Qbe Insurance Group Limited · ASX:QBE
Qbe Insurance — H1 2021 Earnings Presentation
30 slides from Qbe Insurance's earnings presentation, Aug 12, 2021
Slide 1: QBE results presentation for the half year ended 30 June 2021
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 12 August 2021 The Manager Market Announcements Office ASX Limited Level 4 Exchange Centre 20 Bridge Str
Slide 2: 2021 half year results
i mc ae GROUP LIMITED \ | 2021 i half year results Thursday 12 August 2021 24 All figures are in US$ unless otherwise stated. This presentation should be read together with the basis of presentation information detailed on page 19 ‘A Q B E
Slide 3: Richard Pryce, Interim Group Chief Executive Officer
Richard Pryce Interim Group Chief Executive Officer
Slide 4: Capital at S&P 'AA' level
Combined operating ratio 93.3% 1H21 average rate increase 9.7% Net investment return of 0.4% or Regulatory capital at 1.73x 1.4% (ex RFR) GWP growth 20% Compound premium rate increases in $132M mark-to-market losses on FI Capital at S&P ‘AA’ level all regions due to higher risk-free rates Attritiona
Slide 5: Premium growth, combined operating ratio and claims ratios
10,203 9.7% 103.4% $10B 8.7% COVID-19 6.0% 95.8% 95.2% 93.3% FX $8B 4.6% 4.7% 97.4% Reported 7,887 7,637 8,041 $6B 1H18 1H19 1H20 1H21 1H18 1H19 1H20 1H21 1H18 1H19 1H20 1H21 GLRC 1.1% 51.3% 15.1% 47.7% 13.0% 11.4% 45.5% 9.7% 7.0% Cat (1.2%) 3.2% 5.5% 43.7% 1.9% (2.2%) 7.8% 8.2% 7.5% 8.1% Large (4.0
Slide 6: Ongoing compound premium rate increases globally
• Ongoing compound premium rate increases globally 11.3% 9.7% 8.7% • Australia Pacific pricing recovered post COVID-19 relief 12.6% 10.6% 10.2% 9.8% 8.9% • Some signs of moderation, particularly in International Markets 7.3% • Improved customer retention 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 79% 80% 81% 82%
Slide 7: 20% growth in gross written premium
$10B 18% 11% 17% $9B $8B $7B $10,203M $6B $8,041M 20% growth $5B $4B 1H20 FX North America International Australia Pacific 1H21
Slide 8: Attritional claims ratio continues to benefit from premium rate increases
49.0% 48.0% 47.7% 47.0% • Attritional claims ratio continues to benefit from compound premium rate 46.0% 45.5% increases and sustained underwriting discipline 45.0% 44.0% 43.7% 43.0% 1H19 1H20 1H21 51.0% 45.0% 44.0% 56.0% 50.0% 44.0% 42.7% 49.0% 43.0% 54.0% 52.8% 48.0% 47.4% 42.0% 52.0% 47.0% 46.0%
Slide 9: Inder Singh, Group Chief Financial Officer
Inder Singh Group Chief Financial Officer
Slide 10: Gross written premium
1H20 1H21 Gross written premium $M 8,041 10,203 Net earned premium $M 5,556 6,571 Net claims ratio (ex RFR) % 66.7 64.3 Net commission ratio % 16.4 15.3 Expense ratio % 14.3 13.7 COR (ex RFR) % 97.4 93.3 Net investment return % (0.7) 0.4 Underwriting result $M (189) 642 Net investment income $M (60)
Slide 11: Combined operating ratio 93.3%
20% from 1H20 97.4% 0.5% 0.2% 93.3% (3.3%) 1.4% (1.8%) 0.6% (0.6%) (1.1%) 1H20 97.4% ~1% CAY improvement 1H20 PYD Attritional Exp. Comm. Large risk Cat Crop @ Other 1H21 claims 95% COR 1H20 45.5% • Improvement underpinned by lower attritional claims and operating expense ratios • Large individual ri
Slide 12: North America: 31% growth from 1H20
+ + = 31% from 1H20 107.9% COVID-19 7.4% impact 5.7% 103.8% (0.7%) 100.9% 96.6% 95.9% (0.2%) 1H20 103.8% 1H20 1H21 1H20 1H21 1H20 1H21 1H20 1H21 • Premium growth of 17% excluding Crop 1H20 45.2% • COR improvement driven by lower attritional claims and operating expense ratios • Catastrophe claims ab
Slide 13: International: 11% growth from 1H20
+ + = 11% from 1H20 98.7% COVID-19 impact 93.1% 1.4% 91.9% 92.8% (1.7%) (1.3%) 89.1% (1.5%) 1H20 92.8% 1H20 1H21 1H20 1H21 1H20 1H21 1H20 1H21 • Premium growth of 11% 1H20 42.7%4 • Attritional claims ratio improved 3.6% • Large individual risk claims increased 2.7% primarily due to higher IBNR assum
Slide 14: Australia Pacific: 18% growth from 1H20
+ + = 18% from 1H20 6.1% 96.4% COVID-19 1.4% (1.0%) 95.3% 90.2% 90.8% 91.0% (1.2%) 1H20 95.3% 1H20 1H21 1H20 1H21 1H20 1H21 1H20 1H21 • Premium growth of 18% 1H20 49.3% • Attritional claims ratio impacted by higher weather related claims • Catastrophe claims above allowance due to east coast floods
Slide 15: Investment performance
