 Restated for transfer of North America’s inward reinsurance business to International. 6 7 Half Year Report 30 June 2021 June 30 Year Report Half Group Insurance QBE

the Sun Prairie campus and has reset from 2019 and CEO of 5information Other As a result of this work, we have management layers and spans of our European Operations established clear areas of focus that will control, which are expected to deliver a benefit QBE into the future. These include since 2013. sustained improvement in efficiency and Modernisation Talent & Culture many ideas suggested by our people performance. through a recent culture hack that more I wish QBE every success closely align behaviours to our QBE DNA Modernising our practices and operating for the future. The company Deliver on our program Enhance the QBE culture and to build an inclusive workplace where structures will remain a priority as we look is well positioned to make to build a high performing company and of work to accelerate our reinforce a positive risk culture everyone feels respected and supported. meaningful progress that will Equally important is our desire to create culture. technology infrastructure by building on the QBE DNA an environment that acknowledges and benefit all our stakeholders. modernisation through the Culture Accelerator embraces the value of consistent high Continued automation across Accelerate our talent and leadership performance, in turn increasing the value underwriting, distribution and strategy by developing our people Richard Pryce of QBE. The Group Executive Committee claims to support the evolving and building a diverse talent pipeline and Group Board have invested significant Interim Group Chief needs of our customers time in the program and will continue to Executive Officer Focus on embedding performance and partners focus on culture as we deliver the actions through ME@QBE and retaining identified through this important work. Accelerate adoption of and motivating people through machine learning models our Reward approach across pricing and claims Define our future ways of working 6 7 Half Year Report 30 June 2021 June 30 Year Report Half Group Insurance QBE

Customer focus Modernisation Having launched Customer@QBE and the We continue to make positive strides Global Customer@QBE Working Group in modernising many aspects of in late 2020, activity over recent months our business and, in so doing, have has focused on better understanding identified more opportunities to improve Conclusion how we apply our Customer@QBE both performance and the customer 2021 principles, starting with ‘delivering with experience. Fundamental to our I am proud of the collective a customer mindset’. We have undertaken strategic focus is a digital-first mindset to efforts of our people and their overview 1Performance quantitative and qualitative research into modernise the business and improve the achievements in the first half Strategic priorities what is important to our customers – their customer experience. business mindset, risk management of 2021. There is no doubt it We are starting to see the building approach, buying behaviours and what has been a time of challenge, blocks of a more modern QBE take they are looking for in their insurer as shape, with the continual updating or change and evolution; part of our aspiration to build a truly decommissioning of technology and differentiated value proposition for however, our teams across systems we no longer require, moving our customers. the globe have come together Performance Customer Focus applications to the cloud and improving effectively, continuously review 2financial and Operating Our focus is on further embedding the customer and partner experiences through adapting to new ways of use of Salesforce metrics and sales automation. We have detailed roll-out Evolve and reinvigorate cell Deliver value and exceed enablement metrics for all parts of the plans for our technology modernisation working and focusing on how reviews and Brilliant Basics+ to customer expectations through business where practicable. Not only program by function and division and have to make this a better business further enhance performance Customer@QBE does this provide visibility of key pipeline transitioned to a new IT partnership. to deliver for our customers, discipline and drive portfolio data but also allows us to use predictive Better understanding of our We are ready to embark upon selective optimisation analytics to identify where to focus our partners and shareholders. customers’ industries and needs areas of digital enhancement that will efforts to secure renewals which are form the foundations of a truly modern We are pleased to be Targeted, sustainable, profitable most vulnerable to our competitors Embed a culture of proactive, 3Report Directors’ business – but modernisation is much growth, maximising the and so maximise our retention rate welcoming our new Group insightful customer engagement more than technology. We understand that favourable rate environment in chosen areas. CEO, Andrew Horton, on 1 Fully embed the use of Salesforce the business needs to change, so over Deliver against our sustainability September. He will be based and related analytical tools across Talent and culture the last six months we have challenged and climate commitments ourselves around historic operating in Sydney and I look forward the business, central to all our We continue to commit time and energy structures and work practices. Some of to supporting Andrew in his Continued focus on customer activity to our Culture Accelerator to enrich this activity is informed by a view that the shareholder returns new role during a transition our culture while also building a set of post-COVID-19 working environment will key actions for the future success of be very different. period before retiring from 4Report Financial our business. This work seeks to build QBE at the end of this year. on the foundations of our QBE DNA to To this end, North America has taken empower and motivate our people to some significant steps to sustainably It has been a privilege create a consistently high-performing improve operating leverage which and pleasure to serve as company for all our stakeholders. We have is already becoming evident in the Interim Group CEO from engaged the entire organisation in this expense ratio. The North America team late 2020, as the CEO of conversation, with input from our people has reduced its real estate footprint across all geographies and roles. in New York and Atlanta in favour of our International division the Sun Prairie campus and has reset from 2019 and CEO of 5information Other As a result of this work, we have management layers and spans of our European Operations established clear areas of focus that will control, which are expected to deliver a benefit QBE into the future. These include since 2013. sustained improvement in efficiency and Modernisation Talent & Culture many ideas suggested by our people performance. through a recent culture hack that more I wish QBE every success closely align behaviours to our QBE DNA Modernising our practices and operating for the future. The company Deliver on our program Enhance the QBE culture and to build an inclusive workplace where structures will remain a priority as we look is well positioned to make to build a high performing company and of work to accelerate our reinforce a positive risk culture everyone feels respected and supported. meaningful progress that will Equally important is our desire to create culture. technology infrastructure by building on the QBE DNA an environment that acknowledges and benefit all our stakeholders. modernisation through the Culture Accelerator embraces the value of consistent high Continued automation across Accelerate our talent and leadership performance, in turn increasing the value underwriting, distribution and strategy by developing our people Richard Pryce of QBE. The Group Executive Committee claims to support the evolving and building a diverse talent pipeline and Group Board have invested significant Interim Group Chief needs of our customers time in the program and will continue to Executive Officer Focus on embedding performance and partners focus on culture as we deliver the actions through ME@QBE and retaining identified through this important work. Accelerate adoption of and motivating people through machine learning models our Reward approach across pricing and claims Define our future ways of working 8 9 Half Year Report 30 June 2021 June 30 Year Report Half Group Insurance QBE

In addition to cost savings, digitisation The slight reduction in risk margin as Gross written and modernisation are expected to drive a percentage of the net central estimate premium 1 (US$M) Operating and sustained improvement in operating of outstanding claims was driven by capacity and business agility, enhancing reduced COVID-19 related uncertainty. our ability to capitalise on growth financial review opportunities over the longer term. Investment performance and strategy The portfolio remains conservatively Financial strength and positioned with 93% invested in high 10,203 capital management quality fixed income securities and the

QBE’s regulatory and ratings agency remaining 7% in growth assets, primarily overview 1Performance capital position remains strong. unlisted property and infrastructure, which Group Chief Financial delivered annualised returns ahead of At 30 June 2021, the Group’s indicative long-term expectations during the half. Officer’s report APRA PCA multiple was 1.73x, up slightly  North America 3,776 from 1.72x at the end of 2020, and above The net annualised investment return  International 3,899 QBE experienced a strong the midpoint of our 1.6–1.8x target range. for the half was 0.4% and compares  Australia Pacific 2,545 favourably with an annualised net The slight improvement since year end recovery in profitability negative return of 0.7% in the prior period. largely reflects the profit for the half partly

financial review 2financial and Operating during the first half of 2021, offset by an increase in the insurance risk Early in 2021 we reduced asset Gross written underpinned by a material charge due to significant growth. duration to be modestly short relative premium growth 2,3 to outstanding claims liabilities, primarily Following the redemption of $200 million improvement in both through the sale of long-dated maturities. of subordinated Tier 2 notes in March 2021, As a result, the sharp steepening in yield 20% underwriting profitability the Group’s debt to equity ratio improved curves in the first quarter generated and investment returns. to 31.1% from 34.8% at 31 December 2020. Gearing is now closer to the midpoint of the a more meaningful reduction in the value Pleasingly, result quality is Group’s 25–35% target range. of our claims liabilities than our fixed income portfolio, enhancing pre-tax profit 3Report Directors’ strong with headline and The probability of adequacy (PoA) of net by $73 million. We reduced the extent outstanding claims is largely unchanged of this tactical stance later in the half.  North America 31% underlying underwriting at 92.3% and remains at the upper end  International 11%

results more aligned. of our 87.5–92.5% target range.  Australia Pacific 18%

1 Divisional analysis excludes Corporate & Other. 2 Constant currency basis. 3 Excludes impact of COVID-19 in 2020. 4Report Financial

Summary income statement and underwriting performance

COVID-19 STATUTORY IMPACTS EX-COVID Gross written premium (US$M) Financial performance development and better current accident FOR THE HALF YEAR ENDED 30 JUNE 2021 2020 2020 2020 year underwriting performance. US$M US$M US$M US$M

