QBE Insurance Group: A tough result, but a better outlook

About the author:

Richard Coles
Author name:
By Richard Coles
Job title:
Senior Analyst
Date posted:
11 August 2023, 8:00 AM
Sectors Covered:
Insurance, Diversified Financials

  • QBE Insurance Group's (ASX:QBE) 1H23 NPAT of US$405m was ~10% below consensus (US$446m, Visible Alpha) with the miss appearing mainly due to a higher tax rate than expected (31% versus 16.5% in the pcp). The 1H23 dividend (A14cps) was below consensus (A24cps) reflecting a lower 1H23 payout ratio than expected (~35%).
  • In our view, this was a soft 1H23 result with obvious areas of weakness. However, FY23 COR guidance implies a material improvement in QBE’s COR performance in 2H23 (92% versus 97.6% in 1H23), so we expect the market to focus on this rather than the difficult 1H23 (to a large degree).
  • We lift our QBE NPAT forecasts by 2%-9% for FY23/FY24, with our numbers reflecting strong 2H23 COR guidance and a lift in investment yield expectations. Our PT rises to (login to view).
  • We maintain an ADD on QBE, believing the stock has multiple tailwinds over the next few years, and remains inexpensive trading on ~11x FY23F PE.

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