The QBE Insurance Group Ltd (ASX: QBE) share price has jumped 6% after the insurer announced its FY24 result.
QBE is an insurance business with a presence in North America, Australia, the UK, continental Europe and Asia.
QBE FY24 result
Here are some of the main highlights from the report for FY24:
- Gross written premium (GWP) increased by 3% to US$22.4 billion
- Net insurance revenue up 7.3% to US$17.8 billion
- Net claims ratio down 1.9 percentage points to 63.2%
- Net investment income up 8.3% to US$1.5 billion
- Net profit after tax (NPAT) grew 31% to US$1.78 billion
- Dividend per share up 40% to A$0.87
The insurer said the amount of insurance it wrote (gross written premium – GWP) was impacted by the portfolio exits in North America and Australia Pacific, alongside lower crop premium. Excluding crop, the GWP growth was 5%, and 9% after also excluding those exited portfolios. It also reported a renewal rate increase of 5.5%. GWP growth and profit growth are key drivers of the QBE share price.
QBE revealed that its average renewal premium rate increase was 5.5% in FY24, compared to 9.7% in FY23. The insurer said the result reflects moderation in certain property lines, alongside a backdrop of “strong rate adequacy and lower claims inflation.” The combined operating ratio was 93.1% in FY24, down from 95.2% in FY23.
It also said that its expense ratio was 12.2%, up from 11.8% in the prior year. Expense growth of 10%, in constant foreign exchange rates, was “elevated”, though within expectations and reflected increasing spending related to its ‘modernisation’ initiative.
QBE said its investment income equated to a return of 4.9% thanks to both its core fixed income and risk asset portfolios.
Outlook for the QBE share price
The insurance business said that for 2025 it’s expecting GWP growth in 2025 in the “mid-single digits” in constant foreign exchange rate terms.
QBE said it’s expecting a combined operating ratio of around 92.5%.
For investment returns, the FY24 exit core fixed income yield was 4.2%, which implies another potential good year of investment income.
Clearly the company can still make good profits, but with inflation slowing and interest rates coming down (reducing investment income), I’m not sure if this is the best time to invest, as good as the result was. There are other ASX dividend shares I’d rather buy.
