Reporting Season

QBE first-half profits tank but outlook leveraged to rising interest rates

Thu 11 Aug 22, 3:16pm (AEST)
Insurance - home insurance concept - little house and old key
Source: iStock

Key Points

  • The significant increase in bond yields has slashed insurer profits including QBE and Suncorp
  • QBE expects investment yields to sit around 2.8% by year end, up from 0.68% in December 2021
  • Dividends fell -18% to reflect the first-half profit drop

QBE Insurance (ASX: QBE) is leveraged to the rising interest rate environment, expecting investment yields to more than quadruple compared to last year and guiding to gross written premium growth of 10% for the full-year 2022.

Results at a glance:




Change %

Gross written premium (US$m)




Net earned premium (US$m)




Combined operating ratio (%)



-40 bps

Net profit (US$m)




Dividend per share (A cents)




Source: QBE | Table: Market Index

Profits down but rosy outlook

Profits took a massive hit due to an outsized -US$840m investment loss compared to a US$58m return a year ago. The abrupt decline reflected unrealised losses due to the significant increase in bond yields in the last 12 months.

The net profit figure was well-below Bloomberg estimates of US$203m but in-line with Morgans estimates of US$105.6m.

Still, QBE expects a finish the year on a strong note, guiding to gross written premium growth around 10% and a full-year investment yield of around 2.8% compared to 0.68% at the end of 2021.

"QBE has been a play of rising interest rates, with the added tailwind of a global insurance hardening cycle," commented Aequitas Investment Partners in a note on Thursday, highlighting the "strong gross written premium growth, excellent underwriting outcomes, and the big one, the quadrupling in exit run rate for the investment portfolio.

Profitability, which is measured by the Group's combined operating ratio, is forecast to be circa 94% for the calendar year, up from 92.9% in the first-half of 2021.

Dividends inched down to 9 cents to reflect the profit decline. QBE shares will go ex-dividend on Thursday, 18 August.

QBE share price chart
QBE Insurance share price chart


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Written By

Kerry Sun

Content Strategist

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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