Qbe Insurance Group Limited · ASX:QBE
Qbe Insurance — FY2023 Earnings Presentation
25 slides from Qbe Insurance's earnings presentation, Feb 16, 2024
Slide 1: QBE Presentation on the 2023 results
QBE Insurance Group Limited ABN 28 008 485 014 Level 18, 388 George Street, SYDNEY NSW 2000 Australia GPO Box 82, Sydney NSW 2001 telephone + 612 9375 4444 • facsimile + 612 9231 6104 www.qbe.com 16 February 2024 The Manager Market Announcements Office ASX Limited Level 4 Exchange Centre 20 Bridge S
Slide 2: 2023 Result
2023 Result 16 February 2024 QBE INSURANCE GROUP LIMITED Enabling a move resihent future ri my =
Slide 3: ASX website www.asx.com.au or QBE’s website www.qbe.com. making a decision in relation to QBE’s
significant change in equity markets and interest rates; no major movement in budgeted foreign exchange rates; no material change to key inflation and economic growth forecasts; recoveries The information in this presentation provides an overview of the results for the year ended from our reinsuranc
Slide 4: Andrew Horton
Andrew Horton Group Chief Executive Officer
Slide 5: Financial performance continues to improve
North America strategic execution Financial performance continues to improve Consistent strategy to improve core Adjusted cash ROE increased to 16.0% performance and successfully manage run-off Growth remains a highlight Property catastrophe de-risking 10% GWP growth supported by 9.7% premium Reduce
Slide 6: Capital above S&P 'AA'
Average rate increase Excludes 0.6% impact from Total investment income Capital above S&P ‘AA’ 45% full year payout ratio +9.7% reserve transaction of $1,374M level Ex-rate growth +4% Catastrophe claims 4.6% exit running yield Debt to total capital 21.9% 10% franked below allowance
Slide 7: What we achieved in 2023
What we achieved in 2023 Improved property mix through targeted Commenced review to assess opportunities exits, better rate and terms, and ~10% ex- for efficiency and simplification. Deepened rate contraction in standalone property AI across underwriting and operations Strong momentum across QBE Re,
Slide 8: Multi-year effort to de-risk property portfolio and build more resilient catastrophe allowance
61.3 554 FY20 688 57.4 685 366 56.6 FY21 ~320 56.0 905 ~290 225 192 962 141 FY22 1,060 ~90 1,175 FY23 ~(10) FY18-20 FY21 FY22 FY23 1,092 Average FY20 FY21 FY22 FY23 Ex-cat ratio (%)1 Allowance ($M) Actual ($M) Total Long-tail Considered management of elevated Multi-year effort to de-risk property po
Slide 9: Major focus on improving the quality of standalone property portfolios
¹ • Major focus on improving the quality of standalone property portfolios 24% ~15% 2,006 2,073 ~18% • ~$400M reduction in (9%) premium from terminated property portfolios in FY23, with a further ~$600M FY22 Rate Ex-rate FY23 expected in coming periods increases 2Q22 FY24 2Q22 FY24 • Exposure to pea
Slide 10: Launched 'cradle to grave' insurance for AU renewable energy projects
• In underwriting, set a formal engagement target to engage with over 50 priority customers on a regular basis to refine our net-zero underwriting approach • Launched ‘cradle to grave’ insurance for AU renewable energy projects which offers coverage across entire project lifecycle, leveraging our EU
Slide 11: Inder Singh
Inder Singh Group Chief Financial Officer
Slide 12: Improvement in profitability underscored by more resilient underwriting result and strong investment returns
Improvement in profitability underscored by more resilient underwriting result and strong investment returns FY22 FY23 Gross written premium $M 19,993 21,748 95.2 Upfront 0.6 cost of LPT Net insurance revenue $M 15,088 16,599 Net claims ratio % 66.0 65.1 95.9 60.5 94.6 59.1 4.7 Net commission ratio
Slide 13: Organic growth continues across key areas, partially offset by exited property lines
Organic growth continues across key areas, partially offset by exited property lines 8% 17% FY23 4% 15% Crop North America 4 1 3 (7)% NA (ex Crop) (7) (12) 1 $21,748M $19,993M International 17 10 17 10% growth Australia Pacific 8 (1) 11 Group 10 4 11 FY22 FX North International Australia FY23 Americ
Slide 14: Net insurance revenue and COR breakdown
+11% 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 $16,599M COR 95.9 95.2 8.1% 10.9% 10.0% $15,088M Expenses 11.7 11.8 9.1% 6.7% 10.6% 11.5% 12.3% 6.7% 29% 31% 74% 74% 68% 66% 66% 64% Commission 18.2 18.3 5.5% 9.4% 5.5% 42% 39% Cat 7.0 6.6 6.3% 4.9% 9.2% 9.5% 6.0% 5.2% 87% 87% 84% 85% 84% 85% 30% 29% 9.9% 11.8% 13.
