QBE’s Rising Debt and Moderate Rate Increases Pose Future Challenges
QBE Insurance Group reported a robust half-year performance with a 27% jump in net profit and a 6% rise in gross written premium, underpinned by strong underwriting and investment returns. The insurer declared a higher interim dividend, signaling confidence in its growth trajectory.
- 27% increase in net profit to US$1.022 billion
- 6% growth in gross written premium to US$13.82 billion
- Combined operating ratio improved to 92.8%
- Investment income nearly doubled to US$929 million
- Interim dividend raised to 31 Australian cents, 25% franked
Strong Financial Momentum
QBE Insurance Group Limited has delivered a compelling half-year financial performance for the six months ended 30 June 2025, reporting a 27% increase in net profit after tax to US$1.022 billion. This growth was supported by a 6% rise in gross written premium, which reached US$13.82 billion, reflecting strong organic expansion particularly in International and North American markets.
The combined operating ratio, a key measure of underwriting profitability, improved to 92.8% from 93.8% in the prior period. This improvement was driven by favourable prior year reserve developments and catastrophe costs that remained below the allowance, despite significant natural disasters such as the record California wildfires and multiple storm and flood events across Australia and North America.
Underwriting and Investment Highlights
Underwriting performance showed resilience with a net claims ratio decreasing to 62.8%, aided by positive reserve releases and a lower catastrophe claims burden. The insurer’s strategic portfolio exits and disciplined risk selection contributed to a lower strain from non-core lines.
Investment income surged to US$929 million, nearly doubling from the previous period, buoyed by supportive interest rates and strong returns from risk assets including developed market equities and alternatives. The core fixed income portfolio yielded a solid 2.0%, while risk assets returned 4.6%, underscoring effective asset allocation and market positioning.
Capital Management and Dividend Policy
QBE’s balance sheet remains robust with an APRA Prescribed Capital Amount multiple of 1.85x, comfortably within its target range. Borrowings increased to US$3.68 billion, primarily due to Tier 2 debt issuance replacing Additional Tier 1 capital notes, reflecting disciplined capital management and strategic funding decisions.
The Board declared an interim dividend of 31 Australian cents per share, up from 24 cents in the prior year, with a 25% franking rate. This payout reflects 30% of adjusted net profit and aligns with QBE’s dividend policy aimed at balancing sustainable growth with shareholder returns. The dividend is payable on 26 September 2025, with participation options through Dividend Reinvestment and Bonus Share Plans.
Outlook and Strategic Focus
Looking ahead, QBE remains confident in its medium-term strategy execution, expecting to sustain mid-single digit organic volume growth. The company continues to invest in modernisation and customer-centric initiatives to enhance operational efficiency and market competitiveness. While premium rate increases have moderated in some portfolios, rate adequacy remains supportive, and underwriting discipline continues to be a cornerstone of performance.
Despite ongoing geopolitical and economic uncertainties, QBE’s diversified portfolio and strong market positions provide a solid foundation for continued profitability and capital strength.
Bottom Line?
QBE’s half-year results reinforce its position as a disciplined, growth-oriented insurer, but investors will watch closely how it navigates evolving market and inflationary pressures.
Questions in the middle?
- How will QBE manage inflation and claims costs amid moderating premium rate increases?
- What impact will geopolitical tensions have on longer-tail insurance lines and reserving assumptions?
- How will ongoing investments in modernisation translate into operational efficiencies and growth?
