QBE - QBE Insurance Group

[Ann]

QBE profit bounces back, dividend soars

Insurance giant QBE Group's profit recovered dramatically last year, as it faced lower claim costs and the company pushed ahead with a cost-cutting and divestment program.

The ASX-listed insurer on Monday said net profit after tax was $US390 million ($546 million), after 2017's $US1.2 billion loss, with the profitability of its underwriting operations improving significantly. More....

I will put up an EquiVolume chart tomorrow when it has updated, there are some volume pressure issues and a big gap to close.

 

[Ann]

Looking at volumes in the EquiVolume chart, it appears there is more selling pressure before it fights back up through the gap. It rose on what appeared to be pretty thin volumes yesterday, let's see if it can hold on and keep going today.

 

[galumay]

The thing I have found over the years with QBE is that every now and then they have a result that makes you think they have turned the business around and are on track, but within a quarter or two they disappoint to the negative again with some other bumbling stuff up!

 

[bigdog]

I do not own QBE shares

Motley Fool reports
https://www.fool.com.au/2019/03/21/...d-28-this-year-why-is-it-the-top-asx-insurer/

The QBE share price has surged 28% this year – Why is it the top ASX insurer?
Lachlan Hall | March 21, 2019

The QBE Insurance Group Limited (ASX: QBE) share price has surged 28.1% in 2019 to be the top insurance stock in the S&P/ASX200 Index (ASX: XJO) – so why has it outperformed its peers?

What’s happened so far this year for QBE?
The QBE share price neared its 52-week low of $9.28 per share in mid-December 2018 as the Financial Services Royal Commission wrapped up its final hearings and the company completed the sale of its insurance operations in Puerto Rico, Indonesia and the Philippines.

The insurer released its full-year FY18 results on 25 February and recorded growth in gross written premiums (GWP) of 2.5% on the prior corresponding period to $13.66 billion.

QBE’s attritional claims ratio fell from 51.3% in 1H18 to 49.1%, while its cash return on equity (ROE) moved back into the black at 8% for the full year. The company recorded positive half-on-half pricing momentum on a global basis, up 90 basis points (bps) to 5.5%, with upwards trends in its North America, Australia & New Zealand and Asia-Pacific segments.

On the back of the strong results, QBE management announced a significant increase in its final dividend, which increased by 24 cents per share (cps) to 50 cps in FY18.

What about QBE’s insurance peers?
QBE has a market cap of $16.8 billion which is comparable to fellow insurers including Insurance Australia Group Ltd (ASX: IAG) with a $17.6 billion market cap and the $17.2 billion Suncorp Group Ltd (ASX: SUN).

Suncorp’s share price has climbed 6.8% this year to trail both QBE and IAG (10% year-to-date). Suncorp and IAG were both hit by extraordinary events, with IAG recording a $607 million provision for the December 2018 Sydney hailstorm and Suncorp estimating the cost of the Townsville floods to be more than $90 million.

While QBE inevitably had some exposure to such events as a large Australian insurer, its greater diversification across insurance products and geographies ultimately saw its share price largely unaffected by these events which has been a key factor in its continue share price appreciation.

Is the QBE share price a Buy?
Despite the strong start to the year and QBE’s strategic positioning in the insurance market, the QBE share price is trading near its 52-week high of $12.79 per share and I’d be wary of future growth given potential headwinds for insurers in the next 6-12 months.

 

[Struzball]

https://www.afr.com/news/policy/climate/qbe-to-abandon-thermal-coal-by-2030-20190329-p518ug

"Insurance giant QBE will stop insuring new thermal coal mines, power plants and transport networks from July 1 this year, and will shut down its thermal coal underwriting business by 2030."

"[QBE] would also withdraw all direct investment in companies that generate more than 30 per cent of their revenue from thermal coal from July 1"

"QBE is Australia's main domestic coal insurer, and is considered an expert in the area."

Globally, coal is not going anywhere any time soon. Question is, if not QBE, which companies will continue to underwrite and invest in thermal coal? Asking for a friend.