QBE reported a statutory net profit information Other Gross written premium 10,203 8,011 (30) 8,041 5 after tax of $441 million compared with The improved current accident year 10,203 Gross earned premium 7,980 6,509 (30) 6,539 a $712 million loss in the first half of 2020. performance reflects a further 1.8% 2,4 Net earned premium 5,506 (50) 5,556 1,2 reduction in the attritional claims ratio 6,571 20% from 2020 Adjusted cash profit after tax improved coupled with improved operating efficiency, Net claims expense (4,023) (4,307) (266) (4,041) to $463 million from a loss of $666 million which more than offset a material increase Net commission (1,009) (903) 8 (911) in the prior period and equates to a return in catastrophe claims and a previously Underwriting and other expenses (897) (820) (27) (793) on equity of 11.9%. Net earned premium (US$M) flagged increase in reinsurance costs. Underwriting result 642 (524) (335) (189) Net investment income (loss) on policyholders’ funds 32 (60) – (60) The strong profit turnaround reflects Crop was booked at a combined operating Insurance profit (loss) 674 (584) (335) (249) an improved underwriting result ratio of 95%, above the current year plan 6,571 Net investment income (loss) on shareholders’ funds 26 (30) coupled with a recovery in investment of 92% and 90% reported in the prior Financing and other costs (126) (125) 10% from 2020 1,2 income, notwithstanding the adverse period. This reflects signs of drought risk mark‑to‑market impact of higher risk‑free and recognises the inherent difficulty in Loss on sale of entities and businesses – (6) rates on our fixed income portfolio. accurately forecasting the Crop result prior Share of net loss of associates (3) (2) Restructuring and related expenses (29) (18) Gross written premium increased 20% 1,2 to completion of the harvest in November. 3 Amortisation and impairment of intangibles (12) (13) Combined operating ratio as a result of premium rate increases, The expense ratio improved to 13.7% Profit (loss) before income tax 530 (778) improved Group-wide retention and new from 14.3% 2 in the prior period, reflecting Income tax (expense) credit (86) 68 % business growth. Growth in our Crop further cost savings under the operational 93.3 Profit (loss) after income tax 444 (710) business was particularly strong due to efficiency program coupled with operating Non-controlling interests (3) (2) 2020 103.4% commodity prices and targeted growth. leverage due to strong premium growth. Net profit (loss) after income tax 441 (712) The combined operating ratio improved We recently commenced the next phase KEY RATIOS % % % to 93.3% 3 from 103.4% 3 in the prior of our operating efficiency journey including Net claims ratio 61.2 78.2 72.7 Net profit (loss) period, due to significantly reduced rationalisation and modernisation of our COVID-19 claims, the non-recurrence IT estate which is expected to contribute Net commission ratio 15.3 16.4 16.4 after tax (US$M) of adverse prior accident year claims to an expense ratio of 13% by 2023. Expense ratio 13.7 14.9 14.3 Combined operating ratio 90.2 109.5 103.4 441 1 Constant currency basis. Adjusted combined operating ratio 1 93.3 103.4 97.4 2 Excludes impact of COVID-19 in 2020. Insurance profit (loss) margin 10.3 (10.6) (4.5) 2020 (712) 3 Excludes impact of changes in risk-free rates used to discount net outstanding claims. 4 Excludes Crop and/or LMI. 1 Excludes impact of changes in risk-free rates used to discount net outstanding claims. 8 9 Half Year Report 30 June 2021 June 30 Year Report Half Group Insurance QBE

1 Divisional analysis excludes Corporate & Other. 2 Constant currency basis. 3 Excludes impact of COVID-19 in 2020. 4Report Financial

Summary income statement and underwriting performance

QBE reported a statutory net profit information Other Gross written premium 10,203 8,011 (30) 8,041 5 after tax of $441 million compared with The improved current accident year 10,203 Gross earned premium 7,980 6,509 (30) 6,539 a $712 million loss in the first half of 2020. performance reflects a further 1.8% 2,4 Net earned premium 5,506 (50) 5,556 1,2 reduction in the attritional claims ratio 6,571 20% from 2020 Adjusted cash profit after tax improved coupled with improved operating efficiency, Net claims expense (4,023) (4,307) (266) (4,041) to $463 million from a loss of $666 million which more than offset a material increase Net commission (1,009) (903) 8 (911) in the prior period and equates to a return in catastrophe claims and a previously Underwriting and other expenses (897) (820) (27) (793) on equity of 11.9%. Net earned premium (US$M) flagged increase in reinsurance costs. Underwriting result 642 (524) (335) (189) Net investment income (loss) on policyholders’ funds 32 (60) – (60) The strong profit turnaround reflects Crop was booked at a combined operating Insurance profit (loss) 674 (584) (335) (249) an improved underwriting result ratio of 95%, above the current year plan 6,571 Net investment income (loss) on shareholders’ funds 26 (30) coupled with a recovery in investment of 92% and 90% reported in the prior Financing and other costs (126) (125) 10% from 2020 1,2 income, notwithstanding the adverse period. This reflects signs of drought risk mark‑to‑market impact of higher risk‑free and recognises the inherent difficulty in Loss on sale of entities and businesses – (6) rates on our fixed income portfolio. accurately forecasting the Crop result prior Share of net loss of associates (3) (2) Restructuring and related expenses (29) (18) Gross written premium increased 20% 1,2 to completion of the harvest in November. 3 Amortisation and impairment of intangibles (12) (13) Combined operating ratio as a result of premium rate increases, The expense ratio improved to 13.7% Profit (loss) before income tax 530 (778) improved Group-wide retention and new from 14.3% 2 in the prior period, reflecting Income tax (expense) credit (86) 68 % business growth. Growth in our Crop further cost savings under the operational 93.3 Profit (loss) after income tax 444 (710) business was particularly strong due to efficiency program coupled with operating Non-controlling interests (3) (2) 2020 103.4% commodity prices and targeted growth. leverage due to strong premium growth. Net profit (loss) after income tax 441 (712) The combined operating ratio improved We recently commenced the next phase KEY RATIOS % % % to 93.3% 3 from 103.4% 3 in the prior of our operating efficiency journey including Net claims ratio 61.2 78.2 72.7 Net profit (loss) period, due to significantly reduced rationalisation and modernisation of our COVID-19 claims, the non-recurrence IT estate which is expected to contribute Net commission ratio 15.3 16.4 16.4 after tax (US$M) of adverse prior accident year claims to an expense ratio of 13% by 2023. Expense ratio 13.7 14.9 14.3 Combined operating ratio 90.2 109.5 103.4 441 1 Constant currency basis. Adjusted combined operating ratio 1 93.3 103.4 97.4 2 Excludes impact of COVID-19 in 2020. Insurance profit (loss) margin 10.3 (10.6) (4.5) 2020 (712) 3 Excludes impact of changes in risk-free rates used to discount net outstanding claims. 4 Excludes Crop and/or LMI. 1 Excludes impact of changes in risk-free rates used to discount net outstanding claims. 10 11 Half Year Report 30 June 2021 June 30 Year Report Half Group Insurance QBE Cash profit, dividends and foreign exchange rates Segment underwriting performance 1

Reconciliation of cash profit Combined North America Adjusting for catastrophe claims relative operating ratio to allowance, the current accident year North America reported a combined combined operating ratio improved to FOR THE HALF YEAR ENDED 30 JUNE 2021 2020 2 US$M US$M 2 operating ratio of 100.9% , down from 91.9% from 93.1% 3 in the prior period, 103.8% 2,3 in the first half of 2020, primarily Net profit (loss) after tax 441 (712) 93.3% reflecting a further improvement in the reflecting the non-recurrence of significant Amortisation and impairment of intangibles after tax 1 26 30 attritional claims ratio partly offset by an 100.9 adverse prior accident year claims increase in the net cost of large individual Net cash profit (loss) after tax 467 (682) overview 1Performance 89.1 development, partly offset by materially Restructuring and related expenses after tax 21 15 risk and catastrophe claims relative to 91.0 elevated catastrophe costs. Net loss on disposals after tax – 6 a benign prior period. Additional Tier 1 capital coupon accrual (25) (5) Adjusting for catastrophe claims relative European insurance, QBE Re and Asia Adjusted net cash profit (loss) after tax 463 (666) to allowance, the current accident year all recorded improved results relative Net claims ratio combined operating ratio improved to to the prior period. Return on average shareholders’ equity – adjusted cash basis (%) 11.9 (16.6) 95.9% from 96.6% 3 in the prior period. Basic earnings (loss) per share – cash basis (US cents) 31.7 (49.7) 2 Dividend payout ratio (percentage of adjusted cash profit) 2 27% N/A 64.3% This was due to an improvement in the Australia Pacific

attritional claims ratio and a material review 2financial and Operating 1 $24 million of pre-tax amortisation expense is included in underwriting expenses (2020 $24 million). 76.2 reduction in the total acquisition cost Australia Pacific reported a combined 2 2 Dividend payout ratio is calculated as the total A$ dividend divided by adjusted cash profit converted to A$ at the period average rate of exchange. 57.8 ratio reflecting cost savings, operating operating ratio of 91.0% , down from 2 63.1 leverage and business mix changes. 95.3% in the first half of 2020, due to reduced catastrophe costs after especially Interim dividend Dividends Crop was recognised at a combined severe experience in the first half of 2020. operating ratio of 95%, above the current per share (A¢) QBE’s dividend policy is designed to and ongoing supportive market conditions, Net commission ratio year plan of 92% and 90% reported in the Adjusting for catastrophe claims relative reward shareholders relative to adjusted the Board has declared a modest prior period. This reflects drought risk in to allowance, the current accident year cash profit while balancing the need interim dividend with the expectation of parts of the Mid West and recognises the combined operating ratio increased 11.0 % 3Report Directors’ to maintain sufficient capital for future paying a higher final dividend, subject to 15.3 inherent difficulty in accurately forecasting slightly to 90.8% from 90.2% in the prior 2021 11 investment in and growth of the business. performance over the remainder of 2021. the Crop result prior to completion of the period. This was primarily due to an 13.1 2020 4 harvest in November each year. increase in reinsurance costs and the

