QBE Insurance says Australian premiums will continue to rise in 2013 as it deals with major catastrophe costs from its north American business.
QBE has also flagged major changes to its business to save at least $US250 million ($A244.18 million) in costs each year, which is likely to involve job losses.
The global insurance company on Tuesday posted a net profit of $US761 million ($A741.97 million) in the year to December 31, up eight per cent from $US704 million in the previous corresponding period.
The profit was below the company's own forecast of a result above $US820 million, and short of analyst expectations.
The company has also cut the ratio of profits it intends to pay to shareholders, from up to 70 per cent to 50 per cent.
QBE declared a fully-franked final dividend of 10 cents per share, down from a partly-franked 25 cent dividend for the previous year.
Its shares fell: down 24 cents, or 1.8 per cent, at $12.79 at 1115 AEDT.
The company took fewer catastrophe claims in 2012 than it did in 2011, but it suffered a $US464 million ($A452.40 million) cost from developments in prior year accident claims, chief executive John Neal said.
The north American business was hardest hit, due to the impact of severe storms and drought.
Mr Neal said QBE's Australian and New Zealand business posted a significant turnaround in 2012, in part due to the company's efforts to minimise its exposure to natural disasters.
Premiums across QBE's businesses rose by an average of five per cent in 2012, and similar increases were expected again in 2013, he said.
A transformation program would create "dedicated centres of excellence" to manage QBE's business, he added.
No details of potential job losses were provided, but Mr Neal told analysts all major regions of the business - Australia, north America and Europe - would be impacted.
Fairfax Media has reported QBE plans to set up a hub in the Philippines, at the expense of up to 3,000 employees in Australia, Europe and north America.
"I will provide more detail of our new strategic direction, the progress of the operational transformation program and our targeted cost savings as we progress through 2013," he said.
QBE is targeting an underlying insurance profit margin of 11 per cent in 2013, which compares to eight per cent in 2012.
Morningstar analyst David Ellis said the outlook was bright for the company.
"We believe QBE is facing much improved conditions with five per cent forecast insurance premium increases, a major cost out program to improve productivity and the eventual increase in northern hemisphere interest rates," he said.