QBE’s Strong H1 Performance Masks Risks from Geopolitical and Climate Uncertainties

Strong Growth Amid Complex Environment

QBE Insurance Group has reported a solid start to 2025, posting a 6% increase in gross written premiums to US$13.82 billion for the half year ended 30 June. This growth was primarily driven by strong organic momentum in North America and International divisions, alongside a fading impact from exited non-core portfolios. Despite ongoing geopolitical tensions and inflationary pressures, QBE’s diversified global footprint has helped it navigate a challenging operating environment.

Improved Underwriting Performance

The group’s combined operating ratio (COR) improved to 92.8% from 93.8% a year earlier, marking one of QBE’s strongest underwriting performances in recent years. This improvement was supported by favourable prior year reserve developments, disciplined risk selection, and lower catastrophe claims costs, which were notably below the allowance despite a record-high level of industry insured losses globally. The North America segment saw a slight COR improvement to 97.2%, while Australia Pacific delivered a standout 86.8%, benefiting from easing claims inflation and contained catastrophe impacts.

Robust Profitability and Capital Position

Net profit after tax rose sharply to US$1.022 billion, up from US$802 million in the prior period, with adjusted net profit reaching US$997 million. This translated to an adjusted return on equity of 19.2%, up from 16.8%, reflecting both underwriting gains and resilient investment income. Total investment income remained steady at US$788 million, supported by a balanced portfolio with 86% in high-quality fixed income and 14% in risk assets. QBE’s balance sheet remains robust, with an indicative APRA Prescribed Capital Amount (PCA) multiple of 1.85x, comfortably within target ranges despite increased borrowings driven by Tier 2 issuance.

Strategic Execution and Modernisation

QBE’s management highlighted ongoing progress against strategic priorities including portfolio optimisation, sustainable growth, and business modernisation. The insurer is actively managing its portfolio mix to reduce volatility and improve consistency, with a focus on profitable growth in core segments such as Accident and Health, Financial lines, and Crop insurance. The recent partnership with Ki, an algorithmic underwriting business, exemplifies QBE’s push towards digital innovation and enhanced customer experience. Modernisation initiatives across regions aim to streamline operations and improve agility, positioning QBE for long-term competitive advantage.

Dividend and Outlook

Reflecting confidence in ongoing performance, QBE declared an interim dividend of 31 Australian cents per share, a significant increase from 24 cents in the prior year, with a payout ratio of 30% of adjusted net profit. The dividend is 25% franked and payable in September 2025. Looking ahead, QBE expects to maintain a combined operating ratio around 92.5% for the full year and achieve mid-single-digit gross written premium growth on a constant currency basis. The company remains vigilant on geopolitical risks, inflation, and climate-related challenges but is optimistic about sustaining profitable growth through disciplined underwriting and capital management.