QBE Insurance Group: A first quarter blip

About the author:

Author name:

By Richard Coles

Job title:

Senior Analyst

Date posted:

15 May 2023, 7:00 AM

Sectors Covered:

Insurance, Diversified Financials

• QBE Insurance Group (ASX:QBE) has given a 1Q23 performance update. Overall FY23 GWP growth guidance has been increased to +10% on the pcp (up from mid-to-high single digit growth previously), but disappointingly combined operating ratio guidance has also been lifted to 94.5% (previously 93.5%) due to higher CAT claims and a prior year reserve top up.
• We downgrade QBE FY23F/FY24F EPS by 3%-5% reflecting higher current year claims forecasts and more conservative outer year earnings estimates. Our Price Target is set at (login to view).
• Whilst higher claims than expected impacted QBE’s 1Q23 performance, we still see the fundamental story of QBE’s earnings improving strongly over the next few years as intact. We maintain our ADD recommendation, with the stock trading on an undemanding ~10x FY23F PE multiple.

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