FI yield (ex RFR) 66 0.5 1.7% Credit spread Credit spreads MTM 26 0.2 0.3% contribution Growth assets 119 11.8 Expenses & other (21) (0.2) Wtd avg 0.7% 1.3% Net return (ex RFR) 190 1.4 risk-free rate Corporate bonds Short-term money Growth assets 0.4% 0.5% Government bonds Other fixed income 0.2% As
Slide 16: Capital and regulatory capital multiple
$1.4B $3.6B $1.0B 1.73x 1.72x $0.9B $3.2B $3.1B $0.6B $3.0B $2.8B Core $0.5B Group $0.4B program 1H20 Core North Inter- Australia 1H21 Group America national Pacific program • Growth in heavily reinsured Crop business FY20 HY21 FY17 FY18 FY19 FY20 HY21 • MLPL growth in NA supported by 50% QS • Regul
Slide 17: Richard Pryce, Interim Group Chief Executive Officer
Richard Pryce Interim Group Chief Executive Officer
Slide 18: Strategic priorities
Targeted and disciplined growth Portfolio optimisation and improved capital allocation Enhanced customer connectivity Technology and operating model modernisation Culture accelerator 17 QBE Insurance Group
Slide 19: Questions and answers
Questions and answers
Slide 20: Basis of presentation
1. All figures are in US$ 2. Combined operating ratios (COR) exclude the impact of changes in risk-free rates used to discount net outstanding claims 3. Premium growth rates are quoted on a constant currency basis 4. Premium rate change excludes North America Crop and/or Australian compulsory third
Slide 21: 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 30 June 2021. be no assurance that actual outcomes will not differ materially from these statements. You are cautioned not
Slide 22: Appendices
Appendices
Slide 23: QBE is an international general insurance and reinsurance group
QBE is an international general insurance and reinsurance group, with substantial operations in North America, Europe and Australia. QBE also operates its captive reinsurer in Bermuda. QBE is listed on the Australian Securities Exchange, headquartered in Sydney, Australia and lead regulated by APRA
Slide 24: Currency split of investments and premium
1H20 1H21 $M % $M % US dollar 8,756 36 8,909 32 Australian dollar 6,179 25 7,604 27 Sterling 3,849 16 4,836 17 Euro 3,169 13 3,738 14 Canadian dollar 1,235 5 1,426 5 New Zealand dollar 367 2 458 2 Hong Kong dollar 360 1 376 1 Singapore dollar 171 1 192 1 Other 346 1 325 1 Total 24,432 100 27,864 100
Slide 25: Corn and Soybean price increases driving MPCI
Corn Soy 70% ~$200M $1,912M Corn +20% 60% ~$400M +16% Soybean +33% 50% +31% $1,296M Feb20 “Base” 40% MPCI premiums are 30% largely driven by +48% growth commodity prices in 20% Spring (Feb avg) 10% - -10% 1H20 Commodity prices Organic growth 1H21 Feb20 May20 Aug20 Nov20 Feb21 May21 • Corn and Soybea
Slide 26: Regulatory capital (APRA PCA)
31 DEC 30 JUN 2020 2021 Ordinary share capital and reserves 7,606 7,954 CET1 > Common Equity 60% of PCA Tier 1 Capital Total Tier 1 > Net surplus relating to insurance liabilities 1,194 1,342 80% of PCA Additional Tier 1 Regulatory adjustments to Common Equity Tier 1 Capital (3,125) (3,123) Capital
Slide 27: Balance sheet and shareholders' funds
31 DEC 2020 30 JUN 2021 • PYD favourable $71M (1H20 $120M adverse); positive development in North America Investments and cash 27,735 27,864 • Risk margin largely unchanged (1H20 $138M increase includes COVID-19 impact) Trade and other receivables 5,760 7,678 • $205M favourable risk-free rate impact
Slide 28: Debt maturity profile and capital instruments
Weighted average time to first call: 3.6yrs 300 6 886 895 AT1 697 453 Tier 2 400 Senior 2022 2023 2024 2025 2026 1H21 Balance Issued instruments Issue date First call date Coupon Maturity date sheet value ($M) Capital Notes Nov-17 May-25 5.250% Perp 393 Equity Additional Tier 1 (AT1) Capital Notes M
Slide 29: Our Sustainability Framework
Our Sustainability Framework helps us drive performance, manage risks and identify opportunities across the areas of sustainability that are most important to our business, customers and stakeholders See the Sustainability section of our website for more information.
Slide 30: Sustainability highlights and commitments
Recognised in the Top 100 of Equileap's 2021 Gender Equality Global Report & Ranking Achieve our ambition to grow our impact investments to $2 billion by 2025. Refer to for progressing our gender equality agenda. Equileap ranks over 3,500 companies the Premiums4Good section of our website for more i