The interim dividend for 2021 is 11 The interim dividend will be 10% franked 17.9 2019 25 first half catastrophe allowance. Australian cents per share, an increase and is payable on 24 September 2021. 14.3 2018 22 from the 2020 interim dividend of The Dividend Reinvestment Plan and International The attritional claims ratio was broadly 2017 22 4 Australian cents per share. Bonus Share Plan will be satisfied by the unchanged relative to the prior period. International recorded a strong result issue of shares at a nil discount. Premium rate driven improvement Catastrophe incidence and Crop result Expense ratio underpinned by a combined operating 2 2,3 across most of the portfolio was offset variability are typically higher in the second The 2021 interim dividend payout is ratio of 89.1% , down from 92.8% 4Report Financial by attritional weather in householders, Dividend payout (A$M) half of the year. In light of this seasonality, A$162 million compared with A$59 million in the prior period. % strata and the Pacific Islands portfolio. coupled with strong growth during the half in the prior corresponding period. 13.7

162 11.6 1 Divisional analysis excludes Corporate & Other. 13.4 2 Excludes impact of changes in risk-free rates used to discount net outstanding claims. 13.6 Foreign exchange rates 3 Restated for transfer of North America’s inward reinsurance business to International.

FOR THE HALF YEAR ENDED 30 JUNE 2021 2020

5information Other BALANCE SHEET PROFIT OR LOSS BALANCE SHEET PROFIT OR LOSS  North America

Australian dollar A$ 0.750 0.771 0.690 0.657  International

Sterling £ 1.383 1.389 1.240 1.259  Australia Pacific Euro € 1.186 1.205 1.123 1.102

INSURANCE PROFIT GROSS WRITTEN NET EARNED COMBINED (LOSS) BEFORE PREMIUM PREMIUM OPERATING RATIO INCOME TAX FOR THE HALF YEAR ENDED 30 JUNE 2021 2020 2021 2020 2021 2020 2021 2020 US$M US$M US$M US$M % % US$M US$M COVID-19 underwriting result impacts North America 1 3,776 2,892 1,882 1,542 100.9 2 103.8 2 42 (175) International 1 3,899 3,339 2,612 2,321 89.1 2 92.8 2 422 (57) Australia Pacific 2,545 1,829 2,075 1,696 91.0 2 95.3 2 230 25 Corporate & Other (17) (19) 2 (3) – – (20) (42) Group adjusted 10,203 8,041 6,571 5,556 93.3 2 97.4 2 674 (249) Notwithstanding ongoing uncertainty, This primarily impacted attritional claims The underwriting results in each of the Risk‑free rate impact – – – – (3.1) 6.1 – – the Group’s estimated ultimate net cost in accident & health (A&H) and workers’ divisional result commentaries are COVID-19 impact – (30) – (50) – 6.0 – (335) of COVID-19 may prove to be less than compensation in North America and disclosed on the same basis. Group statutory 10,203 8,011 6,571 5,506 90.2 109.5 674 (584) $785 million pre-tax as previously advised. business interruption in Australia. While QBE separately identified obvious Direct and facultative 9,036 7,017 5,938 4,942 91.3 109.3 544 (516) While we remain confident that the $655 Results in the current half have not been COVID-19 underwriting revenue and Inward reinsurance 1,167 994 633 564 80.0 110.9 130 (68) million cost recognised in 2020 remains adjusted for this modest impact; however, expense impacts in the prior period, there Group statutory 10,203 8,011 6,571 5,506 90.2 109.5 674 (584) sufficient, the $130 million of COVID-19 to more directly compare this result with could be other less significant impacts, 1 The 2020 half year results have been restated to reflect the transfer of North America’s inward reinsurance business to QBE Re, part of International. related claims expected to be incurred the prior period (where there was a very both positive and negative, that were not 2 Excludes impact of changes in risk-free rates used to discount net outstanding claims. in 2021 may prove excessive. significant COVID-19 impact), the Group’s readily identifiable or quantifiable. prior period underwriting result is tabled Due to improved economic conditions and Unless otherwise stated, the commentary on page 9 including and excluding the the global vaccine rollout, current accident following refers to the Group’s prior period estimated impact of COVID-19. year COVID-19 claims costs were modest result on an ex-COVID-19 basis. in the current half at only $20 million. 10 11 Half Year Report 30 June 2021 June 30 Year Report Half Group Insurance QBE Cash profit, dividends and foreign exchange rates Segment underwriting performance 1

FOR THE HALF YEAR ENDED 30 JUNE 2021 2020

5information Other BALANCE SHEET PROFIT OR LOSS BALANCE SHEET PROFIT OR LOSS  North America

Australian dollar A$ 0.750 0.771 0.690 0.657  International

Sterling £ 1.383 1.389 1.240 1.259  Australia Pacific Euro € 1.186 1.205 1.123 1.102

INSURANCE PROFIT GROSS WRITTEN NET EARNED COMBINED (LOSS) BEFORE PREMIUM PREMIUM OPERATING RATIO INCOME TAX FOR THE HALF YEAR ENDED 30 JUNE 2021 2020 2021 2020 2021 2020 2021 2020 US$M US$M US$M US$M % % US$M US$M COVID-19 underwriting result impacts North America 1 3,776 2,892 1,882 1,542 100.9 2 103.8 2 42 (175) International 1 3,899 3,339 2,612 2,321 89.1 2 92.8 2 422 (57) Australia Pacific 2,545 1,829 2,075 1,696 91.0 2 95.3 2 230 25 Corporate & Other (17) (19) 2 (3) – – (20) (42) Group adjusted 10,203 8,041 6,571 5,556 93.3 2 97.4 2 674 (249) Notwithstanding ongoing uncertainty, This primarily impacted attritional claims The underwriting results in each of the Risk‑free rate impact – – – – (3.1) 6.1 – – the Group’s estimated ultimate net cost in accident & health (A&H) and workers’ divisional result commentaries are COVID-19 impact – (30) – (50) – 6.0 – (335) of COVID-19 may prove to be less than compensation in North America and disclosed on the same basis. Group statutory 10,203 8,011 6,571 5,506 90.2 109.5 674 (584) $785 million pre-tax as previously advised. business interruption in Australia. While QBE separately identified obvious Direct and facultative 9,036 7,017 5,938 4,942 91.3 109.3 544 (516) While we remain confident that the $655 Results in the current half have not been COVID-19 underwriting revenue and Inward reinsurance 1,167 994 633 564 80.0 110.9 130 (68) million cost recognised in 2020 remains adjusted for this modest impact; however, expense impacts in the prior period, there Group statutory 10,203 8,011 6,571 5,506 90.2 109.5 674 (584) sufficient, the $130 million of COVID-19 to more directly compare this result with could be other less significant impacts, 1 The 2020 half year results have been restated to reflect the transfer of North America’s inward reinsurance business to QBE Re, part of International. related claims expected to be incurred the prior period (where there was a very both positive and negative, that were not 2 Excludes impact of changes in risk-free rates used to discount net outstanding claims. in 2021 may prove excessive. significant COVID-19 impact), the Group’s readily identifiable or quantifiable. prior period underwriting result is tabled Due to improved economic conditions and Unless otherwise stated, the commentary on page 9 including and excluding the the global vaccine rollout, current accident following refers to the Group’s prior period estimated impact of COVID-19. year COVID-19 claims costs were modest result on an ex-COVID-19 basis. in the current half at only $20 million. 12 13 Half Year Report 30 June 2021 June 30 Year Report Half Group Insurance QBE Premium income and pricing Underwriting expenses, commission and tax

to $10,203 million from $8,011 million written premium, underpinned by an average 13.7% The Group’s expense ratio improved premium contribution from Asia. 10,203 in the prior period. renewal premium rate increase of 10.5% to 13.7% from 14.3% in the prior period, 4 2020 14.3% compared with 10.1% in the prior period. reflecting disciplined cost management On an average basis and compared with Income tax expense 20% from 2020 coupled with operating leverage the first half of 2020, the Australian dollar, European operations achieved growth overview 1Performance 1 as a result of strong premium growth. QBE’s effective tax rate was 16.2% 3,776 sterling and euro appreciated against of 12% reflecting pricing momentum compared with a tax credit of 8.7% 3,899 the US dollar by 17%, 10% and 9% and new business growth, particularly Net commission ratio North America reported significant in the prior period and reflects the mix 2,545 respectively which favourably impacted in European insurance (property, financial improvement due to cost savings and of corporate tax rates in the countries gross written and net earned premium by lines and liability) and QBE Re Europe. % operating leverage driven by strong 15.3 where we operate, with profits in the $583 million and $452 million respectively. premium growth, especially in Crop. Growth in European operations was partly North American tax group offset by 1 2020 16.4% Net earned On a constant currency basis, gross offset by an 8% contraction in Asia, International and Australia Pacific also previously unrecognised tax losses. 1,2 written premium increased 20% reflecting primarily due to the impact of COVID-19 enjoyed a modest improvement in their premium (US$M) During the half, QBE paid $46 million rate increases, growth and improved on travel insurance. expense ratios as a result of cost control review 2financial and Operating in corporate income tax globally, including retention across the Group coupled Tax rate coupled with positive operating leverage. 6,571 with especially strong growth in Crop. Australia Pacific $21 million in Australia which benefits our dividend franking account, the balance Excluding Crop, gross written premium Australia Pacific reported an 18% 1 Net commission of which stood at A$94 million as at 10% from 2020 growth was 14% on the same basis. increase in gross written premium 16.2% The net commission ratio reduced 30 June 2021. Allowing for post balance The Group achieved an average renewal reflecting an average renewal premium to 15.3% from 16.4% in the first half 1,882 3 2020 8.7% date tax refunds, the franking account rate increase of 9.7% 3 compared with rate increase of 7.7% compared with of 2020, primarily due to business mix. 2,612 3 balance available for use is estimated 8.7% 3 in the first half of 2020. 5.5% in the prior period. 2,075 Growth in Crop, where commissions are at $54 million enabling the Group to fully

