Global insurer QBE Insurance Group Ltd (ASX: QBE) has seen its shares rise 3.4% by lunchtime on Tuesday after the company reported a higher interim profit.
For the half year ending 30 June, QBE has reported:
- Adjusted gross written premiums up 3% to US$8.6 billion
- Adjusted net earned premium down 11% to US$6.1 billion
- Cash profit after tax up 13% to US$471 million
- Adjusted underwriting profit up 6% to US$401 million
- Adjusted combined operating ratio (COR) of 93.4%
- Adjusted insurance profit margin of 10%
- Debt to equity ratio remained stable at 32.8%
- A fully franked interim dividend of 20 cents per share (up 33%) has been declared. The stock will trade ex-dividend on 26 August and the dividend will be paid on 2 October.
Full Year Outlook
Management has also today provided a revised outlook statement for the full year which sees a slight decrease in certain operating metrics due to changes in foreign exchange rates and adjustments for the disposal of the M&LS business:
- Gross written premium of US$15.2 billion to US$15.6 billion, down from US$15.5 billion to US$15.9 billion
- Net earned premium of US$12.3 billion to US$12.7 billion, down from US$12.6 billion to US$13 billion
- COR of 94% to 95%
- Insurance profit margin of 8.5% to 10%
Buy, Hold or Sell?
Perhaps the most exciting point to note for shareholders from today's announcement was the board's decision to raise the pay-out ratio from 50% of cash profits to 65%. This change will occur in 2016.
For investors, QBE remains a complex business to analyse and ultimately value. Despite having already lifted 32% in the past 12 months there would appear to still be the potential for further upside given the strategic turnaround under way across a range of under-performing QBE businesses. The group will also benefit from rising interest rates in the USA.
