QBE Insurance Group Limited (QBE)
BUY

Trending in the right direction

 11 Aug 2022
Sector: Financials

Need to know:

  • Small earnings and dividend beat
  • QBE lifts guidance for FY22 insurance premium growth to 10%
  • Improving macro backdrop expected to lift QBE earnings from here

Investment implications:

Result Summary: Small earnings beat (noting the market has been heavily downgrading QBE estimates this year) with a stronger than expected dividend. Guidance upgrades for premium growth are largely reflected in market estimates. Earnings growth is more reliant on rising yields vs insurance earnings growth.

Earnings: Reported NPAT $151m vs market $123m, Cash $169m vs market at $150m, EPS 11cps vs 10cps market. Dividend 9cps vs market 8cps.

Guidance for FY22: QBE is looking for insurance premium growth of “around 10%” vs “high single digit range”. This is largely reflected in market estimates (9.5%), and reflective of a strong global insurance backdrop. This may prove conservative given recent US peer results.

Overall: The market will breathe of sigh of relief on earnings given the large market downgrades on QBE this year. No new “QBE issues” for investors to worry about, will also be well received.

Looking forward the operating environment should lead to muchimproved profitability for QBE into FY23E. We continue to rate QBE a Buy.

FIGURE 1: QBE INSURANCE PREMIUM GROWTH EXPECTED TO LIFT TO ~10% OVER 2022

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Stock overview

Share Price

Company overview

QBE is an Australia-based insurance and reinsurance company. QBE underwrites general insurance and reinsurance risks, management of Lloyd's syndicates, and investment management. By revenue, QBE is one of the Top 20 global insurers/reinsurers.

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