Growth in commercial lines, householders Report Directors’ Premium growth (excluding Crop and reimbursed by the US Government, and frank A$126 million of dividends. 3 and LMI was partly offset by moderation premium rate increases) was 7% during in classes protected by quota share such in CTP and the impact of the economic Having regard to QBE’s franked AT1 the half. as financial lines and LMI, beneficially  North America slowdown in the Pacific Islands. distribution commitments, the dividend  International impacted net commission expense franking percentage is expected to remain  Australia Pacific North America Reinsurance expense in North America and Australia Pacific. around 10% for the foreseeable future. North America reported a 31% increase Reinsurance expense increased 43% to $1,409 million from $983 million in the in gross written premium, underpinned by first half of 2020. Average renewal an average renewal premium rate increase 4Report Financial premium rate of 10.2% 3 compared with 9.5% 3,4 in the Much of the increase reflects growth in increase 3 first half of 2020. more heavily reinsured portfolios including Crop, North America financial lines (where

Crop premium grew 48% as a result Group growth is being supported by a 50% quota of significantly higher commodity prices share) and LMI (where the current accident Operational efficiency

+9.7% coupled with strong organic growth. year quota share has been increased to Excluding Crop, growth was 17%, 40%) as well as new (largely government) North America +10.2% reflecting premium rate increases coupled reinsurance on trade credit & surety.

5information Other International +10.5% with growth in financial lines, programs Renewal of the Group’s core catastrophe Underwriting and Having completed the efficiency program development and operational service Australia Pacific +7.7% (property and specialty), retail (middle and per risk treaties from 1 January 2021 (US$M) announced in December 2018, we costs as well as increased contract

other expenses market) and A&H. resulted in additional earned reinsurance have commenced the next phase of our flexibility and protection. expense of around $40 million. efficiency journey targeting an expense Our digital capability continues to improve 897 ratio of 13% by 2023. including in claims, for example, where 3 4% from 2020 1 This program includes significant IT we progressed our ability to automatically Average renewal premium rate increases rationalisation and modernisation coupled lodge and process claims in Australia, with consolidation of our real estate Asia and North America. FOR THE HALF YEAR ENDED 30 JUNE 2021 2020 4 2019 4 2018 4 footprint and an ongoing focus on the % % % % During the half we consolidated our Expense ratio Group’s operating model. North America 10.2 9.5 3.8 2.9 real estate footprint in Australia and International 10.5 10.1 3.9 4.4 Rationalisation and modernisation of North America in line with new working practices. We also achieved a meaningful Australia Pacific 7.7 5.5 6.8 6.4 13.7% our IT estate is expected to significantly reduce our exposure to legacy and reduction in third party consulting costs Group 9.7 8.7 4.7 4.6 2021 13.7 end‑of‑life technologies while enabling and simplified divisional organisational 2020 14.3 further automation of our infrastructure structures, particularly in North America. 2019 14.8 and testing operations. Expanding the use These measures are helping to drive 2018 15.0 of Agile and DevOps methodologies will better business outcomes as well as 2017 14.9 fundamentally change the way we work improving the expense ratio. and accelerate migration to the cloud, The expected cost of the restructure is all of which will make it faster and easier approximately $150 million over three 1 Constant currency basis. to deploy new digital capabilities. years, including a $29 million charge The Group recently transitioned to a new recognised in the current half that was contract relationship with our main IT not reported as part of the Group’s service provider that is expected to deliver underwriting expenses. significant benefits, including reduced 1 Constant currency basis. 2 Divisional analysis excludes Corporate & Other. 3 Excludes premium rate changes relating to North America Crop and/or Australian CTP. 4 Restated for transfer of North America’s inward reinsurance business to International. 12 13 Half Year Report 30 June 2021 June 30 Year Report Half Group Insurance QBE Premium income and pricing Underwriting expenses, commission and tax

Gross written Group International Expense ratio Underwriting and International’s commission ratio improved 1,2 slightly due to reduced commission rates premium (US$M) 1 other expenses Gross written premium increased 27% International reported an 11% uplift in gross in International Markets and a reduced to $10,203 million from $8,011 million written premium, underpinned by an average 13.7% The Group’s expense ratio improved premium contribution from Asia. 10,203 in the prior period. renewal premium rate increase of 10.5% to 13.7% from 14.3% in the prior period, 4 2020 14.3% compared with 10.1% in the prior period. reflecting disciplined cost management On an average basis and compared with Income tax expense 20% from 2020 coupled with operating leverage the first half of 2020, the Australian dollar, European operations achieved growth overview 1Performance 1 as a result of strong premium growth. QBE’s effective tax rate was 16.2% 3,776 sterling and euro appreciated against of 12% reflecting pricing momentum compared with a tax credit of 8.7% 3,899 the US dollar by 17%, 10% and 9% and new business growth, particularly Net commission ratio North America reported significant in the prior period and reflects the mix 2,545 respectively which favourably impacted in European insurance (property, financial improvement due to cost savings and of corporate tax rates in the countries gross written and net earned premium by lines and liability) and QBE Re Europe. % operating leverage driven by strong 15.3 where we operate, with profits in the $583 million and $452 million respectively. premium growth, especially in Crop. Growth in European operations was partly North American tax group offset by 1 2020 16.4% Net earned On a constant currency basis, gross offset by an 8% contraction in Asia, International and Australia Pacific also previously unrecognised tax losses. 1,2 written premium increased 20% reflecting primarily due to the impact of COVID-19 enjoyed a modest improvement in their premium (US$M) During the half, QBE paid $46 million rate increases, growth and improved on travel insurance. expense ratios as a result of cost control review 2financial and Operating in corporate income tax globally, including retention across the Group coupled Tax rate coupled with positive operating leverage. 6,571 with especially strong growth in Crop. Australia Pacific $21 million in Australia which benefits our dividend franking account, the balance Excluding Crop, gross written premium Australia Pacific reported an 18% 1 Net commission of which stood at A$94 million as at 10% from 2020 growth was 14% on the same basis. increase in gross written premium 16.2% The net commission ratio reduced 30 June 2021. Allowing for post balance The Group achieved an average renewal reflecting an average renewal premium to 15.3% from 16.4% in the first half 1,882 3 2020 8.7% date tax refunds, the franking account rate increase of 9.7% 3 compared with rate increase of 7.7% compared with of 2020, primarily due to business mix. 2,612 3 balance available for use is estimated 8.7% 3 in the first half of 2020. 5.5% in the prior period. 2,075 Growth in Crop, where commissions are at $54 million enabling the Group to fully

Crop premium grew 48% as a result Group growth is being supported by a 50% quota of significantly higher commodity prices share) and LMI (where the current accident Operational efficiency

other expenses market) and A&H. resulted in additional earned reinsurance have commenced the next phase of our flexibility and protection. expense of around $40 million. efficiency journey targeting an expense Our digital capability continues to improve 897 ratio of 13% by 2023. including in claims, for example, where 3 4% from 2020 1 This program includes significant IT we progressed our ability to automatically Average renewal premium rate increases rationalisation and modernisation coupled lodge and process claims in Australia, with consolidation of our real estate Asia and North America. FOR THE HALF YEAR ENDED 30 JUNE 2021 2020 4 2019 4 2018 4 footprint and an ongoing focus on the % % % % During the half we consolidated our Expense ratio Group’s operating model. North America 10.2 9.5 3.8 2.9 real estate footprint in Australia and International 10.5 10.1 3.9 4.4 Rationalisation and modernisation of North America in line with new working practices. We also achieved a meaningful Australia Pacific 7.7 5.5 6.8 6.4 13.7% our IT estate is expected to significantly reduce our exposure to legacy and reduction in third party consulting costs Group 9.7 8.7 4.7 4.6 2021 13.7 end‑of‑life technologies while enabling and simplified divisional organisational 2020 14.3 further automation of our infrastructure structures, particularly in North America. 2019 14.8 and testing operations. Expanding the use These measures are helping to drive 2018 15.0 of Agile and DevOps methodologies will better business outcomes as well as 2017 14.9 fundamentally change the way we work improving the expense ratio. and accelerate migration to the cloud, The expected cost of the restructure is all of which will make it faster and easier approximately $150 million over three 1 Constant currency basis. to deploy new digital capabilities. years, including a $29 million charge The Group recently transitioned to a new recognised in the current half that was contract relationship with our main IT not reported as part of the Group’s service provider that is expected to deliver underwriting expenses. significant benefits, including reduced 1 Constant currency basis. 2 Divisional analysis excludes Corporate & Other. 3 Excludes premium rate changes relating to North America Crop and/or Australian CTP. 4 Restated for transfer of North America’s inward reinsurance business to International. 14 15 Half Year Report 30 June 2021 June 30 Year Report Half Group Insurance QBE Claims

