The QBE Insurance Group Ltd (ASX: QBE) share price has pushed higher on Thursday following the release of its annual general meeting presentation.
In late morning trade the insurance giant's shares are up 0.5% to $12.82.
What was in QBE's AGM presentation?
The meeting started with the chairman of QBE, Marty Becker, reminding those in attendance of the company's return to form in FY 2018.
Thanks to improved market conditions and a more normal catastrophe year, combined with a forensic approach to performance management, QBE delivered an improved financial performance and better returns for shareholders.
The company finished the period with a combined operating ratio of 95.7%, which was a significant improvement year on year.
Together with modest growth in both gross written and net earned premium, the company was able to deliver a cash profit after tax of $715 million. This compares extremely favourably to the $262 million cash loss recorded in FY 2017.
This led to the insurer reporting a cash return on equity of 8%, up from a 1.4% loss on equity a year earlier.
The company also went through a major transformation during the year. QBE exited portfolios, regions, and countries where it lacked scale or was unable to achieve an acceptable rate of return.
Management believes this more simplified structure and its focus on achieving cost reductions, has positioned the company well for the future.
What about FY 2019?
According to its CEO, Pat Regan, QBE has had a positive start to the new financial year.
He said: "In 2019, we are targeting a combined operating ratio of 94.5 – 96.5% and a net investment return of 3-3.5% for the year. I am pleased to say that at the end of the first quarter, we remain well on track against both of these measures."
Before adding: "Premium rate momentum has continued into 2019 with average premium rates up by around 4% (ex CTP) in the first quarter, consistent with our experience in the first quarter of 2018. We have experienced positive rate in all of our Divisions due to a combination of market conditions and our disciplined approach to pricing and risk selection."
And despite recent flooding in Townsville, severe weather and hailstorms in New South Wales, and bushfires in Tasmania and Victoria, overall catastrophe experience in the first quarter was broadly in-line with expectations.
And finally, Mr Regan revealed that costs reductions have been going well. He advised that QBE has made good progress on plans to reduce costs by around $40 million this year, as part of its target of $130 million of net reductions over three years.
Should you invest?
I've been very impressed with the turnaround at QBE and feel FY 2019 will be another strong year. In light of this, I'm not overly surprised to see its shares trading close to their 52-week highs.
And whilst I would choose it ahead of industry peers Insurance Australia Group Ltd (ASX: IAG) and Suncorp Group Ltd (ASX: SUN), I'm not a big fan of insurance companies due to their largely inconsistent performances. But if you're purely in search of dividends they could arguably be very good options.
