Qbe Insurance Group Limited · ASX:QBE
Qbe Insurance — H1 2024 Earnings Presentation
26 slides from Qbe Insurance's earnings presentation, Aug 9, 2024
Slide 1: QBE Presentation on the 2024 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 9 August 2024 The Manager Market Announcements Office ASX Limited Level 4 Exchange Centre 20 Bridge Stre
Slide 2: 2024 Half year result
| Z Bi ® QBE / | Uy O24 Half year result 9 August 2024 7 QBE INSURANCE GROUP LIMITED
Slide 3: the ASX website www.asx.com.au or QBE’s website www.qbe.com. making a decision in relation to
recoveries from our reinsurance panel; no unplanned asset sales and no substantial change in regulation. Should one or more of these assumptions prove incorrect, actual results may differ The information in this presentation provides an overview of the results for the year ended materially from the
Slide 4: 10.2% 98.8% 8.1% 94.9% 16.9 1.80 1.82 10.1 1.77 9.1 9.8 10.1 1.7
10.2% 98.8% 8.1% 94.9% 777 79 24 405 40 14 9 66 6 16.9 1.80 1.82 10.1 1.77 9.1 9.8 10.1 1.7
Slide 5: Strategic update
= Strategic update
Slide 6: Strong financial performance continues
North America strategic execution Strong financial performance continues Closure of middle market raises confidence in Adjusted cash ROE of 16.9% improved performance for North America Growth impacted by Crop and portfolio exits Actions to reduce reserve volatility 2% GWP growth translates to growth
Slide 7: What we achieved in 1H24
What we achieved in 1H24 NA Middle Market exit to refocus strategy. Better alignment of future investment spend On track to reduce third party property to support growth focus areas. GWP by >$300M in FY24 New NA Specialty teams and launch of Enhancement of parental leave policies QCyberProtect, QBE’
Slide 8: Capital above S&P 'AA'
Average rate increase Catastrophe claims Total investment income Capital above S&P ‘AA’ 31% payout ratio +6.7% below allowance of $733M level Ex-rate growth Stable prior year 4.7% exit running yield Debt to total capital 21.4% 20% franked (2%) development
Slide 9: Go-forward business has a well-established track record of performance
Go-forward business has a well-established track record of performance, with attractive growth opportunities Commercial ~$1B Crop ~$1.7B • Property programs • #2 in the US 93% 95% 94% 91% • Workers’ compensation programs • Specialty Casualty 25% • Construction ~310 43% ~250 ~230 Specialty ~$1.3B ~11
Slide 10: Portfolio diversification and balance
88% • Combination of portfolio 82% actions and favourable 74% 68% North America markets has driven greater diversification and balance across the portfolio 44% Commercial International • Breadth of profit 44% contribution now Australia Pacific meaningfully improved following multi-year focus on reme
Slide 11: Higher quality earnings and greater resilience in underwriting
Inclusive of ~$1B of portfolio exits 85 98 • Multi-year agenda focused on improving resilience and consistency 21.7 ~22.5 (82) (82) now clearly translating into improved 20.0 FY19- FY22 FY23 1H24 outcomes 15.5 21 avg • Higher quality earnings profile 942 1,059 underscored by greater breadth of profi
Slide 12: Financial performance
Smt ——— Financial performance
Slide 13: Improvement in profitability underscored by more resilient underwriting result
Improvement in profitability underscored by more resilient underwriting result and strong investment returns 1H23 1H24 Gross written premium $M 12,803 13,051 Net insurance revenue $M 7,977 8,512 Net claims ratio % 69.0 64.2 98.8 60.6 93.8 61.3 2.4 2.4 Net commission ratio % 18.1 17.6 Ex-cat Ex-cat c
Slide 14: Organic growth continues across breadth of opportunities
Organic growth continues across breadth of opportunities, partially offset by exited property lines and Crop or ~5% excluding property exits or ~15% of ~$150M North America (6) (9) (2) excluding non- core exits of 12% NA (ex-Crop) 0 (5) (6) ~$200M (0%) NA (ex-Crop & Exits) 15 8 13 0% International 1
