Qbe Insurance Group Limited · ASX:QBE
Qbe Insurance — H1 2022 Earnings Presentation
34 slides from Qbe Insurance's earnings presentation, Aug 11, 2022
Slide 1: QBE Presentation on the 2022 half year 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 11 August 2022 The Manager Market Announcements Office ASX Limited Level 4 Exchange Centre 20 Bridge Str
Slide 2: 2022 Half Year Report
2022 Half Year Report QBE INSURANCE GROUP LIMITED All figures are in US$ unless otherwise stated. This presentation should be read together with the basis of presentation information detailed on page 23
Slide 3: Andrew Horton, Group Chief Executive Officer
Andrew Horton Group Chief Executive Officer
Slide 4: Strategic priorities
Strategic priorities To be the most consistent and innovative risk partner Portfolio Sustainable Bring the enterprise Modernise Our Our optimisation growth together our business people culture • Actively manage for • Harness the depth • Leverage expertise • Complete the • Reward and • Strengthen ali
Slide 5: Strategic priorities: Progress and focus
Strategic priorities: Progress and focus Increased emphasis on consistency of returns, Enterprise level discussions driving a focussed growth implemented a more consistent framework for assessing agenda to optimise Group portfolio mix volatility Commenced a global net-zero transition analysis and Po
Slide 6: Our evolving sustainability strategy
Our evolving sustainability strategy Sustainability is essential to QBE’s ability to deliver our strategic priorities. We are continuing to embed our Sustainability Framework across the business while responding to evolving regulatory and industry trends During the first half of 2022, we have been r
Slide 7: Performance update
Performance update Performance Rate and growth Investments Balance sheet Statutory COR (incl RFR) 82.5% Group-wide renewal rate 1H22 net investment return of Regulatory capital at 1.77x Adjusted COR 92.9% increases averaged 8.1% 0.1% ex-RFR Ex-cat claims ratio 58.4% Continued gross written premium F
Slide 8: Gross written premium
Gross written premium Constant currency growth of 18% Growth ex rate 13% 6% 19% $11,609M 8% $10,203M 18% growth 1H21 FX North America International Australia Pacific 1H22 North America International Australia Pacific Premium growth • GWP momentum continues with Group growth of 18%, or 13% excluding
Slide 9: Premium momentum
Premium momentum Continued group-wide premium rate increases +8.1% • Compound premium rate increases continue across each division 9.7% 9.7% 8.1% • Rate increases moderating in lines where rate adequacy has 10.6% 10.0% 8.9% 9.4% improved 7.9% 8.2% • Ex-rate growth driven by Crop, QBE Re and Continen
Slide 10: Inder Singh, Group Chief Financial Officer
Inder Singh Group Chief Financial Officer
Slide 11: Results snapshot
Results snapshot Key result highlights HY21 HY22 Gross written premium $M 10,203 11,609 • Strong constant currency GWP growth +18% (13% ex Crop) • Constant currency NEP growth of +15% (16% ex Crop) Net earned premium $M 6,571 7,232 • Underwriting profit of $512M, excludes: Net claims ratio (ex risk-
Slide 12: Group performance
Group performance GWP Premium growth • Improved result underpinned by continued positive operating leverage and lower 18.5% catastrophe costs $11,609M • Increased inflation assumptions impacting both current and prior year claims, with PYD 18% from 1H21 also impacted by recent UK business interrupti
Slide 13: Claims inflation
Claims inflation Translation and current observations • CPI and wage inflation are not perfectly correlated to claims inflation across the majority of QBE’s portfolio • Higher CPI inflation most immediately impacting short tail property classes, where rate is generally responding • Key QBE casualty
Slide 14: North America
North America Combined operating ratio GWP • GWP growth of 24%, or 8% excluding Crop. Market conditions remain 103.8% supportive for further targeted growth, with a focus on Commercial middle- $4,701M 14.8 100.9% 11.6 95.6% 11.9 market (Retail) 15.4 13.1 24% from 1H21 11.5 • Progressed initiatives t
Slide 15: International
International Combined operating ratio GWP 92.8% 91.0% • GWP growth of 19%, with ex-rate growth of 11.6% driven by growth in QBE Re 89.1% and Continental European $4,391M 13.9 18.1 13.4 11.6 17.2 • COR deterioration driven by Russia/Ukraine and PYD which was impacted by 17.9 19% from 1H21 recent UK
Slide 16: Australia Pacific
Australia Pacific Combined operating ratio GWP • GWP growth of 6%, with 0.5% ex-rate growth impacted by a notable reduction in $2,516M 95.3% 14.0 91.0% 13.6 90.0% 13.1 • LMI new business Premium rate increases averaged 9.1%, up from 7.7% in the prior period. Rate 6% from 1H21 15.2 14.3 13.8 increase
Slide 17: Investment portfolio performance
