The QBE Insurance Group (ASX:QBE) share price was trading nearly 2% higher today following the release of its annual report.
For context, the broader Australian share market or S&P/ASX 200
(ASX: XJO) was trading at 7107.7, down 0.32%.
Who is QBE Insurance Group?
QBE is Australia’s largest global insurer, it operates in 31 countries and is one of the top 20 global insurance and reinsurance companies. QBE has been operating since 1886 and got its name when the North Queensland Insurance Company and Bankers’ and Traders’ Insurance Company (both set up by James Burns and Robert Philp) merged with The Equitable Probate and General Insurance Company.
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QBE Report – Key Results
| This period | Last period | Change | |
| Revenue | 15,190 | 15,392 | -1.31% |
| Profit | 550 | 390 | 41% |
| Cash flow | 1,779 | -443 | |
| Dividends (cents) | 27 | 28 |
Source: QBE Insurance Group announcements; author calculations, USD millions.
As can be seen above, QBE reported revenue of $15.2 billion, down $202 million. On its policies, the renewal rate rose to 6.3% from 5% last year. Gross written premium rose 2% to $13.44 billion.
“Cell reviews and the Brilliant Basics program have transformed QBE, embedding a strong and transparent performance culture while upgrading the core capabilities of the business – pricing, risk selection and claims management – and driving a consistent approach to doing business across the Group,” CEO Pat Regan said.
QBE Insurance Group’s profit was $550 million, up $160 million. And on the cash flow statement, which is an important financial statement since it represents the underlying health of a business, operating cash flow was $1.78 billion.
Finally, dividends declared by the company stood at 27 cents per share.
“Despite the impact of adverse weather conditions on our North American Crop business, the underlying fundamentals of our business remain strong and we continue to see improvement in both the quality and resilience of our earnings.”
Regan added, “In 2019, we made substantial progress across all our strategic priorities and recorded especially pleasing results in Australia Pacific and International.”
QBE’s combined operating ratio, which measures the profitability of writing insurance contracts, was 97.5%. The figure was above the group’s target range due to the weather events in the USA and as a result of the Australian bushfires.
What Happens Next?
QBE is guiding for a combined ratio of between 93.5% and 95.5%, with a net investment return on its portfolios of between 2.5% and 3%.
“With strong pricing momentum, non-core asset sales completed and having significantly strengthened reserves in portfolios facing more challenging industry-wide inflationary trends, we enter 2020 with strong prospects for further sustainable margin improvement.”
QBE Insurance Group shares were last seen trading at $14.27, giving the company a market capitalisation more than $18 billion.
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