When Australia’s QBE Insurance Group reported a 24 percent leap in first-half earnings last week, the leader of the company signaled the ability of the company to weather both natural catastrophes and depressed global insurance pricing without recourse to M&A.

Presenting what he called a “solid scorecard,” showing a bottom-line profit of $488 million for the first six months, compared to $392 million in first-half 2014, Group Chief Executive Officer John Neal highlighted the stability and predictability of the insurer’s outlook even as the macro environment remains decidedly unpredictable.

“And it inevitably means a number of things: Unless you lead business, unless you’re globally relevant, then I think it’s a struggle,” Neal said.

Putting QBE in the relevant category, he said, “We feel we can weather pretty challenging conditions if they run through 2015 and 2016.”

“I’m not saying we feel complacent. We don’t feel complacent at all. But if you look at the reset in our business, if you look at the relevance of the franchise QBE has globally both with its clients and its brokers, we feel we’re OK,” he said.

The first-half scorecard presented by Neal and Group Chief Financial Officer Pat Regan revealed strong financial performance, strategy execution and balance sheet quality, Neal said, referring, in particular, to positive prior-year claims development of $79 million to underscore the balance sheet strength. “More importantly, we are pleased to be able to confirm our targets for the full year, to be in a position to increase dividends for shareholders, and to be positive in the strategic intent of our business to be able to grow profitability and improve further still,” he said.

Among the targets is a group combined ratio in the mid-90s, with the first half coming in at 93.4 in spite of meaningful catastrophe activity in QBE’s home market of Australia.”We are on track to produce our best full-year combined ratio for five years,” Neal said.

Still, when asked to predict QBE’s margin over the next few years, Neal flagged market conditions as “the imponderable” quantity in the longer-term forecast equation during an investor briefing on Aug. 18.

Speaking of current conditions, Neal identified the London market as a particular trouble spot of price competition. Referring to commentary “coming out of London” describing international insurance pricing as “a repeat of where it was in 1999,” Neal said: “I think that’s a fair assessment. I was underwriting in London in those days so I remember it well. And you’ve got a bit of déjà vu.

“In the international markets, there’s no doubt in my mind that there’s too much capital. There’s a real fear of some markets of losing business, and you see that pressure in terms [renewal] pricing,” he said.

Neal also noted that the fear is “creating some inevitability around the consolidation” and acquisition prices moving in the opposite direction of insurance prices. “The prices that are being put out there for some of the acquisitions we’ve seen this year are incredible in terms of what people are prepared to pay, and I think it is that fear of price pressure and losing market share,” he said.

As for QBE Group’s participation in the consolidation trend, Neal said, “We’re certainly not thinking of any major acquisition activity.” He went on to refer to the late July appointment of Colin Fagen as QBE Group Chief Strategy Officer as part of an organic growth plan. Fagen, who had been CEO of Australian and New Zealand Operations, oversaw the restructuring of those businesses and the introduction of the group shared service model.

“We think there are some really good opportunities for organic growth having stabilized and set the base of the business,” Neal said, responding to a question on acquisitions. “If there are some bolt-on opportunities that augment and add to that strategy, then we’ll look at those. But wholesale acquisitions at the moment are not on the agenda for QBE, which I think in the context of the prices that we’re seeing paid at the moment paying is probably a good thing.”

The chief executive’s comments on insurance pricing and consolidation came after CFO Regan revealed QBE’s premiums rates dropped 1.6 percent on average globally as a result of global price competition. The 1.6 percent decline compares with a slight increased for first-half 2014 (0.7 percent), and an expectation of broadly flat premium rates.

Regan said premium rates are especially under pressure in Europe, Australia and New Zealand, and increasingly in Asia Pacific where premium rate reductions averaged 3.3 percent, 2.3 percent and 3.3 percent respectively. In North America, premium rates in North America were flat, he said.

Neal also spoke about pricing in Australia and the Asia Pacific.

“It’s probably too early to call a bottom” to commercial pricing in Australia, he said, rejecting an analyst’s characterization even though QBE had expected rates to fall by 5 percent, and they actually only dropped 2 percent. “I think the five cats we saw in the first half, or seven if you count the last quarter of last year, certainly takes some of the edge off some of the rate increases we saw coming through.”

In Asia, QBE managed to grow premiums by 13 percent. “Our advantage is that we’re not going through the pain of establishing ourselves in those markets—of setting up joint ventures,” he said, referring specifically to a focus on Hong Kong, Singapore, Malaysia and Indonesia.

Financial Highlights and Outlook

While insurance rates inched downward across the globe, QBE still recorded a 1 percent increase in gross written premiums overall to roughly $8.6 billion, with North America seeing 26 percent growth to $3.1 billion.

Net earned premiums for the group, however, dropped 12 percent—mainly as a consequence of increased reinsurance purchasing, the executives said, describing larger quota-shares for the U.S. crop portfolio and the introduction of aggregate reinsurance treaties to limit large individual losses and catastrophe claims.

“In the short term, it’s inevitable that a combination of remediation [work], increased reinsurance purchases and foreign exchange have the impact of reducing our net earned premium, and correspondingly, therefore increasing our acquisition cost ratios,” Neal noted. But just as reinsurance purchases helped to pull the combined ratio down to 93.4 (compared to 96.5 for the first half of 2014), remediation efforts—in particular, an operational transformation program have—delivered expense savings, Neal reported.

“QBE now operates with 4,000 less employees than three years ago. By the end of 2015, 20 percent of our support functions will be run in our global shared service centers in the Philippines,” he said, noting that total cost savings amount to some $300 million to date, and that the figure will rise to $350 million by the end of this year. “We have plans in place to take a further $100 million out through 2016. That will mean that reduced our operating cost base by a little over 20 percent in four years,” he said.

“Our focus on costs, I should stress, is part of the rhythm of how we do our business,” he said, wrapping up his opening remarks on the outlook for the company. He added, however, that the company is continuing to invest in its people—with a Leadership Academy set up two years ago and a newly launched Underwriting Academy—and also continuing to invest in “digitally-enabled technology to support broader distribution-based ambitions,” and in data and analytics.

(Editor’s Note: The profit results referenced in the second paragraph are statutory after taxes without adjustment for sales of QBE Argentine workers compensation or Mortgage & Lender Services businesses in North America announced earlier this year.)