QBE Insurance Group Ltd (ASX: QBE) shares have handily outperformed the benchmark over the past year.
Shares in the S&P/ASX 200 Index (ASX: XJO) insurance giant closed yesterday trading for $23.44. In early afternoon trade on Wednesday, shares are changing hands for $22.79, down 2.8%.
Despite today's dip, QBE shares remain up 34.1% over 12 months. That's more than three times the 11.0% one-year gains posted by the ASX 200.
Atop those share price gains, QBE has also delivered investors some handy passive income.
The insurance company paid out a 24 cents per share interim dividend on 20 September and a 63 cents per share final dividend on 11 April. Both were franked at 20%.
With a full-year dividend payout of 87 cents per share, QBE trades on a partly franked trailing dividend yield of 3.8%.
But after such a strong year, are QBE shares still a good buy?
QBE shares: Buy, hold, or sell?
In a research report released yesterday, the analysts at Macquarie Group Ltd (ASX: MQG) expressed concerns over the looming impact of catastrophes on QBE shares.
"We believe QBE could miss on 1H25 catastrophes given recent floods in Northern NSW in May '25 (MRE $575m vs $549m allowance)," the broker said.
Macquarie also cited valuation concerns relating to the insurer's forecast price-to-earnings (P/E) ratio.
The analysts noted, "QBE is trading at a 15.7% premium to weighted international peers on a two-year forward PE compared with a 3.1% three-year average premium."
QBE shares closed up 3.5% when the company released its first-quarter update on 9 May. Investors bid up the ASX 200 stock after QBE reported 7% year-on-year gross written premium (GWP) growth for the quarter, or 8% on a constant currency (CC) basis.
"Strong premium growth has continued as market conditions generally remain supportive, while underwriting performance has remained resilient in light of a challenging quarter for catastrophes," QBE CEO Andrew Horton said on the day.
The company forecast GWP growth in the mid‑single digits for FY 2025.
Macquarie said its FY 2025 expectations for QBE are:
GWP growth (CC) of +5.7% compares with mid-single digit guidance (CC) and is buoyed by positive feedback on UK volume growth with the major "trackers" for example Aon's "Aon Client Treaty".
Other than this, GWP movements include: #1) ongoing US Middle Market exits; #2) exit of Westwood; and #3) exit from Vanuatu; offset by; #4) new underwriting arrangement for Personal and Commercial Motor with Youi from July '25; and #5) underwriting 20% of Home policies for the Sure Underwriting Agency from Aug '25.
Connecting the dots
Connecting the dots, Macquarie concluded, "Given current multiples as we start peak catastrophe season, we downgrade the stock from outperform to neutral."
The broker has a 12-month target price of $23.00 on QBE shares. That's around 1% above current levels. And it doesn't include those two upcoming dividends.