Attritional claims ratio 1 Incurred claims Attritional claims ratio Large individual risk Weighted average Net large individual The Group’s net claims ratio improved Excluding Crop and LMI, the attritional and catastrophe claims risk‑free rates risk claims (US$M) 43.7% to 61.2% from 72.7% in the first half claims ratio improved a further 1.8% The net cost of large individual risk claims As tabled below, the currency weighted of 2020, largely reflecting a modest to 43.7% from 45.5% in the prior period, increased to $535 million or 8.1% of net average risk-free rate used to discount 535 44.2% increase in risk‑free rates used to discount reflecting continued improvement in North earned premium from 7.5% in the prior net outstanding claims liabilities increased 39.1% net outstanding claims liabilities relative America and International. period, including the adoption of a stronger to 0.73% at 30 June 2021 from 0.30% 8.1% of NEP overview 1Performance 49.6% to a very material reduction in risk-free Excluding Crop, North America’s current accident year IBNR allowance. at 31 December 2020. 2020 416 rates in the prior period. attritional claims ratio improved 1.0% The net cost of catastrophe claims Risk‑free rates increased materially Risk-free rate movements aside, relative to the prior period. The benefit increased to $462 million or 7.0% of net across all currencies resulting in Large individual risk a further improvement in the attritional of earned rate increases was partly offset earned premium compared with 5.5% in a $205 million underwriting benefit that Net catastrophe claims ratio claims ratio and a modest level of by the adoption of a stronger current the first half of 2020. This exceeded the decreased the net claims ratio by 3.1% claims (US$M) favourable prior accident year claims accident year incurred but not reported Group’s recently increased catastrophe compared with a $335 million charge 8.1% development (relative to significant (IBNR) claims allowance coupled with allowance by 1.6% of net earned premium. in the prior period that increased the net adverse development in the prior a modest COVID-19 related impact in the claims ratio by 6.0%. 462 period) were partly offset by an increase A&H portfolio. Catastrophe costs included winter storm review 2financial and Operating 8.1% in both the large individual risk and Uri in Texas, widespread flooding on the The $205 million beneficial risk-free rate 7.0% of NEP 13.1% International’s attritional claims ratio improved catastrophe claims ratios. east coast of Australia, Cyclone Seroja impact on the underwriting result was 2.0% 3.6% relative to the prior period, reflecting and bush fires in Western Australia and largely offset by a $132 million adverse 2020 308 The major components of the the strong pricing landscape. storm and flood damage in Melbourne. impact on investment income. Group’s net claims ratio are Excluding LMI, Australia Pacific’s summarised in the table below. Catastrophe claims ratio attritional claims ratio increased Net large individual 0.3% relative to the first half of 2020. risk and catastrophe Improvement in most classes was claims (US$M) 3Report Directors’ 7.0% offset by heightened attritional claims Weighted average risk‑free rates due to adverse weather, including an 8.8% especially wet summer, which impacted 997 4.8% CURRENCY 30 JUNE 31 DECEMBER 30 JUNE householders and strata in Australia and 2021 2020 2020 8.2% 15.1% of NEP the Pacific Islands portfolio. Australian dollar % 0.68 0.41 0.50 US dollar % 1.35 0.82 0.69 2020 724 Sterling % 0.72 0.07 0.16  North America Euro % (0.30) (0.59) (0.34)

4Report Financial  International Group weighted % 0.73 0.30 0.31  Australia Pacific Estimated risk-free rate benefit (charge) US$M 205 (381) 1 (335)

1 Estimated risk-free rate charge for the 12 months to 31 December 2020. 1 Excludes Crop and/or LMI.

Net incurred claims Prior accident year claims development Prior accident year 5information Other Favourable prior accident year claims Australia Pacific reported $24 million claims development FOR THE HALF YEAR ENDED 30 JUNE 2021 2020 development was $71 1 million or 1.1% of positive prior accident year claims (US$M) STATUTORY STATUTORY EX-COVID of net earned premium, compared with development. Strengthening in workers’ 1 % % % adverse development of $120 million compensation and commercial liability 71 Attritional claims 47.2 48.1 47.5 or 2.2% 1 in the first half of 2020. was more than offset by favourable

Large individual risk and catastrophe claims 15.1 15.7 13.0 development in short-tail lines and CTP. 1 International reported $38 million 2021 71 Claims settlement costs 3.2 3.5 3.5 of positive development, primarily due North America reported $13 million of 2020 (120) Claims discount (0.5) (0.5) (0.5) to favourable development in UK motor, favourable development during the half. 2019 47 Net incurred central estimate claims ratio (current accident year) 65.0 66.8 63.5 liability, SME and QBE Re partly offset 2018 40 Changes in undiscounted prior accident year central estimate (1.1) 2.0 1.8 Corporate includes a $4 million by adverse development in financial lines. 2017 112 Impact of changes in risk-free rates (3.1) 6.1 6.0 adverse adjustment. Movement in risk margin 0.3 2.5 0.4 Other (including unwind of prior year discount) 0.1 0.8 1.0 Net claims ratio 61.2 78.2 72.7

Attritional claims ratio

FOR THE HALF YEAR ENDED 30 JUNE 2021 2020 NEP ATTRITIONAL NEP ATTRITIONAL US$M % US$M % Rest of portfolio 5,933 43.7 5,132 45.5 Crop insurance 549 85.6 352 79.5 LMI 89 39.1 72 34.1 1 Excludes $2 million ($19 million in the prior period) of positive prior accident year claims development pertaining to North America Crop insurance QBE Group adjusted 6,571 47.2 5,556 47.5 that is matched by additional premium cessions under the MPCI scheme. 14 15 Half Year Report 30 June 2021 June 30 Year Report Half Group Insurance QBE Claims

4Report Financial  International Group weighted % 0.73 0.30 0.31  Australia Pacific Estimated risk-free rate benefit (charge) US$M 205 (381) 1 (335)

1 Estimated risk-free rate charge for the 12 months to 31 December 2020. 1 Excludes Crop and/or LMI.

Attritional claims ratio

FOR THE HALF YEAR ENDED 30 JUNE 2021 2020 NEP ATTRITIONAL NEP ATTRITIONAL US$M % US$M % Rest of portfolio 5,933 43.7 5,132 45.5 Crop insurance 549 85.6 352 79.5 LMI 89 39.1 72 34.1 1 Excludes $2 million ($19 million in the prior period) of positive prior accident year claims development pertaining to North America Crop insurance QBE Group adjusted 6,571 47.2 5,556 47.5 that is matched by additional premium cessions under the MPCI scheme. 16 17 Half Year Report 30 June 2021 June 30 Year Report Half Group Insurance QBE Balance sheet and capital management

PCA multiple Capital management Prescribed capital amount Net outstanding claims Borrowings Total borrowings 1 (US$M)

1 The only capital market transaction The indicative PCA multiple increased At 30 June 2021, the risk margin in net At 30 June 2021, total borrowings were 1.73x undertaken during the half was the slightly to 1.73x at 30 June 2021 from outstanding claims was $1,541 million $2,751 million, down $204 million from redemption of $200 million of subordinated 1.72x at 31 December 2020, reflecting: or 9.6% of the net discounted central $2,955 million at 31 December 2020. 2 2020 1.72x Tier 2 notes in March 2021. estimate of outstanding claims • the $463 million half year cash profit; and In March 2021, the Group redeemed The redemption was funded by part of the compared with $1,537 million and 9.7% $200 million of subordinated notes 2,751 overview 1Performance • an increase in the premium liabilities at 31 December 2020. proceeds raised through the A$500 million surplus due to significant premium using proceeds from the A$500 million Target PCA multiple capital qualifying Tier 2 subordinated debt rate increases. Excluding foreign exchange movements, subordinated note issued in August 2020. issuance in August 2020. the risk margin increased $18 million during Gross interest expense on These notes were subject to APRA’s These impacts were largely offset by: the half compared with a $138 million 1.6–1.8x long‑term borrowings for the half was transitional arrangements and, as of • the March 2021 redemption of increase in the prior period. $87 million, down from $96 million in the  Less than one year 453 31 December 2020, only $37 million was subordinated Tier 2 notes which The probability of adequacy (PoA) of net prior period. The average annualised  One to five years 1,925 regulatory capital qualifying. As such, reduced Tier 2 capital by $37 million; outstanding claims is largely unchanged cash cost of borrowings at 30 June 2021  More than five years 373 Debt to equity the redemption had minimal impact • an increase in the insurance liabilities

at 92.3% from 92.5% at 31 December was 6.0%, down slightly from 6.1% review 2financial and Operating on regulatory capital at 30 June 2021. risk charge, primarily driven by the Crop 2020 and remains at the upper end of the as at 31 December 2020. 31.1% As a result of the redemption, gearing business, including usual seasonality Group’s 87.5%–92.5% target range. At 30 June 2021, all but $6 million of the Borrowings profile improved to 31.1% from 34.8% at but also exposure growth; and 2 The slight reduction in risk margin as Group’s borrowings continued to count 2020 34.8% 31 December 2020, and closer to • a higher asset risk charge reflecting a percentage of the net discounted central towards regulatory capital. the midpoint of the Group’s internal the seasonal increase in premium estimate of outstanding claims was driven benchmark range of 25–35%. receivables, deferred reinsurance by reduced COVID-19 related uncertainty. expense and reinsurance Target debt to equity QBE has $900 million of perpetual fixed recoveries receivable. 30 JUNE 31 DECEMBER 2,751 rate resetting capital notes that are AT1 AS AT 2021 2020 3Report Directors’ qualifying under APRA’s capital adequacy 25–35% Net discounted central estimate US$M 16,062 15,797 framework. The notes are classified as Risk margin US$M 1,541 1,537 equity, pay franked after tax distributions

Net outstanding claims US$M 17,603 17,334 1 Indicative APRA PCA and do not impact the weighted average Probability of adequacy % 92.3 92.5 multiple at 30 June 2021. number of shares for earnings per share  Senior debt 2 – Risk margin to central estimate % 9.6 9.7 2 As at 31 December 2020. calculations (since the notes are written  Subordinated debt 100% off in whole or in part if APRA determines QBE is, or would become, non-viable).

