QBE's net profit declined to $1.86 billion for the 12 months to December 31, 2008 from $1.93 billion a year earlier, the Sydney-based company said.
The company said it will pay a final dividend of 65 cents, taking the full-year payment to $1.26 per share compared with $1.22 the year before.
Gross written premiums, a key measure for insurance business revenue, gained six per cent to $13.1 billion.
Shares in QBE fell $1.01, or 5.05 per cent, to $19 as of 10.20am, after the profit fall and the gross written premium figure coming in under forecast at $13.3 billion.
QBE forecast in November that it expected gross written premiums to rise to $16.5 billion in 2009.
Profit was hurt by losses on equities of $554 million before tax, a provision of $200 million for financial related claims, and interest income $200 million lower on the $27 billion cash and fixed interest portfolio.
Those were partially offset by a foreign exchange gain of $409 million, because of the fall in the Australian dollar, and a profit of $303 million on the repurchase of some debt.
The insurer reported a return on average equity of 20.9 per cent, while the insurance profit margin declined to 19.7 per cent from last year's record 22.2 per cent.
"Our result is most satisfactory given the financial crisis and the increased frequency of large individual risk and catastrophe claims,'' chief executive Frank O'Halloran said in the statement.
"The substantial majority of our products and the 45 countries in which we operate continued to produce underwriting profits.''
Mr O'Halloran said the company made eleven takeovers during 2008 for $2.7 billion, and all of those increased earnings within the year.
That meant QBE's capital level declined to $7.9 billion, which was still 1.7 times the required minimum of $4.6 billion.
"The acquisitions and our capital adequacy, together with the continued strong performance of our products and businesses around the world and our positive outlook for premium growth, premium rates and underwriting profitability in 2009, means we are well placed to consider further opportunities,'' Mr O'Halloran said.
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