QBE Insurance Group Limited · ASX:QBE
QBE Insurance — FY2021 Earnings Presentation
31 slides from QBE Insurance's earnings presentation, Feb 18, 2022
Slide 1: 2021 Full Year Results
QBE INSURANCE GROUP LIMITED 2021 Full Year Results Friday 18 February 2022 All figures are in US$ unless otherwise stated. This presentation should be read together with the basis of presentation information detailed on page 22
Slide 2: Andrew Horton, Group Chief Executive Officer
Andrew Horton Group Chief Executive Officer
Slide 3: Initial reflections
Initial reflections Strong foundations Diversified portfolio with international footprint Extensive product set across all major insurance markets Strong brand, distribution and relationships Embedded performance management disciplines Scope to improve returns and reduce volatility Market conditions
Slide 4: Business overview
Business overview 1 Well balanced, diversified portfolio with an international footprint North America International Australia Pacific GWP GWP GWP Motor & motor Professional casualty Financial & indemnity Marine energy Accident & Marine energy credit Accident & & aviation Financial & health Other &
Slide 5: Performance update
Performance update Performance Pricing Investments Balance sheet Combined operating ratio 93.7%1 FY21 average rate increase 9.7% Net investment return of 0.4% or Regulatory capital at 1.75x2 1.3% (ex risk-free rates) GWP growth 21% Pricing remains strong in all regions $260M mark-to-market losses on
Slide 6: Pricing momentum
Pricing momentum Continued group-wide premium rate increases +9.7% • Group-wide rate increases 9.7% in 2021 11.3% 9.7% 9.7% • Ongoing compound premium rate increases globally 12.6% 10.6% 9.8% 8.9% 10.0% 9.4% • Some signs of moderation in certain market segments • Improved customer retention 3Q20 4Q2
Slide 7: Gross written premium
Gross written premium Constant currency growth of 21% Growth ex rate 15% 17% 15% 20% $18,453M $14,685M 21% growth FY20 FX North America International Australia Pacific FY21 North America International Australia Pacific • Crop • Cont. Europe • Workers’ comp • Financial lines • QBE Re • Packages • Ret
Slide 8: Inder Singh, Group Chief Financial Officer
Inder Singh Group Chief Financial Officer
Slide 9: Results snapshot
Results snapshot Key result highlights FY20 FY21 Gross written premium $M 14,685 18,453 • Strong constant currency GWP growth +21% (17% ex Crop) Net earned premium $M 11,785 13,779 • Constant currency NEP growth of +12% (10% ex Crop) • Underwriting profit of $695M, excludes: Net claims ratio (ex ris
Slide 10: Group combined operating ratio
Group combined operating ratio GWP Combined operating ratio improvement (excluding COVID-19) $18,453M 98.6% 21% from FY20 (1.4%) 0.8% 0.3% 95.0% (1.3%) (0.9%) (1.1%) COR 95.0% FY20 98.6% Ex-cat FY20 Ex-cat claims Expenses Commissions Cat claims PYD Other FY21 ratio claims ratio 57.4% • Improvement u
Slide 11: Claims inflation dynamics
Claims inflation dynamics Rising inflation: impacts and assumptions • CPI inflation is lifting notably across many regions • Diverse portfolio and each cell responds to a unique mix of inflationary drivers • Inflation is broadly in-line with expectations in 2021, albeit with some exceptions • Expect
Slide 12: North America
North America GWP Reducing volatility and building a more balanced and diversified business $6,289M 112.7% 32% from FY20 (2.6%) 0.6% (2.4%) COR (1.6%) 1.0% 102.9% 102.9% (4.8%) FY20 112.7% Ex-cat FY20 Ex-cat claims Expenses Commissions Cat claims PYD Other FY21 ratio claims ratio 66.7% • Premium gro
Slide 13: International
International GWP Disciplined underwriting and expense management $6,958M 15% from FY20 2.2% 91.3% 0.3% 90.6% (0.5%) (1.9%) (0.6%) (0.2%) COR 90.6% FY20 91.3% Ex-cat FY20 Ex-cat claims Expenses Commissions Cat claims PYD Other FY21 ratio claims ratio 53.1% • Increased current year claims primarily d
Slide 14: Australia Pacific
Australia Pacific GWP Strong fundamentals in commercial lines $5,215M 17% from FY20 92.8% 0.7% 91.4% 3.1% (2.4%) COR (1.2%) (0.6%) (1.0%) 91.4% FY20 92.8% Ex-cat FY20 Ex-cat claims Expenses Commissions Cat claims PYD Other FY21 ratio claims ratio 54.2% • Current year claims ratio improved despite hi
Slide 15: Investment portfolio and performance outlook
Investment portfolio and performance outlook Investment portfolio FY21 investment return $M % FI running yield FI yield (ex risk-free rate) 144 0.6 Credit spreads MTM 20 0.1 $29.0B Risk assets 258 13.5 1.5% Credit Based on expected risk spread 0.4% asset return of ~5.5% Expenses and other (40) (0.2)
