QBE (ASX:QBE) share price sinks after posting US$1.5bn loss

The QBE Insurance Group Ltd (ASX:QBE) share price is on the move on Friday after announcing a massive US$1.5bn loss for FY 2020…

| More on:
business man turning out empty pockets

Image source: Getty Images

The QBE Insurance Group Ltd (ASX: QBE) share price has come under pressure this morning.

At the time of writing, the insurance giant’s shares are down 1% to $8.63.

This means the QBE share price is now down 42% since this time last year.

Why is the QBE share price trading lower?

The QBE share price has fallen today following the release of its FY 2020 results.

For the 12 months ended 31 December, on a constant currency basis and adjusting for disposals, QBE reported a 10% increase in gross written premiums (GWP) to US$14,643 million.

Management advised that this reflects premium rate momentum, improved premium retention across all divisions, and strong new business growth in North America and International.

However, as it previously warned, this GWP growth could not stop the company from posting an enormous loss in FY 2020. QBE reported a loss after tax of US$1,517 million for the 12 months. This compares to a net profit after tax of US$550 million in FY 2019.

This loss includes a disappointing underwriting result, a significant reduction in investment income, impairment of goodwill and deferred tax assets in North America, and charges related to rationalisation of legacy IT platforms and its real estate footprint.

Also weighing on the QBE share price was its adjusted result. Excluding all the one-offs, on an adjusted basis, QBE’s recorded a net cash loss after tax of US$863 million. This compares to an adjusted net cash profit after tax of US$733 million a year earlier.

Unsurprisingly, given its significant loss, the QBE board has not declared a final dividend for FY 2020. 

Management commentary

QBE’s Interim CEO, Richard Pryce, was disappointed with the company’s performance in FY 2020, but appears positive about the year ahead.

He commented: “While obviously very disappointed with the headline loss, premium momentum accelerated across 2020 and has continued into 2021. Coupled with the improved positioning of the underlying business, we enter this year with confidence and optimism.”

“I look forward to leading the business in 2021; my primary focus remains performance improvement including that the Group takes full advantage of currently favourable market conditions by maximising premium rate increases while driving targeted growth in portfolios and regions offering the most profitable new business opportunities,” Mr Pryce added.


Not even QBE’s outlook for FY 2021 could help drive the QBE share price higher today.

Based on several factors, such as assuming a normal crop result, QBE believes it exited FY 2020 with a combined operating ratio of ~95%. This compares to FY 2020’s actual combined operating ratio of 104.2%. (Anything below 100% is profit, whereas above is a loss.)

In light of this, at this stage, QBE is expecting margin expansion in FY 2021.

Also failing to give the QBE share price a boost today was news that dividend payments are likely to return this year.

The QBE board advised that, subject to global economic conditions not deteriorating materially, it expects to resume dividend payments of up to 65% of adjusted cash profits in FY 2021.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of January 12th 2022

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

Top 10 blank list on chalkboard
Share Market News

Here are the top 10 ASX shares today

Here are your top 10 biggest gainers in the ASX 200 on Wednesday.

Read more »

An old man with wavy white hair folds his arms in a stubborn gesture as he stands defiantly in an outdoor setting.
Best Shares

I’ll never sell this ASX dividend share. Here’s why

Looking for a bottom drawer ASX share? Here's a company I would own forever...

Read more »

Share Gainers

Why did the Dubber share price push 18% higher today?

Dubber shares have bounced from yearly lows.

Read more »

Two workers on site discuss the next stage of this civil engineering job, one points his hands upwards.
Share Gainers

Why did this ASX nickel share surge 23% today?

Investors keep rewarding ASX listed metals and mining companies in 2022.

Read more »

A woman sits at her computer with hand to mouth and a contemplative smile on her face although she is considering or thinking about information she is seeing on the screen.
Growth Shares

Why I think the EML share price is a long-term buy

Here's why I think EML shares are looking very good value for the long haul.

Read more »

a man sits on a rocket propelled office chair and flies high above a city

Aurora Energy Metals share price rockets 35% on ASX debut

This lithium and uranium explorer debuted the ASX in style.

Read more »

Share Fallers

Why Boral, Eagers Automotive, PolyNovo, and Serko shares are dropping

These ASX shares are under pressure on Wednesday...

Read more »

a man with a wry smile is behind ascending piles of coins as he places another coin on top of the tallest stack.
Share Market News

Can ASX 200 banks really see a 15% profit jump if the cash rate hits 1%?

These analysts are predicting big returns for banks in the rising interest rate environment.

Read more »