The QBE Insurance Group Ltd (ASX: QBE) share price rocketed to a new 52-week high yesterday. The Aussie insurer is trading at $14.14 per share and is up 17.05% since early December.
But what’s driving the group’s shares higher and can this growth continue in 2020?
Why the QBE share price is at a 52-week high
The group’s shares have climbed higher in the last month or so despite no market-moving news since 18 December.
QBE reported an earnings downgrade after adverse conditions hit its North American Crop insurance business. Despite lowering its combined operating ratio (i.e. insurance underwriting profitability), the QBE share price still climbed higher in December.
That momentum has continued into January 2020 with the group’s market capitalisation swelling to $18.46 billion.
A strong half-year result in August picked the QBE share price back up from a disappointing first half of 2019. QBE posted a 1% increase in gross written premium for $7,637 million as statutory net profit after tax jumped 29% to $463 million.
Is QBE the best ASX insurer right now?
It hasn’t been a great start to 2020 for the ASX insurers. The Insurance Australia Group Ltd (ASX: IAG) share price slumped after reporting weaker earnings due to the recent hailstorms and bushfires.
IAG’s reported insurance margin is expected to land between 14.5% and 16.5%, down from previous guidance of 16% to 18%.
QBE shares have performed well when compared to many of its other insurance peers.
The NIB Holdings Ltd (ASX: NHF) share price is trading near a 52-week low as the private health insurance sector remains under pressure.
That’s also sunk Medibank Private Ltd (ASX: MPL) shares 9.68% after the insurer reported an increase in FY20 claims.
Should I buy QBE shares?
Given the strong half-year results, I think it’s worth watching QBE shares in February.
There’s no doubt the ASX insurance sector is under pressure in the early part of this year. An increase in natural peril claims could be a flash in the pan or an ongoing problem for profitability.
I wouldn’t personally be purchasing shares at a 52-week high but a good full-year result could make it a bargain buy.
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Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Insurance Australia Group Limited. The Motley Fool Australia has recommended NIB Holdings Limited. 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 Scott Phillips.