QBE Insurance Group Ltd (ASX: QBE) shares have been under pressure this month.
Month to date, the insurance giant's shares are down almost 10%.
This has been driven by the release of its half year results.
But has this created a buying opportunity? Let's see what analysts at Macquarie Group Ltd (ASX: MQG) are saying about this blue chip.
What is the broker saying?
Macquarie was relatively pleased with the company's performance during the first half, highlighting that its gross written premium (GWP) was stronger than expected. It said:
QBE beat on GWP growth and the Group CoR. Despite this, investors were not impressed as we head into "risk-off" mode in the 2H. Stripping out the reserve release (100bps), catastrophe beat (80bps) and non-core loss implies an Underlying CoR closer to ~94.0%. Capital again featured in discussions, but with a 1.81x PCA post-dividend we expect management to continue prioritising growth over capital returns.
The broker also points out that it was surprised by premium rate softness. It adds:
Property lines and Lloyd's portfolios were weak, consistent with commentary from international peers. MRE view: the severity of premium rate softness in 2Q25 even caught us by surprise. We must remember rate remains adequate to support growth.
Macquarie spoke about it capital position, which is slightly ahead of target. But there could be a reason for this. It said:
PCA [Prescribed Capital Amount] post-dividend is 1.81x vs. the 1.6x to 1.8x target. QBE reviews excess capital on an annual basis and compares it with the top of its target range implying only ~1bps excess. • MRE view: We wonder if QBE remains in the running for the CBA and ING LMI portfolios, which are capital intensive.
Should you buy QBE shares?
Macquarie is sitting on the fence with this one and feels that investors should keep their powder dry for the time being.
According to the note, in response to QBE's results, the broker has retained its neutral rating on QBE's shares with a slightly improved price target of $23.30.
Based on its current share price of $21.00, this implies potential upside of 11% over the next 12 months.
In addition, it is forecasting a 4.4% dividend yield, which boosts the total potential beyond 15%.
Commenting on its recommendation, the broker said:
Neutral: Current valuations (FX adjusted) are in-line with global peers. Heading into the North American catastrophe season, we retain our cautious stance.
Earnings changes: FY25E: +15% reflecting higher investment income and lower reinsurance costs; and -2% to +3% thereafter reflecting various modelling tweaks. Valuation: 12-month price target at A$23.30 (from A$23.00) based on a DCF methodology. Catalyst: 3Q25 trading update on 27 Nov '25.
