Backed by its updates on recent trading performance and reiterating full year outlook, one of the top growth stocks QBE has made a record high it earlier made in 2010.
QBE Insurance Group Limited (ASX: QBE)
QBE Insurance Group Limited (ASX: QBE) released its third-quarter update for 2024, confirming its full-year expectations. For the nine months to September 30, 2024, the company reported a 3% increase in gross written premiums (GWP) compared to the previous year, in both reported and constant currency terms.
Considered among the best growth stocks to buy now, its growth was largely driven by a 5.9% increase in renewal premium rates across the group. However, the company experienced a 2% decline in growth due to the impact of non-core portfolio exits. Excluding these exits, GWP grew by 5%, or 9% when excluding the Crop segment. Group-wide renewal premiums continued to grow at or above inflation in most classes.
In terms of underwriting performance, QBE has been affected by the high level of global catastrophe claims, especially from the active 2024 hurricane season. The industry's insured losses for the year are expected to surpass $100 billion. However, QBE's catastrophe claims experience has been in line with expectations, with the net cost of claims for the second half of 2024 totaling around $425 million, compared to a catastrophe allowance of $671 million. Notably, QBE's exposure to hurricanes Milton and Helene was lower than in previous years due to recent portfolio adjustments and exits. Despite these global events, QBE’s North America division is performing in line with expectations.
The Crop segment, which is important for QBE’s North America business, is projected to have a combined operating ratio of approximately 94% for FY24, helped by favorable prior year developments. While yields from the crop harvest are not expected to be as strong as initially projected, they remain strong enough to offset the impact of lower commodity prices. The segment’s performance is expected to meet full-year expectations, despite some challenges in the agricultural markets.
QBE's investment performance in the third quarter of 2024 was favourable, supported by strong results from both fixed income and risk assets. The company’s core fixed income yield remained supportive at around 4.4%, and risk asset returns were strong, driven by enhanced fixed income and equities. As of the third quarter, total funds under management (FUM) reached $33.4 billion, up from $30.5 billion at mid-year, with risk assets comprising about 13% of the portfolio. The company also successfully completed a $1.6 billion reserve transaction in October, which will reduce claims reserves and FUM in the fourth quarter. QBE remains on track to meet its full-year guidance, with expected GWP growth of around 3% and a combined operating ratio of approximately 93.5%.
Source: Company’s Report
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