MENU

The QBE Insurance Group Ltd share price is up 12% this year: Will it go higher in 2016?

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:

  1. 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.
  2. 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.
  3. 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).

Looking for a less complicated stock idea than QBE Insurance? The Motley Fool's top stock for 2015 could be just the ticket! Its a sexy ASX tech company with a stunning track record and plenty of room to run. Discover our analysts' hands-down favourite bet for 2015 in this brand-new FREE report. Simply click here to grab your copy.

Motley Fool contributor Tim McArthur has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.