 

[tech/a]

Pete you mention poor corporate risk.

QBE covers our debtors insurance. I pay
a fair bit for this but am increasingly frustrated
having clients knocked back for cover not due
to any issue with them only that QBE and their risk
people deem that they are at capacity with exposed risk
to particular companies. So Im left to make the call
take the risk naked or walk away from the contract.

As for the chart it is in my opinion not looking like
moving out of this pattern. But when it does either way
would be worth hopping on. It will become clearer eventually.
The initial setup does look appealing--I agree there.

 

[peter2]

I agree the daily chart looks bullish. I have posted the quarterly chart just to remind myself that this stock has been a dog since the GFC.

 

[UMike]

Started offloading some of this stock.
Kept buying as it bottomed out below $10.

Surprised the Bush fires haven't dented it a bit.
Almost at 5 year highs.

 

[Dona Ferentes]

had a look at the (jargon riddled) latest QBE investor presentation. Couldn't make head nor tail of it.

"QBE is an international general insurance and reinsurance group underwriting commercial and personal lines of business through operations in 38 countries."

A longstanding CEO, Frank O'Halloran, built QBE to its current staus. He was thought to be a master of the numbers; and an acquisitor of no mean repute. Now we all all know a myriad of sins can be hidden in growth strategies. Harry Hindsight wrote then that the company had "poor underwriting practices, under reserving, weakness in its capital and poor risk management."

Then in 2011, John Neal was bought in. To steady the ship. Writedowns and selling off a few 'non-core' assets followed (and besides, it's almost obligatory to clean up the balance sheet and lower expectations. How else can allocated performance options end up 'in the money' at the end of the new CEO's time at the helm?).

The $254 million loss recorded in calendar 2013 was meant to mark the beginning of a "period of refocus and stabilisation". Neal managed to lift the return on equity from about 7 per cent to 8 per cent but QBE shares were trading at a price less than they were when Neal took over as CEO.

It is generally accepted that Neal transformed QBE from a disparate group of siloed businesses into an integrated global insurer. Then in Sept 2017, chief financial officer and head of Australian and New Zealand operations, Pat Regan, was appointed chief executive.

Not much happened for a year or so, probably more "refocus and stabilisation"; after which the SP started to build. No escape velocity, but the bad news became less and insto's re-found their confidence/ nerve to take or build stakes.

I mean, QBE can be attractive, given its very size. Sits in indexes, can outperform. Sometimes is a 'must hold' type company. And ability to achieve targeted rate increases, and analysts like things like "Attritional claims ratio", "reduction in peak catastrophe exposure", "premium rate adequacy measures" and the like THAT CAN BE MEASURED .... and if these trends are positive, such that RoE and Earnings are good (and there is always a margin in everything). And there always is a lot of cash sitting within the company, on the sidelines; bolstering the balance sheet.

in Feb 2019 the AFR said

Insurance giant QBE used to be seen as a black box. It's still a complex beast, but chief executive Pat Regan is making strides towards keeping things as simple as possible. The key number from the 2018 full year result is the group's combined operating ratio, which is the main measure of profitability. It improved from 103.9 per cent in 95.7 per cent in 2018, thanks to better pricing and lower costs. Regan says it will be between 94.5 per cent and 96.5 per cent in 2019; if he can hit the midpoint of 95.5 per cent, he'll eclipse market expectations.

"Premium rate momentum has continued into 2019 with average premium rates up by around 4% (ex CTP) in the first quarter, consistent with our experience in the first quarter of 2018. We have experienced positive rate in all of our divisions due to a combination of market conditions and our disciplined approach to pricing and risk selection.”

May 2019 - Pat Regan, CEO, QBE Insurance Group

good luck. Not my type of stock. Don't need to hold.

 

[galumay]

good luck. Not my type of stock. Don't need to hold.