Investment portfolio performance Half year Investment portfolio 1H22 investment return $M return % Fixed income running yield Credit Spread Contribution FI yield (ex risk-free rate) 214 0.8 Weighted Average RFR 2.49% $26.7B Credit spreads MTM (208) (0.8) 2.02% Risk assets (9) (0.4) 1.86% 1.52% Expen
Slide 18: Balance sheet and capital management
Balance sheet and capital management APRA capital Borrowings Adjusted cash return on equity Debt to total capital target range: 15 – 30% $3.2B $3.1B 1.77x $3.0B 1.75x 10.3% $2.8B $2.8B 4.3% FY21 1H22 FY18 FY19 FY20 FY21 1H22 FY21 1H22 • Regulatory capital at the top end of our 1.6x- Debt to • Return
Slide 19: Andrew Horton, Group Chief Executive Officer
Andrew Horton Group Chief Executive Officer
Slide 20: North America business update
North America business update Strategy and value drivers Business overview NEP mix Specialised capabilities Crop GWP ~$3.3bn | NEP ~$1.3bn 9% Other Winning customer value proposition underpinned by solution oriented technical 13% expertise. Product expertise augmented by modernised workflows. 7% Mar
Slide 21: North America Business update
North America Business update Crop Commercial GWP GWP CAGR 22% COR GWP GWP CAGR 11% COR 110% ~$3.3bn 94% ~$1.5bn 18-22 18-22 FY22 18-22 18-22 FY22 • Vision to “be the leader of risk management solutions for the American Farmer.” Property programs GWP FY22: ~$700M COR 18-22: 113% • Organic growth thr
Slide 22: Outlook
Outlook • Premium rate increases expected to continue, albeit at GWP FY22 constant currency GWP growth expected at around 10% moderating levels • Market conditions remain conducive to organic growth Combined Consistent low to mid 90s COR through-cycle • Strategy remains focussed on building a platfo
Slide 23: Questions and answers
Questions and answers
Slide 24: Important information
Important information Basis of presentation (unless otherwise stated) 9. APRA PCA calculations at 30 June 2022 are indicative. Prior period calculation 1. All figures are in US dollars has been updated to be consistent with APRA returns finalised subsequent to 2. Combined operating ratios (COR) and
Slide 25: 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 30 June 2022. be no assurance that actual outcomes will not differ materially from these statements. You are cau
Slide 26: Appendices
Appendices
Slide 27: Key metrics summary
Key metrics summary Group North America International Australia Pacific HY20 HY21 HY22 HY20 HY21 HY22 HY20 HY21 HY22 HY20 HY21 HY22 Gross written premium $M 8,041 10,203 11,609 2,892 3,776 4,701 3,339 3,899 4,391 1,829 2,545 2,516 Net earned premium (ex Crop & LMI) $M 5,132 5,934 6,573 1,190 1,333 1
Slide 28: Key metrics summary
Key metrics summary Underwriting result 1H21 1H22 Investment result 1H21 1H22 Statutory Underwriting result $M 642 1,191 Fixed income $M 25,879 23,759 Risk assets $M 1,985 2,990 Adjustments – Aust PPR & E&S LPT $M - (125) Total cash and investments – closing $M 27,864 26,749 Adjusted underwriting re
Slide 29: Key metrics summary
Key metrics summary 1H21 1H22 Net profit (loss) after tax $M 441 151 GWP by currency 1H21 $M % 1H22 $M % Amortisation and impairment of intangibles after tax $M 26 30 US dollar 5,126 50 6,576 57 Write-off of deferred tax assets $M - - Australian dollar 2,365 23 2,352 20 Write-off of capitalised IT a
Slide 30: APRA regulatory capital
APRA regulatory capital APRA PCA calculation ($M) 31 DEC 30 JUN APRA Tiers of Capital Requirement 2021 2022 Ordinary share capital and reserves 7,996 7,627 CET1 > Common Equity 60% of PCA Tier 1 Capital Total Tier 1 > Net surplus relating to insurance liabilities 1,251 1,400 80% of PCA Additional Ti
Slide 31: Balance sheet and ratings
Balance sheet and ratings Summary balance sheet ($M) Reserving 31 DEC 2021 30 JUN 2022 • PYD unfavourable $68M (1H21 $71M favourable) excludes $5M of favourable PYD in North America and International matched by premium Investments and cash 28,967 26,749 • Risk margin strengthening $38M Trade and oth
Slide 32: Capital markets issuance profile
Capital markets issuance profile QBE has access to A$MTN, EMTN and US144A capital markets Date to first call ($M) Weighted average time to first call: 3.3yrs 300 886 866 AT1 6 699 484 Tier 2 400 Senior 2023 2024 2025 2026 2027 2028 Balance Issued Nominal value Issue date Currency First call date Cou
Slide 33: Our sustainability commitments include:
Our sustainability commitments include: Foster an orderly and inclusive Enable a sustainable and resilient Partner for growth through innovative, transition to a net-zero economy workforce sustainable and impactful solutions • Use 100% renewable electricity for QBE’s • Achieve 40% of women in leader
Slide 34: Enabling a more resilient future
Evabling a move vesilient future ® QBE