The QBE Insurance Group Ltd (ASX: QBE) share price has been performing solidly this year. A change in sentiment towards the insurance company has followed the insurer’s return to profitability.
At the end of Tuesday’s session, shares in QBE finished at $12.38, representing an increase of 1.23%. Meanwhile, the company’s share price has surged 45% since the beginning of the year.
The more than impressive performance has not solely been led by retail investors either. A number of analysts are also bullish on the business since it reported a robust first-half result in August. While more severe weather events have been a concern for investors of insurance companies, one expert remains optimistic on QBE and its shares in 2022.
Are QBE shares an opportunity?
In a letter, Ausbil’s executive chair, chief investment officer, and head of equities Paul Xiradis outlined his expectations for shares next year. A year that Xiradis expects will see COVID-19 brought under control by the country’s health measures.
Positively, the fund manager believes the year ahead will include strong earnings growth for some cyclical businesses. While some pundits are proclaiming that ASX shares are expensive, Xiradis and the Ausbil Management team see value in some areas of the market based on forward earnings per share (EPS) growth.
For example, general insurance is one of a few sectors that Ausbil believes is offering strong potential EPS growth for FY22 relative to value. QBE Insurance was named as an opportunity within the sector inside the letter.
Describing the potential tailwind for QBE shares, Xiradis wrote:
We are entering an environment where general insurers will benefit from stronger margins and returns, with companies like QBE of interest in this space.
Shaking off large claims
While investors are getting excited about the QBE share price, natural catastrophe claims have been stacking up across the insurance industry.
In an interview with The Australian, QBE CEO Andrew Horton said:
The insurance industry is there to support the challenge of risk but there’s a limit to what the insurance industry can do. The challenge for the insurance industry is to work with governments.
Furthermore, QBE is yet to advise shareholders of the latest impact from Australia’s stretch of wild weather in October. Whereas, Suncorp Group Ltd (ASX: SUN) has outlined an estimated $225 million to $250 million worth of claims.
Despite this, ASX-listed QBE shares are up nearly 5% since these erratic weather events.