QBE Insurance Group - Half Year Financial Performance Report - 9 August 2024
QBE (QBE) Share Update August 2024 Thursday 8th
QBE Insurance Group Reports Strong Financial Performance for H1 2024
QBE Insurance Group Limited (ASX: QBE) has reported a strong financial performance for the half year ending 30 June 2024, with significant improvements in underwriting profitability and return on equity.
Instant Summary:
- Net profit after tax increased to $802 million, up from $400 million in the prior period.
- Gross written premium grew by 2% to $13,051 million.
- Combined operating ratio improved to 93.8% from 98.8%.
- Insurance profit margin increased to 11.6% from 6.0%.
- Average renewal premium rate increase of 6.7%.
Financial Performance Overview
QBE Insurance Group reported a net profit after tax of $802 million for the first half of 2024, a significant increase from $400 million in the same period last year. The adjusted net profit after tax rose to $777 million, equating to an annualized adjusted return on equity of 16.9%.
Gross written premium increased by 2% to $13,051 million, driven by premium rate increases and targeted new business growth. The combined operating ratio improved to 93.8%, down from 98.8% in the prior period, primarily due to lower catastrophe costs and more stable reserve development.
Underwriting Performance
The underwriting performance showed significant improvement, with a combined operating ratio of 93.8%, supported by lower catastrophe costs and favorable prior accident year development. North America's combined operating ratio improved to 97.5%, driven by strong underwriting results across its core businesses and lower catastrophe costs.
Gross written premium growth of 2% was supported by premium rate increases of 6.7% and targeted organic growth. Excluding Crop and the impact of exited lines, the business exhibited good momentum with gross written premium growth of 11% and ex-rate growth of 5%.
Investment Performance
Total investment income for the period was $733 million, equating to a return of 2.4%. The core fixed income portfolio delivered a return of 2.4%, while risk assets returned 3.3%. The portfolio transitioned toward the target strategic asset allocation, with risk assets now accounting for 14% of total investments.
Balance Sheet and Capital Management
QBE's balance sheet remains strong, with net assets of $10,180 million. The indicative APRA PCA multiple decreased slightly to 1.77x from 1.82x at 31 December 2023. Debt to total capital improved to 21.4%, reflecting strong profitability and earnings retention.
The strong financial performance and improved underwriting profitability are likely to positively impact QBE's stock price. The significant increase in net profit and return on equity will boost investor confidence. However, the ongoing investment in modernisation and the impact of business closures may create some short-term volatility.
Investor Reaction:
Analysts have reacted positively to QBE's strong financial performance, noting the improvements in underwriting profitability and return on equity. The reduction in catastrophe costs and stable reserve development are seen as positive indicators for the company's future performance.
Conclusion:
Investors should monitor QBE's ongoing efforts to reduce volatility and improve performance in North America. The company's strategic initiatives and strong financial performance position it well for continued growth. Investors are encouraged to stay informed about QBE's future updates and assess the potential long-term impacts on their portfolios.