Ditto. Held it once, I bought it because in my early days as an investor I imagined I needed to diversify across sectors, so I made the terrible mistake of buying the best businesses in the sector I could find - ignoring the fact that they might well still be a **** business!!

 

[peter2]

good luck. Not my type of stock. Don't need to hold.

Ditto x 2. I have a love / hate relationship with QBE over the past few years. Love to trade it but hated the results I was getting. Every reporting season there was always one division that went out of control and the QBE price tanked.

Looked at it long and hard on the BO > 13.00 recently then cut my hands off before they pushed the buy button.

 

[Skate]

had a look at the (jargon riddled) latest QBE investor presentation. Couldn't make head nor tail of it - good luck. Not my type of stock. Don't need to hold

Ditto x 2. I have a love / hate relationship with QBE over the past few years. Love to trade it but hated the results I was getting.

An alternative chart of QBE.
@Dona Ferentes - I don't care about the fundamentals of a company (they the are just ASX codes to me) as I enter the trade on the technicals. The Chart below is from my CAM Strategy, (technical mechanical strategy) buying pullbacks & trend continuations

I can understand the love hate relationship with QBE
The CAM Strategy is my only strategy that entertains buying QBE (& it buys it on a regular basis) as my other strategies won't touch it with a 10ft pole (for the reasons @peter2 has explained)

Just taking off again
The CAM strategy is not perfect as it kicked me out just when another move has started (it's the reason I keep entering the position on a regular basis) - selling at the correct time (timing the exit) makes the money. Selling is easy and can be undone in the blink of an eye - I'm now waiting for the next re-entry signal.

Skate.

 

[MovingAverage]

An alternative chart of QBE.
@Dona Ferentes - I don't care about the fundamentals of a company (they the are just ASX codes to me) as I enter the trade on the technicals.
Skate.

A big thumbs up to that

 

[UMike]

So Another Capital raising and is now lower than what the instos paid?

I have still never understood how QBE was affected by this pandemic? It is not like they will have to pay out on any claims for it as I imagine no one has insured for this type of catastrophe.

 

[InsvestoBoy]

So Another Capital raising and is now lower than what the instos paid?

I have still never understood how QBE was affected by this pandemic? It is not like they will have to pay out on any claims for it as I imagine no one has insured for this type of catastrophe.

Aren't they a big Travel Insurance provider?

Also https://www.afr.com/companies/finan...or-s-coronavirus-court-action-20200505-p54ps9

 

[Garpal Gumnut]

So Another Capital raising and is now lower than what the instos paid?

I have still never understood how QBE was affected by this pandemic? It is not like they will have to pay out on any claims for it as I imagine no one has insured for this type of catastrophe.

They have been affected because the insurance money they get is invested, often in stocks and stocks have fallen. They are similar to an index fund. They usually have re-insurance for their insurance losses.

gg

 

[Ferret]

Trading at nearly 10% under the price the instos paid and the retail SPP doesn't close until end of trade Monday.

This could get really ugly.

 

[UMike]

Trading at nearly 10% under the price the instos paid and the retail SPP doesn't close until end of trade Monday.

This could get really ugly.

Yea I am not partaking in it.
I'll buy online. The last parcel I bought was 7.25. Got a buy order in for that price. It is more likely to get worse before it gets better.

 

[UMike]

Share Purchase Plan Results ("SPP")

QBE advises that the SPP announced on 14 April 2020 closed on Monday 11 May 2020 with more than 7,400 applications received.


QBE confirms it will accept all valid SPP applications in full and expects to issue approximately 12.2 million fully paid ordinary shares for approximately A$91.5m which will rank equally with existing shares on issue from allotment.


The SPP shares will be issued at A$7.51 per share (representing a 2% discount to the 5 day VWAP to 11 May 2020 of A$7.66 per share).

Got in today with 2000 @$7.25.
Shows you don't have to partake in the SPP to benefit from it. Over 3.5% better off.

 

[UMike]

Looks like the time is ripe to take at least 1000 of that of the table.

Itchy fingers ATM.