Many in retirement are travelling comfortably, with three key factors contributing to their happiness – good physical and mental health and enough money to enjoy life.
Perhaps the assumption that markets are still anchored by predictable economic policies needs to be challenged. For the first time since the fall of the Berlin Wall, political volatility – once background noise – is potentially reshaping investment risk at a structural level.
Alfred fails to dampen investor appetite for QBE Insurance
Tropical cyclone Alfred might have been downgraded to an ex-cyclone before it crossed the mainland just north of Brisbane, but it still left a trail of destruction, as figures from the Insurance Council of Australia (ICA) attest.
In its latest release, the ICA said insurers had received more than 22,000 claims from policyholders across southeast Queensland and northern NSW in the wake of Alfred – a figure they expected to rise, especially from the NSW.
In such circumstances, the share prices of publicly listed insurers could be expected to be blown away (excuse the poor pun) as the claims roll in the door.
Yet for QBE Insurance (ASX:QBE), it’s hardly made a dent in a share price that had a one-year peak at $21.89 on March 3, 2025, and closed at $21.07 on Tuesday – only down four per cent. For the year to Tuesday, the share price has appreciated 21 per cent. Quite clearly investors are liking the QBE story – even if Opposition Leader Peter Dutton isn’t.
That’s not surprising. In the 12 months to December 31, 2024, it announced a robust result, delivering a significant improvement in its combined operating ratio and net profit after tax while setting optimistic targets for future growth.
The insurer reported a net profit after tax of $1.78 billion, a substantial increase from $1.36 billion in the previous year. This strong performance translated to an adjusted return on equity of 18.2 per cent, up from 15.8 per cent in 2023, reflecting its strategic focus on portfolio optimisation and sustainable growth.
Group chief executive officer Andrew Horton highlighted the company’s progress in reshaping and de-risking its business, particularly in North America where several strategic initiatives were implemented during the year.
COR below 100% indicates profitable underwriting results, meaning the insurer’s premiums cover its claims and expenses.
Shareholders benefited from the improved performance with QBE declaring a final dividend of 63 cents a share, bringing the full-year dividend to 87 cents, a substantial 40 per cent increase from 62 cents in 2023. This represents a dividend payout ratio of 50 per cent of adjusted net profit after tax.
The company’s combined operating ratio improved to 93.1 per cent from 95.2 per cent in the prior year, demonstrating enhanced underwriting discipline across its portfolio. This improvement came despite significant global catastrophe costs of about $US150 billion ($AU236 billion) for the insurance industry, one of the most elevated years on record.
An insurer’s combined operating ratio measures its underwriting profitability by comparing claims, costs, and expenses to premiums. It is calculated by adding the loss ratio (claims as a percentage of premiums) and the expense ratio (expenses as a percentage of premiums). A combined operating ratio below 100 per cent indicates profitable underwriting results, meaning the insurer’s premiums cover its claims and expenses; above 100 per cent, it indicates unprofitable underwriting results, meaning the insurer’s premiums are not sufficient to cover its claims and expenses.)
QBE’s gross written premium increased by three per cent to $22.4 billion, with organic growth partially offset by the strategic exit of under-performing portfolios in North America and Australia Pacific, as well as lower crop premium due to commodity price pressures. Excluding these factors, the company’s core property and casualty business showed strong momentum, with nine per cent growth.
Total investment income rose to $1.49 billion, representing a return of 4.9 per cent, up from 4.7 per cent in 2023. This performance was supported by strong risk asset returns and elevated interest rates, which the company expects to remain supportive in 2025.
Looking ahead, QBE has provided an optimistic outlook for 2025, forecasting gross written premium growth (on a constant currency basis) in the mid-single digits and a group combined operating ratio of around 92.5 per cent. The company’s balance sheet remains strong with an indicative APRA Prescribed Capital Amount (PCA) multiple of 1.86x, well above its 1.6-1.8x target range.
The shape and health of QBE’s underwriting portfolio has improved materially over recent years, with strong profitability across most business segments. As a result, priorities are becoming more future-focused, with particular excitement about the breadth of opportunities to grow the business over the medium term, in what are expected to remain supportive markets.
The company also made significant progress with its modernisation agenda, achieving several key milestones in Australia-Pacific, including the migration of its primary policy administration platform to the cloud. These initiatives are expected to progressively deliver benefits as QBE transitions to new platforms and embeds new technology.
