QBE Insurance Group Ltd (ASX: QBE) shares could be a top buy right now.
That's the view of analysts at Goldman Sachs, which believe the insurance giant's shares could offer big returns over the next 12 months.
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What is Goldman saying about QBE?
Goldman has been looking over the quarterly update of industry peer Chubb Ltd (NYSE: CB) and was pleased with what it saw.
The broker highlights the following from Chubb's update:
Ex CATs, the current accident year COR was 79% which improved by 1.8% on pcp – driven by a 2.2% improvement in the loss ratio and a 0.4% increase in the expense ratio – positive read for QBE. […] Chubb comments on rate and strength of loss reserves read positively for QBE. […] Chubb's confidence in book growth (pricing / volume) as well as margin improvement into FY24 – is a positive read for QBE.
Buy rating reaffirmed on QBE shares
According to the note, the broker has reaffirmed its buy rating and $18.52 price target on QBE's shares.
Based on the current QBE share price of $16.02, this implies potential upside of 15.6% for investors over the next 12 months.
In addition, the broker is forecasting a 59 US cents per share dividend in FY 2024. This equates to a very attractive 5.6% dividend yield.
Goldman commented:
We are Buy rated on QBE because 1) QBE has the strongest exposure to the commercial rate cycle. 2) QBE's achieved rate increases continue to be very strong. 3) QBE is also growing volumes: QBE is currently getting strong top line growth on a constant currency basis ex rate increases. 4) North America on a pathway to improved profitability. 5) Valuation not demanding.
