QBE stock price falls as figures disappoint

PROFITS are back at QBE on the back of a wave of price rises, but the result fell short of market expectations and the insurer’s stock was hammered on Friday.

Rising premiums fed by new business and higher prices boosted full-year net profit to $US750M ($1.04bn), despite a material lift in costs from natural catastrophe claims.

The previous year QBE suffered a $Us1.5bn net loss.

Statutory gross written premium for the year to December 31 increased by 22 per cent to $Us18.45bn. Revenue rose 17 per cent to $20.7bn.

Despite the turnaround, the insurance giant has walked back its policies around payouts of profits in a bid to keep more cash in the group.

The result also comes in below expectation, with analysts at Barrenjoey noting profits came in 2.4 per cent below forecasts and 5.4 per cent below consensus.

This saw disappointed investors slam the stock, sending it 8.7 per cent lower to close at $11.55, which made it the worst performer on the ASX 200 index.

The insurance giant, with operations in Australia, North America, four countries in Asia, and Europe, has also signalled its plans to deal with high emitting customers as it transitions to a clean energy future.

QBE also flagged premium rate increases were ongoing with renewal rate increases averaging 9.7 per cent during the first half of the year. This was a touch down on the 9.8 per cent increases slugged to customers in 2020.

New chief executive Andrew Horton (pictured) said he expected QBE premium rises would remain above expected inflation of 4-5 per cent in the coming years.

Like many insurers, QBE has been lashed with worldwide natural catastrophes that saw losses top $US905M, up from $US688M a year ago.

Mr Horton said the insurer was facing a growing problem as wealthier customers flocked to coastal areas more exposed to storm surge.

QBE also recently signed on to a 2050 net zero insurance alliance, which will see it transition all its underwriting portfolio to non-emitters in the coming decades.

QBE declared a final dividend of 19c, up from 4c the previous year. However, the insurer revised down its payout policy from “up to 65 per cent of adjusted cash profit” to just 40-60 per cent of annual adjusted profit, flagging less cash going forward.