1 Based on first call date. 4Report Financial The after‑tax distribution on QBE’s AT1 2 Senior debt at 30 June 2021 capital was $25 million in the half, while is $6 million. the reclassification of the 2017 notes (in July 2020) contributed to an $11 million reduction in financing and other costs during the half.

Identifiable intangibles and goodwill Goodwill (US$M)

5information Other The carrying value of identifiable to amortisation and impairment expense

intangibles and goodwill at 30 June 2021 of $36 million and a $31 million foreign was $2,495 million, down from $2,534 exchange impact which more than offset million at 31 December 2020. net additions in the period, being mainly the capitalisation of software in relation Capitalisation and capital metrics During the half, the carrying value of 2,080 intangibles reduced by $39 million due to various information technology projects.

30 JUNE 31 DECEMBER AS AT BENCHMARK 2021 2020 Net assets US$M 8,840 8,492 Less: intangible assets US$M (2,495) (2,534)  North America 358  International 538 Net tangible assets US$M 6,345 5,958  Australia Pacific 1,184 Add: borrowings US$M 2,751 2,955 Total tangible capitalisation US$M 9,096 8,913

Debt to equity % 25–35 31.1 34.8 Debt to tangible equity % 43.4 49.6 Premium solvency 1 % 48.3 50.6

QBE's regulatory capital base US$M 9,804 9,348 APRA's PCA US$M 5,681 5,434 3 PCA multiple 1.6–1.8x 1.73x 2 1.72x

1 The ratio of net tangible assets to annualised net earned premium. 2 Indicative APRA PCA multiple at 30 June 2021. 3 Restated to be consistent with APRA returns finalised subsequent to year end. 16 17 Half Year Report 30 June 2021 June 30 Year Report Half Group Insurance QBE Balance sheet and capital management

PCA multiple Capital management Prescribed capital amount Net outstanding claims Borrowings Total borrowings 1 (US$M)

Identifiable intangibles and goodwill Goodwill (US$M)

5information Other The carrying value of identifiable to amortisation and impairment expense

Debt to equity % 25–35 31.1 34.8 Debt to tangible equity % 43.4 49.6 Premium solvency 1 % 48.3 50.6

QBE's regulatory capital base US$M 9,804 9,348 APRA's PCA US$M 5,681 5,434 3 PCA multiple 1.6–1.8x 1.73x 2 1.72x

1 The ratio of net tangible assets to annualised net earned premium. 2 Indicative APRA PCA multiple at 30 June 2021. 3 Restated to be consistent with APRA returns finalised subsequent to year end. 18 19 Half Year Report 30 June 2021 June 30 Year Report Half Group Insurance QBE Investment performance and strategy Closing remarks

Net investment The portfolio remains conservatively Given the highly reflationary and Continued favourable pricing conditions and strong business income (US$M) positioned with around 93% invested in stimulatory environment created by high quality fixed income securities and governments and central banks, we momentum underpin our confidence in the outlook for the the remaining 7% invested in growth entered 2021 with an expectation that business; however, we remain cautious around lingering 58 assets, including unlisted property, yield curves would steepen and had infrastructure and private equity. positioned our fixed income portfolio (COVID-19 related) economic uncertainty and the potential $148 from 2020 modestly short of our liability duration. Our corporate credit portfolio performed trajectory of global inflation. overview 1Performance well as credit spreads narrowed slightly The subsequent dramatic moves led by Net investment return during the half. Attention to quality and US treasuries meant that our asset book resilience resulted in less incidence of was reasonably well insulated against Outlook After an encouraging start to the year, we remain acutely focused on delivering downgrade or negative outlook than the the mark-to-market moves that more our 2021 business plan and capitalising on current market conditions 0.4% broader market and no securities were significantly and favourably impacted focus to achieve targeted growth and improved underwriting performance. downgraded to sub-investment grade. our net outstanding claims liabilities. 2020 (0.7%) Total Achieving an appropriate return on capital in North America remains our Unlisted property and infrastructure assets This tactical duration positioning15,047 benefited investments highest priority with success dependent upon ongoing portfolio optimisation,

financial review 2financial and Operating enjoyed a return to modest income growth pre-tax profit by $73 million. Maximise market targeted growth (for scale and diversification), and a further material and strong net asset value appreciation, Closing total cash and investments was opportunity reduction in operating costs. Fixed Growth and our small private equity portfolio kept $27,864 million, up from $27,735 million We are continuing to focus on risk at a more granular level (including income Vs assets pace with listed market strength. Achieve targeted growth at 31 December 2020. Operating cash reserve, underwriting, catastrophe, credit and operational risk) to improve and margin expansion The net annualised investment return flow during the half was largely offset by capital allocation by cell and by region, thus facilitating a more accurate (0.3)% 11.9% for the half was 0.4% and compares a $246 million foreign exchange impact assessment of premium rate adequacy and better informing our decisions favourably with an annualised net negative and redemption of the $200 million 2020 1.8% 2020 (25.7%) 27,864 on where to grow. As the Group’s return on equity continues to improve, return of 0.7% in the prior period. subordinated5,674 Tier 2 note in March 2021. Risk focus we are increasingly focused on developing the systems and culture to sustain long term organic growth. 3Report Directors’ 4,038 For a more accurate I am pleased with the stability in our prior accident year claims reserves assessment of premium Interest bearing financial assets Currency mix of investments during the half; however, claims inflation is topical and we remain focused

rate adequacy – S&P security grading 767 720 851 on enhancing our approach to pricing and staying ahead of the reserving 353 25 292 62impacts of35 claims inflation. AS AT 30 JUNE 2021 31 DECEMBER 2020 AS AT 30 JUNE 2021 31 DECEMBER 2020 % % Cash and Short-term Government Corporat% e Infrastructur% e Developed Unlisted Infrastructure Private AlternativesWhileInvestment our regulatory capital remains above the midpoint of our target Building further Rating US dollarequivalent money bonds 32bonds 33 market property assets equity range,properties we will build further capital strength to support our growth ambitions, AAA 14 12 equity trustscapital strength facilitate a gradual re-risking of the investment book and further reduce Australian dollar 27 27 4Report Financial Total AA 36 38 gearing to enable us to better withstand extreme events. Sterling 17 17 To support our 15,047 investments A 38 36 Euro 14 14 growth ambitions We will consider more strategic reinsurance to enhance returns and further

Premium income North America Gross written premium increased 31% to as part of the build-out of financial lines Average renewal $3,776 million. This reflected especially translated into strong organic growth. premium rate increase 1 1,2 strong growth in Crop and growth across Increased new business in middle market broader P&C lines of around 17% as a commercial lines, coupled with rate business review result of continued strong premium rate increases and improved retention in A&H, 10.2% increases, new business growth and further contributed to growth. improved retention. 0.7% from 2020 Alternative Markets’ gross written premium Crop gross written premium increased 48% increased 13% due to strong premium 2021 10.2% overview 1Performance North America’s first half performance reflects the primarily due to higher commodity prices, rates in both commercial property and 2020 9.5% notably for Corn (+18%) and Soybeans homeowners, as well as new business continuation of a positive premium rate environment, good 2019 3.8% (+29%), coupled with organic growth of growth in casualty programs. 2018 2.9% around 16%. The Crop business continues organic growth and margin improvement, albeit partly Net earned premium increased 22% to grow market share through its especially to $1,882 million. Net earned premium offset by the impact of Texas winter storm Uri. strong technology-based service offering, growth lagged top line growth largely deeply ingrained agent loyalty and, more due to strong growth in heavily reinsured Gross written premium recently, investment in new talent. Gross earned premium portfolios such as Crop (including growth by class of business financial review 2financial and Operating Specialty & Commercial premium grew in dairy that is fully reinsured) while by class of business 22% during the half. Premium rate meaningful quota share reinsurance increases remained strong in all lines was purchased for 2021 to support the while investment in market leading talent expansion of our financial lines business. Gross written NOTE: “Other” segment 2021 overview Operating and financial manually adjusted to be visible premium (US$M) Market conditions remained favourable during performance Separate shape sitting on top of pie graph the first half of 2021, with sustained positive Underwriting performance Claims expense 3Report Directors’ 3,776 premium rate momentum and a strong economic recovery as the US emerges from the pandemic. North America reported a combined operating ratio The attritional claims ratio (excluding Crop) claims severity in the prior period, most 31% from 2020 of 100.9% 3, down from 103.8% 3 in the prior period. improved to 44.2% from 45.2% in the prior notably in aviation. Pricing remained strong resulting in an average

to improve, with rate increases exceeding lines, including higher replacement and 4Report Financial The underwriting result benefited from a 1.0% Catastrophe claims increased materially Professional indemnity 8.6 claims inflation across most portfolios. repair costs due to rising lumber and 1,882 improvement in the attritional claims ratio and a to 8.8% of net earned premium from 2.9% Workers' compensation 5.0 5.5% reduction in the total acquisition cost ratio, labour costs due to demand surge. Strong growth, most notably in Crop, financial in the prior period. This was primarily due Public/product liability 3.0

