Qbe Insurance Group Limited · ASX:QBE
Qbe Insurance — H1 2023 Earnings Presentation
23 slides from Qbe Insurance's earnings presentation, 2023
Slide 1: 2023 Half Year Result
2023 Half Year Result QBE INSURANCE GROUP LIMITED Enabling a move resilient future z |
Slide 2: Important information and forward-looking statements
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 30 June from our re
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Slide 4: Growth remains a highlight
Growth remains a highlight North America strategic execution 13% GWP growth supported by 10.2% premium Enterprise wide focus on NA strategy and rate increase and ex-rate growth of 7% ambition for improved returns Catastrophe costs impact underwriting result Completion of major reserve transaction CO
Slide 5: Strategic and operational progress
Deepening volatility focus, ongoing Progressed a number of global growth refinement of property CAT exposure opportunities Structured collaboration, alignment around Continue to prosecute potential for new enterprise operating principles standardisation, sharing or common sourcing Voice surveys rema
Slide 6: Sustainability and people highlights
• Commenced formal engagement with priority commercial Foster an orderly and inclusive customers and large suppliers transition to a net-zero economy • Green Insurer of the Year, 4th year in a row • Gender equality: top 100 globally (Equileap) and maintained in Enable a sustainable and Bloomberg’s G
Slide 7: 1H23 key metrics
Average rate increase Cat claims 8.7% Total investment income of Capital above S&P ‘AA’ 35% interim payout ratio +10.2% $662M level Includes 1.2% impact from Ex-rate growth +7% 4.9% exit running yield Debt to total capital 24.7% 10% franked reserve transaction
Slide 8: Organic growth continues across key focus areas, partially offset by exposure reduction in property
Organic growth continues across key focus areas, partially offset by exposure reduction in property lines 18% 1H23 18% 6% North America 6% 3% 5% 10% Crop NA (ex Crop) (1%) (7%) 6% (1)% $12,803M International 18% 10% 16% $11,576M 13% growth Australia Pacific 18% 9% 13% Group 13% 7% 12% 1H22 FX North
Slide 9: Further organic growth across focus areas
• Catastrophes from secondary Further organic growth across AUS/UK SME perils continue to challenge Deepen core and Middle market, Lloyd’s, Crop, NA industry returns franchises accident & health • Focus on challenging return assumptions, enhancing models and tools, and reducing standalone property ~
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Slide 11: Strong investment returns served to mitigate the headwind from catastrophes
Strong investment returns served to mitigate the headwind from current and prior year catastrophes Restated 1H23 1H22 Gross written premium $M 11,576 12,803 98.8 Upfront 1.2 cost of LPT Net insurance revenue $M 7,328 7,977 Net claims ratio % 65.5 69.0 94.9 61.6 97.6 60.6 2.4 Net commission ratio % 1
Slide 12: Notable changes to key metrics under AASB 17 management reporting framework
Notable changes to key metrics under AASB 17 management reporting framework Net insurance Quota share income now recorded in reinsurance income. In 1H23 the $98M net upfront cost of the revenue reserve transaction is recorded in reinsurance expenses Includes strain from the establishment of current
Slide 13: Premium growth, retention and combined operating ratio
+12% 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 $7,977M COR 94.9 98.8 10.4% 8.1% 10.9% $7,328M Expenses 11.7 11.7 9.9% 11.0% 9.1% 6.7% 10.6% 11.5% 29% 30% 73% 73% 74% 74% 68% 66% 18.1 Commission 17.7 7.0% 5.5% 9.4% 41% 39% Cat 6.2 8.7 7.1% 6.9% 6.3% 4.9% 9.2% 9.5% 85% 88% 87% 87% 84% 85% 31% 30% 9.1% 9.9% 11.8%
Slide 14: Divisional combined operating ratios
106.9 COR (%) 95.9 9.2 COR (%) 95.4 93.2 98.9 COR (%) 92.9 Expenses 9.8 Expenses 12.3 13.5 20.5 12.1 Expenses 12.8 Commission 20.7 Commission 15.6 3.9 16.8 17.9 Commission 15.7 Cat 2.8 9.3 PYD 0.8 6.0 6.2 Cat 9.6 11.8 Cat Ex-cat 66.2 64.0 60.0 61.8 Ex-cat 59.5 57.9 Ex-cat (3.6) (0.9) (5.2) (3.8) PYD
Slide 15: Duration economically matched at 1.8 years
Credit spread contribution FI yield (ex risk-free rate) 531 2.1 Weighted average RFR 4.9% 4.1% 4.2% Credit spreads MTM 52 0.2 Risk assets 87 2.7 Corporate bonds Short-term money Growth assets Expenses and other (8) (0.0) Government bonds Other fixed income Enhanced FI Dec-22 Mar-23 Jun-23 Net return
Slide 16: Capital position and return on equity
1.79x 1.80x $3.1B $3.0B $3.0B 10.1% $2.8B $2.7B 1.7% FY22 1H23 FY19 FY20 FY21 FY22 1H23 1H22 1H23 • Regulatory capital at the top end of our Debt to • Encouraging resilience and improvement in 1.6x-1.8x target range total 27.5 25.8 24.1 23.7 24.7 ROE despite challenging period for capital underwriti
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Slide 18: Progress on portfolio balance and profitability
Progress on portfolio balance and profitability FY18-22 Avg FY22 FY22 1H23 26% COR1 AASB 1023 AASB 1023 AASB 17 AASB 17 30% 31% 30% 32% Crop Crop 96% 96% 96% 99% 20% 27% 26% 26% 26% Specialty 18% 19% Specialty 98% 96% 96% 94% 19% 23% 29% Commercial 32% 28% 24% 21% 14% Non-core Commercial 106% 94% 96
Slide 19: Drag from non-core lines to moderate meaningfully into FY24
Drag from non-core lines to moderate meaningfully into FY24 Homeowners Commercial Premiums ~($140M) ~($150M) ~($250M) Gross reserves FY20-22 FY22 1H23 Subject to LPTs Average Net reserves • Unprofitable non-core lines further impacted by current and • Approximately half of the net reserves reflect s
Slide 20: FY23 outlook
• Premium rate increases expected to remain supportive • Expected 2023 constant currency GWP growth of ~10% • Market conditions to remain conducive for further targeted organic growth • Consistent low-to-mid 90s COR • COR outlook continues to exclude upfront impact of reserve through-cycle transacti
Slide 21: Questions and answers
Questions and answers
Slide 22: Supplemental financial tables by division
1H22 1H23 1H22 1H23 1H22 1H23 1H22 1H23 1H22 1H23 1H22 1H23 1H22 1H23 1H22 1H23 Gross written premium $M 11,576 12,803 4,708 4,967 4,367 5,072 2,503 2,771 Ex-cat claims $M (4,514) (4,836) (1,436) (1,463) (1,719) (1,897) (1,353) (1,479) Insurance revenue $M 8,942 9,911 3,208 3,508 3,281 3,793 2,448 2
Slide 23: Enabling a more resilient future
Enabling a move resilient future ® QBE