QBE's conservative portfolio curbs investment risk

Net profit doubled year-on-year to $806m in H1 2024.

Fitch Ratings expects QBE Insurance Group Ltd. and its subsidiaries reserve risk volatility to ease after recent reserve transactions, which reinsured $3.5b of long-tail reserves in its North American and international businesses.

All QBE segments reported underwriting surpluses, including its North American business, which had struggled in previous years.  

QBE's financial improvements were highlighted by a Fitch-calculated combined ratio of 91% in the first half of 2024 (H1 2024), an improvement from 93% in 2023 and 95% in 2022. 

The group's return on equity also rose significantly, reaching 16% in 1H24, up from 14% in 2023 and 7% in 2022. 

Net profit doubled year-on-year to $806m in H1 2024, driven by lower catastrophe costs and stable reserve development.  

The company’s decision to exit its North American middle-market business, announced in June, reflects efforts to refocus on areas with greater market strength. 

Stronger underwriting in Europe and Australia has helped balance weaker performance in North America.  

QBE also benefits from low investment risk, with a conservative portfolio dominated by high-quality fixed-income securities. Fitch recognised the insurer’s financial flexibility, with fixed-charge coverage rising to 9.6x in 2023, up from 4.7x in 2022, supported by improved profitability.