Slide 16: Balance sheet and capital management
Balance sheet and capital management APRA capital Dividend payout ratio Borrowings Debt to total capital target range: 15 – 30% $3.6B 1.75x 1.72x Target range $3.2B $3.1B 40 – 60% $3.0B $2.8B of adjusted cash profits FY20 FY21 FY17 FY18 FY19 FY20 FY21 • Regulatory capital comfortably above the • Upd
Slide 17: Andrew Horton, Group Chief Executive Officer
Andrew Horton Group Chief Executive Officer
Slide 18: Our strategy and priorities
Our strategy and priorities Our purpose Our vision To be the most consistent and innovative risk partner Portfolio Sustainable Bring the Modernise Our Our optimisation growth enterprise together our business people culture • Actively manage for • Harness the depth • Leverage expertise • Complete the
Slide 19: Our approach to sustainability
Our approach to sustainability We have a focus on sustainability and the identification of current and emerging environmental, social and governance (ESG) trends is an integral part of achieving our purpose, understanding the needs of our customers and ensuring the sustainability of our own business
Slide 20: Outlook
Outlook FY21 ‘exit’ CAY COR Outlook Gross written premium: 2022 GWP growth expected in the high single digit range • Market conditions are conducive to supporting 95.0% organic growth ~94% • Premium rate increases expected to continue Combined operating ratio: Consistent low to mid 90s • Expect impr
Slide 21: Questions and answers
Questions and answers
Slide 22: Important information
Important information Basis of presentation (unless otherwise stated) 10. Prior periods (2019 and earlier) are presented on a continuing operations basis 1. All figures are in US$ and adjusted basis as presented in prior reports 2. Combined operating ratios (COR) and underwriting results exclude the
Slide 23: Disclaimer
Disclaimer The information in this presentation provides an overview of the results for the materially from those either expressed or implied in such statements. There can half year ended 31 December 2021. be no assurance that actual outcomes will not differ materially from these statements. You are
Slide 24: Appendices
Appendices
Slide 25: Key metrics summary
Key metrics summary1 Group North America International Australia Pacific FY19 FY20 FY21 FY19 FY20 FY21 FY19 FY20 FY21 FY19 FY20 FY21 Gross written premium $M 13,442 14,685 18,453 4,361 4,775 6,289 5,200 5,856 6,958 3,920 4,079 5,215 Net earned premium $M 11,609 11,785 13,779 3,692 3,351 3,965 4,339
Slide 26: Currency mix of investments and cash, and GWP
Currency mix of investments and cash, and GWP FY20 FY21 Total investments and cash $M % $M % US dollar 9,128 33 9,089 31 Australian dollar 7,420 27 7,924 27 Sterling 4,738 17 5,534 19 Euro 3,751 13 3,609 13 Canadian dollar 1,335 5 1,377 5 New Zealand dollar 460 2 551 2 Hong Kong dollar 372 1 395 1 S
Slide 27: APRA regulatory capital
APRA regulatory capital APRA PCA calculation ($M) 31 DEC 31 DEC APRA Tiers of Capital Requirement 2020 2021 Ordinary share capital and reserves 7,606 7,996 CET1 > Common Equity 60% of PCA Tier 1 Capital Total Tier 1 > Net surplus relating to insurance liabilities 1,194 1,250 80% of PCA Additional Ti
Slide 28: Financial strength and flexibility
Financial strength and flexibility Summary balance sheet ($M) Reserving 31 DEC 2020 31 DEC 2021 • PYD unfavourable $192M (FY20 $366M unfavourable) excludes $55M of adverse PYD in International matched by premium Investments and cash 27,735 28,967 • Risk margin release $140M due to reduced COVID-19 r
Slide 29: Capital markets issuance profile
Capital markets issuance profile QBE has access to A$MTN, EMTN and US144A capital markets Date to first call ($M) Weighted average time to first call: 3.5yrs 300 6 886 884 AT1 698 442 538 Tier 2 400 Senior 2022 2023 2024 2025 2026 2027 2028 Balance sheet Issued instruments Issue date First call date
Slide 30: 2022 global reinsurance program
2022 global reinsurance program Risk XOL Cat XOL Cat Agg Key changes • Cat Top or Drop or Non-Peak1 • Limit reduced to $225M A$300M xs A$4.5B 1 Pre-paid Reinstatement • Drop attachment increased to $175M ANZ • Cat Top Layer • Increased from $100M to $175M $500M xs $2.9B • ANZ Cat Top Layer Worldwide
Slide 31: Our approach to sustainability
Our approach to sustainability 2021: Recent achievements 2022: Forward focus Included in S&P Global’s Sustainability Yearbook Refresh our sustainability strategy For the third year in a row, QBE has been included in the DJSI/Corporate Sustainability Develop a refreshed sustainability strategy to ack