Slide 15: Divisional COR FY22 vs FY23
COR (%) 99.5 103.7 COR (%) 94.8 COR (%) 92.8 93.6 Expenses 9.2 9.1 89.5 Expenses 11.8 Expenses 13.1 13.9 21.6 11.6 Commission 21.4 Commission 17.9 Commission 15.5 15.7 4.9 17.9 Cat 5.4 8.1 Cat 7.5 Cat 8.4 6.6 Ex-cat 65.9 65.7 59.3 Ex-cat 57.3 54.3 Ex-cat 58.2 PYD (2.4) 2.4 0.3 (0.9) (3.2) (2.6) PYD
Slide 16: Drag from non-core lines expected to more than halve into FY24
Drag from non-core lines expected to more than halve into FY24 FY18-22 Avg FY22 FY22 FY23 COR AASB 1023 AASB 1023 AASB 17 AASB 17 Crop 96% 96% 96% 98% Specialty 98% 96% 96% 95% Commercial ~($140M) 106% 94% 96% 95% ~($250M) ~($245M) Go-forward core segments ~96% Non-core ~140% FY20-22 FY221 FY23 Divi
Slide 17: 2024 reinsurance renewal completed largely as expected, with broadly stable retention
2024 reinsurance renewal completed largely as expected, with broadly stable retention • 2024 program remains largely consistent. Retentions broadly stable year over year resulting in negligible APRA prescribed capital impact ~350 ~350 ~310 ~325 • 2024 catastrophe allowance set at $1,280M, which will
Slide 18: Duration 'economically' matched at 1.7 years
Credit Spread Contribution Weighted Average RFR FI yield (ex risk-free rate) 1,131 4.4 5.0% 4.9% 13 Feb 4.6% 4.8% Credit spreads MTM 116 0.4 4.2% 4.1% Risk assets 190 5.7 Corporate bonds Short-term money Growth assets Expenses and other (63) (0.2) Government bonds Other fixed income Enhanced FI Dec-
Slide 19: Regulatory capital, debt and ROE
1.82x $3.1B $3.0B 16.0% $2.8B $2.7B $2.8B 1.79x 1.74x 8.3% (0.08x) FY22 FY23 2023 final FY23 FY19 FY20 FY21 FY22 FY23 FY22 FY23 dividend pro forma • Regulatory capital at the top end of our Debt to • Encouraging resilience and improvement 1.6x-1.8x target range total 27.5 25.8 24.1 23.7 21.9 • Almos
Slide 20: Andrew Horton
Andrew Horton Group Chief Executive Officer
Slide 21: Underlying settings behind 2024 business plan are more robust, with lower expected earnings volatility
Underlying settings behind 2024 business plan are more robust, with lower expected earnings volatility • Premium rate increases expected • Expect 2024 constant to remain supportive currency GWP growth in ~7% the mid-single digits • Markets to remain conducive for 7.1% further targeted organic growth
Slide 22: Questions and answers
Questions and answers
Slide 23: Financial results by division FY22 FY23
FY22 FY23 FY22 FY23 FY22 FY23 FY22 FY23 FY22 FY23 FY22 FY23 FY22 FY23 FY22 FY23 Gross written premium $M 19,993 21,748 7,280 7,555 7,502 8,802 5,219 5,392 Ex-cat claims $M (9,132) (9,808) (3,056) (3,150) (3,368) (3,761) (2,721) (2,843) Insurance revenue $M 18,834 20,825 7,170 7,529 6,701 8,000 4,965
Slide 24: Reinsurance program structure
Main Cat XOL (Worldwide) • $1.7B xs $400M US and ANZ cat layers (incl in Cat XOL diagram) • 1 reinstatement • $1B xs $2.1B • 1 reinstatement $2,700M xs $400M Risk Catastrophe wrap • Main cover $250M xs $50M • $150M xs $500M 1 Reinstatement • Clash section $50M xs $50M • US and AU windstorm / US, AU
Slide 25: Enabling a more resilient future
Enabling a move resilient future ® QBE