QBE Insurance Group Ltd (ASX: QBE) shares are outperforming the market on Tuesday, up 0.12% to $21.36.
By comparison, the S&P/ASX 200 Index (ASX: XJO) is up 0.061% and the S&P/ASX 200 Financials Index (ASX: XFJ) is down 0.27%.
Many Australians are talking about how much insurance premiums have increased during the past three years of elevated inflation.
Does this mean investors should consider buying ASX 200 insurance shares like QBE to cash in on potentially higher insurance profits?
Top broker Macquarie just undertook a review of 18 global insurance companies to assess their performance against QBE shares.
Let's see what Macquarie has to say.
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How does Macquarie rate QBE shares?
Macquarie has an outperform rating on QBE shares with a 12-month share price target of $23.
This is a small reduction from the $23.20 target Macquarie gave the ASX 200 financial share in February following its 1H FY25 results.
Macquarie said it reviewed the 1Q FY25 results of 18 offshore insurance companies "as a read-through for QBE".
Global comparisons are relevant to QBE because it operates in Australia, Asia, Europe, and America.
Macquarie said global insurance premiums in 1Q FY25 were similar to 4Q FY24, with weakness in Europe and strength in the US.
The broker said:
Given confidence in the North America turnaround story and flattening forward curves in the US, we maintain our Outperform rating.
QBE is due to provide its 1Q FY25 update on Friday.
In terms of valuation, the broker found that QBE shares are trading at a 10.6% two-year forward price-to-earnings (P/E) ratio premium to international peers.
Looking ahead, Macquarie expects QBE shares to deliver adjusted diluted earnings per share (EPS) of 77.3 cents per share in 1H FY25.
This would be a decline from 93.1 cents per share in 2H FY24, but only slightly down on the 79.9 cents per share delivered in 1H FY24.
Macquarie expects full-year FY25 EPS of 161.8 cents per QBE share, down from 173.1 cents per share in FY24.
The broker is bullish about FY26.
It predicts full-year EPS of 192.5 cents per share, followed by 196.6 cents per share in FY27.
What about dividends?
Macquarie expects QBE shares to pay 70 cents per share, partially franked, for full-year FY25.
That's down from the 87 cents per share that QBE paid in FY24.
The broker predicts dividends to rise to 86 cents per share in FY26 and 88 cents per share in FY27.