22% from 2020 lines and middle market commercial, reflected due to a combination of premium rate increases, The current accident year claims ratio was to Texas winter storm Uri and resulted in Marine, energy & aviation 1.6 cost savings and improved operating leverage. higher premium rates, increased new business also impacted by an estimated 0.6% of catastrophe claims exceeding the first half Motor & motor casualty 0.9 volumes and improved retention. Materially Supply chain cost inflation had a modestly COVID-19 related claims, primarily in A&H allowance by 5.7% of net earned premium. Financial & credit 0.8 higher commodity prices contributed to the and workers’ compensation. Combined adverse impact on attritional claims costs Prior accident year claims experience was Other 0.2 substantial growth in Crop. operating ratio 3 in short-tail property classes during the half. The net cost of large individual risk claims $13 million favourable compared with a

5information Other In addition to a further reduction in the attritional Crop was booked at a combined operating improved to 8.1% of net earned premium cost of $115 million or 7.4% of net earned claims ratio, cost savings and operating leverage ratio of 95% during the half, above the current from 8.5% in the first half of 2020. premium in the first half of 2020.

% 100.9 resulted in a materially improved expense ratio. year plan of 92% and 90% reported in the prior This reflects the non-recurrence of higher Combined commission This was partly offset by elevated catastrophe and expense ratio 2020 103.8% period. This reflects drought risk in parts of the claims due to unusually severe winter weather Mid West and also recognises the inherent difficulty in Texas as arctic temperatures and power in accurately forecasting the Crop result prior to 24.7% outages resulted in record insurance claims. completion of the harvest in November each year. Underwriting Commission and expenses 5.5% from 2020 result 3 (US$M) Underwriting result The total acquisition cost ratio improved to Excluding Crop, North America’s 24.7% from 30.2% in the prior period. This combined commission and expense ratio 2021 24.7% EX-COVID partly reflects the benefit of business mix improved by approximately 4%, reflecting 2020 30.2% (17) FOR THE HALF YEAR ENDED 30 JUNE 2021 2020 2019 2018 and operating leverage associated with underwriting expense savings coupled 2019 29.4% Gross written premium US$M 2,892 2,655 2,738 strong growth in Crop which operates on with improved operating leverage due 42 from 2020 3,776 2018 31.0% Gross earned premium US$M 2,578 2,051 2,067 2,028 commission and expense ratios well below to strong premium growth. Net earned premium US$M 1,882 1,542 1,729 1,631 the North America average. Net incurred claims US$M 1,388 1,247 1,251 1,084 Insurance profit Net commission US$M 246 237 263 248 (loss) margin Expenses US$M 219 229 246 258 Underwriting result US$M 29 (171) (31) 41 Net claims ratio % 73.8 80.8 72.4 66.5 2.3% Net commission ratio % 13.1 15.4 15.2 15.2 Expense ratio % 11.6 14.8 14.2 15.8 2020 (11.4)% Combined operating ratio % 98.5 111.0 101.8 97.5 Adjusted combined operating ratio 3 % 100.9 103.8 99.3 99.2 Insurance profit (loss) margin % 2.3 (11.4) N/A N/A 1 2020 and prior results have been restated to reflect the transfer of North America’s inward reinsurance business to QBE Re, part of International. 2 Excludes impact of COVID-19 in 2020. 3 Excludes impact of changes in risk-free rates used to discount net outstanding claims. 1 Excludes Crop. 20 21 Half Year Report 30 June 2021 June 30 Year Report Half Group Insurance QBE

period, reflecting rate increases in excess renewal rate increase (excluding Crop) of 10.2% The result was heavily impacted by Texas winter The continued build-out of financial lines HY21 of claims inflation across most lines. compared with 9.5% in the prior period. This storm Uri which added ~6% to the combined will ultimately shift the business mix % Agriculture 50.6 included rate increases of 22% in financial lines, operating ratio. Catastrophe claims increased This was despite a strengthening of current slightly towards large individual risk claims Net earned Commercial & to $166M or 8.8% of net earned premium 17% in aviation, 16% in property programs and accident year claims assumptions due to (away from attritional claims) due to the domestic property 20.0 premium (US$M) 11% in A&H. Overall rate adequacy continues compared with 2.9% in the prior period. inflationary pressure in short-tail property limit profile of the financial lines business. Accident & health 9.3 to improve, with rate increases exceeding lines, including higher replacement and 4Report Financial The underwriting result benefited from a 1.0% Catastrophe claims increased materially Professional indemnity 8.6 claims inflation across most portfolios. repair costs due to rising lumber and 1,882 improvement in the attritional claims ratio and a to 8.8% of net earned premium from 2.9% Workers' compensation 5.0 5.5% reduction in the total acquisition cost ratio, labour costs due to demand surge. Strong growth, most notably in Crop, financial in the prior period. This was primarily due Public/product liability 3.0

% 100.9 resulted in a materially improved expense ratio. year plan of 92% and 90% reported in the prior This reflects the non-recurrence of higher Combined commission This was partly offset by elevated catastrophe and expense ratio 2020 103.8% period. This reflects drought risk in parts of the claims due to unusually severe winter weather Mid West and also recognises the inherent difficulty in Texas as arctic temperatures and power in accurately forecasting the Crop result prior to 24.7% outages resulted in record insurance claims. completion of the harvest in November each year. Underwriting Commission and expenses 5.5% from 2020 result 3 (US$M) Underwriting result The total acquisition cost ratio improved to Excluding Crop, North America’s 24.7% from 30.2% in the prior period. This combined commission and expense ratio 2021 24.7% EX-COVID partly reflects the benefit of business mix improved by approximately 4%, reflecting 2020 30.2% (17) FOR THE HALF YEAR ENDED 30 JUNE 2021 2020 2019 2018 and operating leverage associated with underwriting expense savings coupled 2019 29.4% Gross written premium US$M 2,892 2,655 2,738 strong growth in Crop which operates on with improved operating leverage due 42 from 2020 3,776 2018 31.0% Gross earned premium US$M 2,578 2,051 2,067 2,028 commission and expense ratios well below to strong premium growth. Net earned premium US$M 1,882 1,542 1,729 1,631 the North America average. Net incurred claims US$M 1,388 1,247 1,251 1,084 Insurance profit Net commission US$M 246 237 263 248 (loss) margin Expenses US$M 219 229 246 258 Underwriting result US$M 29 (171) (31) 41 Net claims ratio % 73.8 80.8 72.4 66.5 2.3% Net commission ratio % 13.1 15.4 15.2 15.2 Expense ratio % 11.6 14.8 14.2 15.8 2020 (11.4)% Combined operating ratio % 98.5 111.0 101.8 97.5 Adjusted combined operating ratio 3 % 100.9 103.8 99.3 99.2 Insurance profit (loss) margin % 2.3 (11.4) N/A N/A 1 2020 and prior results have been restated to reflect the transfer of North America’s inward reinsurance business to QBE Re, part of International. 2 Excludes impact of COVID-19 in 2020. 3 Excludes impact of changes in risk-free rates used to discount net outstanding claims. 1 Excludes Crop. 22 23 Half Year Report 30 June 2021 June 30 Year Report Half Group Insurance QBE

further increases were necessary. claims ratio improved materially due to compound HY21 Claims expense % We are seeing increasing opportunities to grow premium rate increases. The result also benefited Net earned The net claims ratio improved to 57.8% 1 Net catastrophe costs increased to $126 Commercial & in European insurance and targeted areas within from favourable prior accident year claims domestic property 28.8 premium (US$M) from 60.7% 1 in the first half of 2020. million or 4.8% of net earned premium casualty and specialty reinsurance. We remain development and a lower expense ratio due to compared with 2.9% in the prior period, Public/product liability 22.0 focused on maintaining underwriting discipline cost control and operating leverage. This was An improved attritional claims ratio and reflecting Texas winter storm Uri. Marine, energy & aviation 15.3 partly offset by normalisation of large individual 4Report Financial 2,612 and have curtailed growth in those portfolios the benefit of positive prior accident year Motor & motor casualty 12.3 risk and catastrophe claims which, although up where further rate increases are warranted, claims development were partly offset The result benefited from favourable Professional indemnity 10.9 6% from 2020 4 from the prior period, were within allowances. with short-tail reinsurance lines being a pertinent by normalisation of large individual risk prior accident year claims development Workers' compensation 4.3

and catastrophe claims relative to benign of $38 million or 1.5% of net earned example. Overall new business written increased The current accident year combined operating Accident & health 3.5 16% relative to the prior period. experience in the prior period. premium compared with 1.4% of adverse ratio improved to 90.6% from 91.4% in the first Financial & credit 1.6 development in the first half of 2020. This half of 2020. The attritional claims ratio improved Other 1.3 Combined Catastrophe claims normalised during the half included strengthening of Irish COVID-19 by 3.6% to 39.1%, reflecting the strong operating ratio 3 following especially benign experience in the prior Excluding Asia, our insurance business business interruption provisions. period. Most notably, International Markets and reported an improved combined operating premium rate environment and reduced

