Almost three-quarters of the ASX-listed company's business comes from outside of Australia and intense competition has depressed premiums and hurt earnings in recent years. But chief executive John Neal said on Monday that prices were close to the bottom of the down cycle.

"Global pricing has been pretty challenged for almost seven years now and probably for the first time in a long while we're starting to see a bit of inflation," he said.

"I think insurers are starting to struggle a bit when it comes to achieving margins. So there's just a sense that we're close to the bottom of the cycle and maybe closer to seeing price increasing generally."

QBE said in an update to the ASX that the global market would remain "challenging" in the year ahead, despite the indications prices would stop falling and the rally in the American economy since the presidential election.

"Business is in great shape, we feel very positive about 2017 and indeed in terms of our medium-term plan,"  Mr Neal said.

The company on Monday reported net profit after tax of $844 million for 2016, up 5 per cent 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 on-market share buyback over three years in recognition of the strength of its balance sheet and expected retained earnings growth.

The buyback, targeting no more than $333 million in any of the next three years, was a way to use surplus capital to reward shareholders, QBE said.

QBE's strong results was largely overshadowed by revelations that Mr Neal's annual bonus was cut by $550,000 because he failed to notify the board that he was having a relationship with his executive assistant.

That breached the company's code of conduct, which states employees must notify their manager of any close personal relationship that may cause a conflict of interest.

Mr Neal on Monday said he had failed to be "timely in disclosing to the board a personal relationship", but would not answer questions on when he did tell the board about the relationship or how long it had been going when he did disclose it.

The board decided to cut his short-term incentive by 20 per cent, slicing his total 2016 remuneration to $3 million dollars.

There is no suggestion of inappropriate behaviour by Mr Neal.

Other than the undisclosed relationship, Mr Neal had a "commendable year and delivered a strong full-year result fro QBE" and his "performance is well regarded by the board," the remuneration report says.

On the company's financial results, "improved discipline" in managing insurance claims delivered a lower payout ratio in Australia and New Zealand, Mr Neal said, with earnings also boosted by a crackdown on fraudulent claims.

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.

Mr Neal again dismissed speculation that German insurance giant Allianz had made an informal bid for QBE valuing it at $20 billion, which was widely reported last month, saying there had been no formal or informal approach from the company.

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.

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.

QBE will pay a 33¢ dividend, up from 30¢ last year, on April 13.