Slide 15: Combined operating ratio and premium retention
+7% 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 $8,512M COR 98.8 93.8 $7,977M 10.9% 10.0% 9.3% Expenses 11.7 26% 12.0 10.6% 11.5% 12.3% 6.7% 10.9% 6.9% 29% 68% 66% 66% 64% 67% 68% Commission 18.1 17.6 9.4% 5.5% 4.8% 41% 45% Cat 8.7 6.2 9.2% 9.5% 6.0% 5.2% 5.1% 4.5% 84% 85% 84% 85% 88% 88% 30% 29% 11.8% 13.2% 9.9%
Slide 16: Divisional combined ratios
COR (%) 106.9 97.5 9.2 COR (%) 93.2 COR (%) 98.9 95.6 Expenses 10.2 89.2 Expenses 12.1 11.4 Expenses 13.5 12.7 Commission 20.5 19.8 15.6 Commission 17.9 Commission 15.4 Cat 9.3 4.8 17.6 Cat 6.2 3.7 Cat 11.8 11.2 Ex-cat 64.0 68.7 Ex-cat 57.9 57.8 Ex-cat 61.8 60.4 PYD 3.9 (3.8) (4.1) (6.0) (0.9) (1.3)
Slide 17: Drag from non-core lines expected to moderate into 2025
Drag from non-core lines expected to moderate into 2025 FY20-22 Avg FY22 FY23 1H24 (~90) Non-core other (~220) (~150) (~35) COR AASB 1023 AASB 17 AASB 17 AASB 17 (~250) (~80) (~125) Crop 95% 96% 98% 92% Middle market (~80) (~230) (~100) Specialty 97% 96% 95% 91% (~300) Commercial (~350) 96% 82% 81%
Slide 18: Loss portfolio transfer reserve transactions
• QBE has entered loss portfolio transfer reserve transactions (LPTs) with RiverStone International and Enstar for reserves totalling $1.6B. The transactions will be effective as of 1 July 2024 and are expected to complete in 4Q24, subject to regulatory approvals • The transactions de-risk all North
Slide 19: Duration 'economically' matched at 2.2 years
FI yield (ex-risk-free rate) 578 2.2 Credit Spread Contribution Weighted Average RFR 4.9% 5.0% Credit spreads MTM 55 0.2 4.6% 4.7% 4.7% 7 Aug 4.2% 4.5% Risk assets 128 3.3 Expenses and other (28) (0.1) Corporate bonds Short-term money Growth assets Net return 733 2.4 Government bonds Other fixed inc
Slide 20: Strong capitalisation, with improved quality of capital
1.73 1.79 1.82 1.77 PCA 16.9% 1.82x 1.09 1.16 1.23 1.22 CET1 0.03x 1.77x ~0.03x ~1.76x 10.1% 25.8 23.7 21.9 21.4 (0.08x) ~(0.04x) FY19-21 FY22 FY23 1H24 Avg 34.9 31.0 28.1 27.3 FY23 2023 1H24 Interim Reserve 1H24 1H23 1H24 final divi- trans- pro dividend dend action forma • Strong capitalisation, wi
Slide 21: Premium rate increases expected to remain supportive
• Premium rate increases expected to remain supportive • FY24 constant currency GWP growth • Markets to remain conducive for further targeted organic growth of ~3% • Portfolio exits to impact GWP by ~$550M • Consistent low-to-mid 90s COR • Underlying business settings continue to improve through-cyc
Slide 22: Appendix
a 2) = D B eq
Slide 23: Divisional financial results
1H23 1H24 1H23 1H24 1H23 1H24 1H23 1H24 1H23 1H24 1H23 1H24 1H23 1H24 1H23 1H24 Gross written premium $M 12,803 13,051 4,967 4,645 5,072 5,708 2,771 2,698 Ex-cat claims $M (4,836) (5,221) (1,463) (1,539) (1,897) (2,196) (1,479) (1,490) Insurance revenue $M 9,911 10,438 3,508 3,331 3,793 4,404 2,600
Slide 24: QBE is an international P&C insurer organised over three divisions
QBE is an international P&C insurer focused on commercial and specialty (re)insurance, organised over three divisions 5% 6% 25% 11% 35% North America 19% Commercial Commercial International 41% Specialty Specialty 11% 46% Australia Pacific Reinsurance Reinsurance 10% Crop & LMI Crop & LMI Consumer C
Slide 25: Updated asset liability management framework
QBE has updated its asset liability management (ALM) framework to manage interest rate risk in regulatory capital RFR RFR RFR RFR -100 bps -100 bps +100 bps +100 bps PCA Core FI Manage Prior ALM New ALM New ALM Prior ALM capital (FV OCI2) interest rate Duration sensitivity (~0.04x) (~0.02x) ~0.02x ~
Slide 26: Enabling a more resilient future
Enabling a move resilient future ® QBE