QBE Insurance Group Ltd (ASX: QBE) shares are on the move on Thursday.
In morning trade, the insurance giant's shares are down 6% to $18.62.
Why are QBE shares sinking?
Investors have been selling the company's shares this morning after it released its third quarter update.
According to the release, QBE's gross written premium growth in the nine months to 30 September was 6% compared to the prior corresponding period.
Management notes that ex-rate growth of 5% remained in line with first half trends, underpinned by sustained momentum across International and North America.
QBE's gross written premium growth included a drag of around ~US$250 million from the run-off of non-core lines in North America. Excluding this, ex‑rate growth was 7%, or 6% on further excluding Crop.
Premium rate growth softens
The company advised that its premium rate increases in the nine months to 30 September were ~1.5%. This growth rate is modestly below the first half result, driven predominately by commercial property lines.
Premium rate increases for the Group excluding commercial property and Lloyd's segments remain in line with first half growth rates at ~4%. It also notes that rate adequacy remains supportive across the portfolio heading into the year ahead.
Claims update
Management believes it is well-placed to achieve its claims guidance for the full year. It said:
We are confident in achieving our outlook for the year. In the aggregate, Group claims are expected to track broadly to plan, as we focus on delivering consistent and resilient performance. Following meaningful first half global catastrophe losses, catastrophe experience in the second half has been more benign to date.
The net cost of catastrophe claims in the ten months to October is anticipated at around ~$700 million, which is below the allowance for this same period of ~$950 million. QBE's allowance for the months of November and December totals ~$200 million. On the current trajectory catastrophe costs are likely to be comfortably below allowance for FY25, marking the third consecutive year of favourability in this regard.
It also highlights that based on available data, the FY 2025 Crop current accident year combined operating ratio is expected to be slightly better than plan.
This strong outcome reflects the impact of recent actions to reset its Crop strategy, with a focus on achieving better portfolio balance, and remediating the private product portfolio.
Outlook
QBE has reiterated its FY 2025 guidance. It expects constant currency gross written premium growth in the mid‑single digits and a group combined operating ratio of ~92.5%.
Looking to FY 2026, management is feeling positive about its outlook. It said:
With our portfolio in better balance, alongside improved breadth and visibility of earnings, planning for FY26 is well progressed. Profitability remains attractive across the majority of lines and the year ahead appears constructive for further growth, and a continuation of strong returns.
QBE currently expects a group combined operating ratio of ~92.5% again in FY 2026.
