In calendar year 2015 the share price of global insurance giant QBE Insurance Group Ltd (ASX: QBE) has gained 12.5% which is significantly better than the minus 3% return from the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO).
Despite this recent outperformance, it doesn't negate the fact that longer-term QBE shareholders, over the past five and ten-year periods have endured a 23% and 34% share price fall respectively, compared with a gain of roughly 14% in the index over both time periods.
It's certainly been an unpleasant ride for QBE's long-suffering shareholders but there could be some light at the end of the tunnel…
With the company operating on a December year end, investors will soon get the opportunity to review the insurer's full year results.
While there are advantages in waiting until you have all the latest information at hand, the downside is that by this time the market has already factored in all expectations. For this reason it can make sense to position your portfolio prior to a result announcement.
With that strategy in mind, here are three key takeaways from the recent UBS Australasian Investment Conference Presentation which included a third quarter trading update:
- QBE is a top 20 global property and casualty insurer with a specialty and commercial focus (minimal personal lines); operations in 38 territories and leading industry positions in Australia and London/UK markets.
- For the half year ending June 30, QBE's underwriting profit improved by 64% to US$244 million; insurance profit improved by 15% to US$530 million and cash profit after tax improved 13% to US$416 million.
- Management reaffirmed full year margin targets with the combined operating ratio towards the top end of 94% to 95% and the insurance profit margin towards the low end of the 8.5% and 10% guidance range.
Further upside ahead?
While three does appear to be some reasons for hope, accurately assessing QBE is a very difficult proposition given the multitude of moving parts within QBE's global operations.
For investors wishing to gain exposure to the insurance sector a safer way to invest could be via insurance brokers such as Steadfast Group Ltd (ASX: SDF) and Austbrokers Holdings Limited (ASX:AUB).
