QBE Insurance Group Ltd (ASX: QBE) shares have been sliding in recent months, losing momentum after what began as a strong year for the global insurer.
The finance stock has drifted toward multi-month lows as investors reassess the company's growth outlook and brace for softer earnings ahead.
During Monday afternoon trade, QBE shares were changing hands for $18.97 apiece, a plus of 0.7%.
In the past 6 months, the $29 billion ASX stock has lost almost 20% of its market value. By comparison, the S&P/ASX 200 Financials Index (ASX: XFJ) lost 4.3% in the same period.
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Slowdown premium increases
After rallying earlier in the year, QBE shares reversed course quickly as investors worried that the company's strong first-half performance might not carry through to the end of the financial year.
Investors were rattled after QBE revealed that premium-rate increases had slowed sharply across several key business lines, particularly in commercial property insurance.
Improved underwriting and share buyback
The irony is that the underlying business hasn't collapsed. QBE delivered solid half-year results, boosted by improved underwriting, stronger investment income, and a cleaner, more disciplined portfolio.
It even launched a sizeable on-market share buyback, signalling confidence in its financial footing. However, markets are looking forward, and the softer 2025 third-quarter update overshadowed earlier gains.
QBE's business remains built on global diversification and underwriting discipline. The company operates across multiple regions – North America, Australia and the Pacific – and insurance classes. This gives the insurer a spread of risks and a buffer against volatility in any one market.
Rising natural disasters
Nevertheless, the drawbacks are also evident. The main issue now is the slowing growth of premium rates. Insurers depend on consistent rate increases to safeguard their profit margins against higher claims, inflation, and rising reinsurance expenses.
Slower pricing makes earnings less predictable, particularly in property insurance, where disasters quickly reduce profits. QBE shares are also exposed to global market risks. The company's performance can be affected by rising natural disasters or fluctuations in reinsurance prices.
What do brokers think?
Most analysts see the recent sell-off as overdone, arguing that QBE's balance sheet is strong, its underwriting is improving, and investment returns remain supportive.
Most analysts rate QBE shares as a buy or strong buy, with the average 12-month price target sitting at $22.63. That suggests a 19% upside at the time of writing.
UBS has assigned a buy rating to the ASX share, with a price target of $24.15, indicating a potential 25% rise over the next year.
The broker noted that the outlook for FY26 "continue to track in-line with expectations" despite a softening in the premium rate cycle.
UBS commented:
With FY26E COR [combined operating ratio] guidance of ~92.5%… supporting a ~16% ROE outlook, mid-single digit volume growth ambitions retained, investment yields stabilising and A$450m buyback announced (~1.5% shares), its FY26E earnings outlook remains well underpinned. At a 10x FY26E PE (0.54x ASX200, 18% disc to 5yr avg) we continue to see compelling value and retain a Buy rating.