QBE Re were impacted by Texas winter storm 3 3 claims frequency in motor and liability An increase in risk margin of $22 million 5information Other ratio of 88.3% compared with 90.9% in the Combined commission 89.1% Uri. Notwithstanding this event, catastrophe costs prior period, QBE Re improved to 89.8% 3 from classes, partly as a result of ongoing contributed 0.8% to the claims ratio remained within allowances for the period which 96.8% 3 and Asia to 94.8% 3 from 99.4% 3 in the government lockdowns. compared with 0.2% in the prior period. and expense ratio 2020 92.8% is testament to the diversification of the portfolio. first half of 2020. Large individual risk claims increased to $341 million or 13.1% of net earned 31.3% premium from 10.4% in the prior period, Underwriting Underwriting result largely due to more prudent assumptions 0.7% from 2020 3 in respect of long-tail classes. result (US$M) EX‑COVID 2021 31.3% FOR THE HALF YEAR ENDED 30 JUNE 2021 2020 2019 5 2018 6 2020 32.0% 285 Gross written premium US$M 3,899 3,339 3,029 3,054 2019 32.5% Gross earned premium US$M 3,108 2,645 2,446 2,569 2018 33.7% 118 from 2020 Commission and expenses Net earned premium US$M 2,612 2,321 2,139 2,220 Net incurred claims US$M 1,372 1,602 1,474 1,384 The net commission ratio reduced to The expense ratio improved to 13.4% from Net commission US$M 465 421 379 409 17.9% from 18.1% in the first half of 13.9% in the prior period. This reflected Insurance profit Expenses US$M 351 323 315 339 2020, reflecting reduced commissions operating leverage associated with strong in Continental Europe and increased premium growth coupled with disciplined (loss) margin Underwriting result US$M 424 (25) (29) 88 Net claims ratio % 52.5 69.1 68.9 62.3 profit commissions from reinsurers in expense management, which saw Net commission ratio % 17.9 18.1 17.8 18.4 International Markets. constant currency underwriting expenses down slightly relative to the prior period. 16.2% Expense ratio % 13.4 13.9 14.7 15.3 Combined operating ratio % 83.8 101.1 101.4 96 2020 (2.5)% Adjusted combined operating ratio 3 % 89.1 92.8 95.1 96.8 Insurance profit (loss) margin % 16.2 (2.5) N/A N/A 1 2020 and prior results have been restated to reflect the transfer of North America’s inward reinsurance business to QBE Re, part of International. 2 Excludes impact of COVID-19 in 2020. 3 Excludes impact of changes in risk-free rates used to discount net outstanding claims. 4 Constant currency basis. 1 Excludes impact of changes in risk-free rates used to discount net outstanding claims. 5 Excludes one-off adverse impact on the underwriting result due to the Ogden decision in the UK. 6 Excludes transaction to reinsure Hong Kong construction workers’ compensation liabilities. 22 23 Half Year Report 30 June 2021 June 30 Year Report Half Group Insurance QBE

Premium income International Gross written premium increased 17% QBE Re’s growth focused on casualty Average renewal to $3,899 million, or 11% on a constant and specialty lines across our London, premium rate increase 1,2 currency basis, reflecting the premium New York, Bermuda and Dubai platforms, rate environment and targeted growth in where premium rate adequacy has business review European insurance and QBE Re. recovered to appropriate levels. QBE Re 10.5% renewal rate increases averaged 7.3% International achieved an average compared with 6.0% in the prior period. 0.4% from 2020 renewal premium rate increase of 10.5% Although property rates have improved, compared with 10.1% in the prior period. they are not yet at levels at which we 2021 10.5% overview 1Performance This included rate increases of 13.5% Our focus on leveraging market conditions and pursuing would look to materially increase our 2020 10.1% in International Markets and 13.0% in selective growth while maintaining underwriting discipline market share. 2019 3.9% UK regional business. Although there 2018 4.4% has allowed us to strengthen our market position and are signs momentum is moderating, Asia has been challenged by the particularly in the London Market, rate economic effects of COVID-19. 3 produce a strong combined operating ratio of 89.1% . increases remain well above inflation and Government restrictions impacted our it is encouraging that rate momentum travel insurance business and we have Gross written premium continues to build on portfolios where significantly reduced our trade credit Gross earned premium by class of business correction was necessary such as exposure across Asia. by class of business review 2financial and Operating financial lines and international liability. Net earned premium increased 6% Our Continental European business on a constant currency basis. The lesser is benefiting from rate acceleration, growth relative to gross written premium Gross written 2021 overview Operating and financial particularly in liability and property reflects increased reinsurance costs, premium (US$M) The pricing environment remains supportive in performance classes, with an average renewal rate including the government reinsurance of all markets. Premium rate momentum increased increase of 11.0% compared with 6.5% trade credit insurance and the impact of Underwriting performance 3,899 in European insurance while double digit rate in the prior period. some non-recurring prior year adjustments. increases prevail across regional UK and London International reported a combined operating ratio of 3Report Directors’ 11% from 2020 4 Market business. Pleasingly, premium rates have 89.1% 3 compared with 92.8% 3 in the prior period. strengthened the most in portfolios where we felt Despite more prudent assumptions, the attritional further increases were necessary. claims ratio improved materially due to compound HY21 Claims expense % We are seeing increasing opportunities to grow premium rate increases. The result also benefited Net earned The net claims ratio improved to 57.8% 1 Net catastrophe costs increased to $126 Commercial & in European insurance and targeted areas within from favourable prior accident year claims domestic property 28.8 premium (US$M) from 60.7% 1 in the first half of 2020. million or 4.8% of net earned premium casualty and specialty reinsurance. We remain development and a lower expense ratio due to compared with 2.9% in the prior period, Public/product liability 22.0 focused on maintaining underwriting discipline cost control and operating leverage. This was An improved attritional claims ratio and reflecting Texas winter storm Uri. Marine, energy & aviation 15.3 partly offset by normalisation of large individual 4Report Financial 2,612 and have curtailed growth in those portfolios the benefit of positive prior accident year Motor & motor casualty 12.3 risk and catastrophe claims which, although up where further rate increases are warranted, claims development were partly offset The result benefited from favourable Professional indemnity 10.9 6% from 2020 4 from the prior period, were within allowances. with short-tail reinsurance lines being a pertinent by normalisation of large individual risk prior accident year claims development Workers' compensation 4.3

QBE Re were impacted by Texas winter storm 3 3 claims frequency in motor and liability An increase in risk margin of $22 million 5information Other ratio of 88.3% compared with 90.9% in the Combined commission 89.1% Uri. Notwithstanding this event, catastrophe costs prior period, QBE Re improved to 89.8% 3 from classes, partly as a result of ongoing contributed 0.8% to the claims ratio remained within allowances for the period which 96.8% 3 and Asia to 94.8% 3 from 99.4% 3 in the government lockdowns. compared with 0.2% in the prior period. and expense ratio 2020 92.8% is testament to the diversification of the portfolio. first half of 2020. Large individual risk claims increased to $341 million or 13.1% of net earned 31.3% premium from 10.4% in the prior period, Underwriting Underwriting result largely due to more prudent assumptions 0.7% from 2020 3 in respect of long-tail classes. result (US$M) EX‑COVID 2021 31.3% FOR THE HALF YEAR ENDED 30 JUNE 2021 2020 2019 5 2018 6 2020 32.0% 285 Gross written premium US$M 3,899 3,339 3,029 3,054 2019 32.5% Gross earned premium US$M 3,108 2,645 2,446 2,569 2018 33.7% 118 from 2020 Commission and expenses Net earned premium US$M 2,612 2,321 2,139 2,220 Net incurred claims US$M 1,372 1,602 1,474 1,384 The net commission ratio reduced to The expense ratio improved to 13.4% from Net commission US$M 465 421 379 409 17.9% from 18.1% in the first half of 13.9% in the prior period. This reflected Insurance profit Expenses US$M 351 323 315 339 2020, reflecting reduced commissions operating leverage associated with strong in Continental Europe and increased premium growth coupled with disciplined (loss) margin Underwriting result US$M 424 (25) (29) 88 Net claims ratio % 52.5 69.1 68.9 62.3 profit commissions from reinsurers in expense management, which saw Net commission ratio % 17.9 18.1 17.8 18.4 International Markets. constant currency underwriting expenses down slightly relative to the prior period. 16.2% Expense ratio % 13.4 13.9 14.7 15.3 Combined operating ratio % 83.8 101.1 101.4 96 2020 (2.5)% Adjusted combined operating ratio 3 % 89.1 92.8 95.1 96.8 Insurance profit (loss) margin % 16.2 (2.5) N/A N/A 1 2020 and prior results have been restated to reflect the transfer of North America’s inward reinsurance business to QBE Re, part of International. 2 Excludes impact of COVID-19 in 2020. 3 Excludes impact of changes in risk-free rates used to discount net outstanding claims. 4 Constant currency basis. 1 Excludes impact of changes in risk-free rates used to discount net outstanding claims. 5 Excludes one-off adverse impact on the underwriting result due to the Ogden decision in the UK. 6 Excludes transaction to reinsure Hong Kong construction workers’ compensation liabilities. 24 25 Half Year Report 30 June 2021 June 30 Year Report Half Group Insurance QBE