This morning QBE Insurance Group Ltd (ASX: QBE) reported its full-year results for the period ending December 31 2018. Below is a summary of the results with comparisons to the 2017 prior year .
- Cash profit of $715m, up from $262m loss
- Net profit after tax of $390m including a $567m profit from continuing operations, compared to $1,249m loss in prior year
- Gross written premium (GWP) of $13,657m, up 3%
- Reported combined operating ratio of 95.8%
- Final dividend of 28 cents per share, compared to 4 cents per share 2018
- Full year dividends totalling 50 cents per share, compared to 26 cents per share
- Completed $333m share buyback to take total shareholder returns in 2018 to more than $1 billion
- Cash profit return on equity of 8%
- Debt to equity ratio reduced to 38%, from 40.8%
The QBE share price is up 3.7% to $11.90 in response to the news as investors welcome it meeting guidance and exhibiting genuine signs that its simplification (emerging market asset sales, etc) and cost out program could finally be helping it to turn a corner.
For example the group is continuing to scale back its complex Asian operations where selling and correctly pricing insurance products has proven tough going in markets riskier and more complex than Australia and New Zealand.
As a result of the Asian pullback its gross premiums written in the region fell 15% over the year, but overall the group still managed to grow GWP 3% as it focuses on the better risk-adjusted return markets of ANZ, Europe and North America.
Other large financial services businesses to have been seduced by the Asian growth story only to find the region too hot to handle include Insurance Australia Group Ltd (ASX: IAG) and Australia & New Zealand Banking Group (ASX: ANZ).
Based on today' share price QBE offers a trailing yield of 4.2% (plus partial franking credits) while trading on around 16x trailing adjusted earnings.
It is targeting a combined operating ratio of 94.5%-96.5% on a net investment return of 3%-3.5% for 2019.
