Inside QBE’s billion dollar profit, dividend and return on equity at decade highs

This interview was filmed 13 August, 2025

QBE (ASX: QBE) delivered another robust set of numbers for the first-half of 2025, with net profit up 28% to just shy of $1 billion and its interim dividend the highest since 2012.

These strong results come against a challenging backdrop. Industry estimates suggest this was the most expensive first half for insurers in more than a decade, while premium rate increases decelerated to 2.1% compared to 6.3% a year ago and 10.2% in the first-half of 2023.

Despite these headwinds potentially overshadowing the earnings strength, CFO Inder Singh remains confident about QBE's positioning. He says the business is well-prepared for the upcoming North American catastrophe season and is generating an ROE of 19.2% – the highest in more than a decade.

In our discussion, we explore capital management priorities, the trajectory of premium rate increases, investment portfolio positioning amid shifting bond yields, and the practical ways AI is being deployed across the business. It's a candid look at how QBE is navigating a complex global environment while maintaining strong growth and profitability.

Watch the interview above for the full experience, or read a summary below. 

INTERVIEW SUMMARY

Broad-based growth and strong returns

QBE posted an 8% year-on-year lift in gross written premium, driven by growth in the UK, the Lloyd’s market, and the US. First-half profit approached $1 billion – up 30% on the prior period – with equal contributions from investment and underwriting results. 

“Within the underwriting result, each of our divisions… all contributed to that result,” CFO Inder Singh said. 

The 19% return on equity underscored the group’s strong operational performance across its diversified global footprint.

Managing catastrophe exposure

Industry data reveals the first half of 2025 was the most expensive for insurers in over a decade. Despite this challenging environment, QBE's catastrophe costs came in at $479 million, comfortably within their $549 million allowance. Singh attributed this outperformance to "a lot of hard work… in better understanding the risk, making sure we've got the right balance, making sure we're getting the right pricing."

The group’s catastrophe allowance is set at the 80th centile, with QBE beating its allowance in each of the past three years. He noted that industry modelling “is still catching up a little bit,” making conservative risk settings critical.

Margins, risks, and the second half

The combined operating ratio was 92.8% for the half, with full-year guidance at 92.5% reaffirmed. Singh cited a “dynamic” risk environment, with two key catalysts for the second-half: The North Atlantic hurricane season in Q3 and the US crop insurance business, which is now under refreshed leadership. 

“We’ve reset the portfolio … and we are feeling pretty good heading into Q3,” he said. 

While geopolitical tensions, trade tariffs, conflict, and climate trends remain on the radar, Singh stressed that “our portfolio is in a good place” to handle volatility.

Capital deployment and pricing trends

With growth running at 8% and ROE at 19%, Singh sees the best use of capital as reinvestment into the business: “Every $100… we really should be deploying back into the business to the extent we can get these growth opportunities.” 

The current dividend payout ratio is 30%, with buybacks or higher payouts possible if conditions change. On pricing, premium rate increases slowed to 2.1% in the half, down from 6.3% a year earlier and over 10% in 2023. 

Singh said this was expected in some highly profitable segments where the market “is giving back some rate… and that’s okay,” adding that across 80% of the business, rate versus inflation remains “in good health.”

Investment positioning and AI potential

QBE’s $34 billion investment portfolio is heavily weighted to fixed income, with Singh noting that much of the expected moderation in interest rates is “already priced into bond prices.” Structural inflation drivers like deglobalisation and supply chain shifts suggest inflation will be “a little bit more persistent,” but even if rates fall, “the company has still got very strong returns and earnings profile going forward.”

On AI, Singh described “immense” potential, particularly for processing unstructured data in underwriting and claims. Deployments include streamlining broker submissions in the North American cyber business and similar projects in accident and health. The challenge will be to “accelerate, scale and embed” AI use in a regulated environment while ensuring “the models actually work… that they’re giving us the right outcomes… and that we’ve got the human in the loop.”