QBE Insurance Group Ltd (ASX: QBE) reported a 6% fall in half-year revenue to $US7.34 billion with a profit of $US370 million, up 4% over the prior year’s result.
A 22 cents per share interim dividend was declared, in-line with 2017.
According to data from Bloomberg, analysts were expecting a half-year profit of $US295 million and dividends of 17 cents per share. Therefore, it appears QBE beat analyst expectations.
Combined with its ongoing $1 billion share buyback QBE said its shareholder returns were equivalent to $397 million during the half year.
Under the hood
QBE’s combined ratio, which represents the profit made by insurance companies (less than 100% is positive), was 95.8%. Looking towards the future, QBE said it will target a combined ratio of 95% to 97.5% over the full year as it continues to simplify its operations.
QBE increased the price of policies by 4.6% during the half versus 1% a year earlier. “Pricing conditions improved in all divisions but especially in European, North American and Asia Pacific Operations,” the company noted.
The insurer’s annualised investment return was 2.1%, down from 3.6% a year earlier.
“QBE has historically been too complex, in terms of both geography and product mix,” QBE CEO Pat Regan wrote.
“Our objective is to simplify the business so that QBE operates only in markets and products where we have a competitive advantage and can deliver attractive returns and profitable growth.”
Looking out to the remainder of 2019 QBE will continue its buyback. It expects to report a positive insurance result (combined ratio) and achieve an investment return of between 2.25% and 2.75%.
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