QBE boosts profit despite toll of natural disasters as premiums climb

QBE’s combined operating ratio – a key gauge of profitability which compares premiums with claims and expenses – improved from 95 per cent to 93.7 per cent. That included a turnaround in North America from 102.9 per cent to 98.9 per cent. A ratio above 100 per cent indicates underwriting is unprofitable. The company’s forecast for the entire group in 2023 is a further improvement to about 93.5 per cent.

In its annual report, the company said flood and storm events across eastern and southern Australia generated a “challenging operating environment” as severe weather events disrupted supply chains and worsened inflation. Of the $US1.06 billion net outlays from catastrophe claims – which is above its previous allowance of $962 million – the fastest increase was in the Australia-Pacific. But that was offset by a 9 per cent increase in gross written premiums in the region.

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Overall, gross written premium revenue grew 13 per cent over the financial year, and company expects growth in this metric will temper but remain in the mid-to-high single digits in 2023.

Despite headwinds, Horton said QBE was demonstrating improved resilience, with the company declaring a final dividend of 30 cents a share, compared with 19 cents ashare in the previous financial year.

In a note to investors, Citi insurance and diversified financials equity analyst Nigel Pittaway said he was optimistic about the insurance group.

“As we expected, QBE delivers a strong result with top-line momentum almost as strong as our relatively bullish forecasts and above consensus,” he said.

“The market has already reacted positively to this result which should see financial year 2023 consensus forecasts for top line and investment yield rise, with the combined operating ratio estimates likely to stay broadly similar to slightly higher.

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