QBE (ASX:QBE) jumps after declaring dividend in HY20 result

Insurance giant QBE Insurance Group Ltd (ASX: QBE) shares are up almost 6% after the company reported its interim 2020 result.

FY20 report

QBE announced that its gross written premiums (GWP) grew by 10% to $8 billion. Its net earned premium increase 4% to $5.56 billion.

GWP was able to grow so much largely due to an average group-wide renewal premium rate increase of 8.7%. However, QBE did say that there was $115 million of COVID-19 related risk margins and a COVID-19 underwriting impact of $335 million. Net catastrophe claims amounted to $308 million due to the bushfires, east coast hail and storm activity.

Thankfully, QBE’s expense ratio improved to 14.3%, down from 14.8% last year. That shows that the company is becoming more efficient.

But the bottom line was a statutory net loss after tax of $712 million. The result includes a pre-tax investment loss of $90 million compared to a $755 million gain last year. Lower risk-free rates used to discount net outstanding claims impacted the underwriting result by $335 million.

QBE Dividend

Despite the tough result, QBE’s board decided to declare an interim dividend of 4 cents per share.

Summary

Insurance is a really tough industry. Insurance is now kind of like a commodity product and every time there’s a recession or a bad natural disaster the profit gets hit.

I don’t think I’d want to invest in QBE. There are plenty of other ASX dividend shares that are more attractive to me with better long term growth potential.

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At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.

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