Insurance giant QBE has reported a 5 per cent jump in net profit in the year to December 31 and announced a $1 billion share buyback ahead of expected earnings growth.  

The company on Monday reported net profit after tax of $844 million for 2016, up from $807 million in the prior year. Return on equity improved from 7.5 per cent to 8.1 per cent. 

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

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

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

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

"Improved discipline" in managing insurance claims deliver a lower payout ratio in Australia and New Zealand, he said. Operating ratio in North America improved from 97.7 per cent to 99.8 per cent and European operations delivered an earnings ration of 90.2 per cent. 

QBE on Monday also announced David McMillan as its new group chief operations officer . 

He joins from British multinational insurer Aviva, where he is CEO of European operations and chairman of its global health insurance arm.

QBE will pay a 33¢ dividend, up from 30¢ last year.