Wilson's Anna Milne says QBE a hold as profits, return on equity jump

Sprawling insurance group QBE Insurance (ASX: QBE) topped analysts' headline profit forecasts on Friday as it posted strong growth in gross written premium, dividends and profits. 

The group reports on a calendar year basis and told the market it's on track to meet guidance to grow gross written premiums (as a measure of total insurance policies sold) in the mid-single digits in 2025. 

"Ongoing focus and execution against our strategic agenda continues, reflecting our ambition to deliver more profitable performance and sustainable long-term growth," said Chief Executive Andrew Horton.

QBE also told shareholders it expects a combined operating ratio (as a measure of total claims and operating expenses versus earned premiums) of around 92.5% in 2025.

Shares opened down 2.1% to $22.95 on the news as the interim dividend fell fractionally short of the market's expectations, but the stock has still soared 43.6% over the past 12 months as investors cheer its restructuring, strong profit growth, and improved capital allocation.

The group said its adjusted return on equity (ROE) jumped to 19.2% over the first half of 2025, versus 16.8% over the first half of 2024.

Livewire spoke to Anna Milne a deputy portfolio manager at Wilson Asset Management about her views on the result and outlook for the resurgent insurer. 

QBE Insurance (ASX: QBE) FY25 key results

• Gross written premium up 6% to $US13.82 billion (up 0.4% on estimates)
• Combined operating ratio of 92.8% (versus 93.1% estimates)
• Group operating expenses up 12% to $704m
• Adjusted NPAT up 28% to $US997m versus $841.3m ests (18.5% beat)
• Interim dividend up 29% to 31 cents per share vs. 31.9 cents (2.8% miss)
• Catastrophe claims ratio of 5.4%, net cost of catastrophe claims of $US479m vs. catastrophe allowance of $US549m
• Outlook for gross written premium growth in mid-single digits for 2025

For more information and market data on QBE please visit Market Index. 

What was the key takeaway from QBE's result in one sentence?

Impressive headline beat, overshadowed by concerns for the global insurance premium rate cycle.

Were there any surprises in this result that you think investors need to be aware of?

There is a lot to like in this result. They are on track for their full year, catastrophes are below budget, they are extremely well capitalised and are generating a ROE above 19%. 

However, there are some concerns around the premium rate cycle and ability for top line growth into next year.

As at time of writing, a -6% share price move is a big reaction for a result that will not see any changes to earnings estimates and has valuation support. QBE, given its complexities, often trades on sentiment and can swing further than fundamentals would suggest, which creates opportunities from time to time

Would you buy, hold or sell QBE off the back of this result?

Hold. QBE is in our portfolio and has been for a couple of years.

Are there any risks investors need to be aware of?

As always with QBE – the key swing factors from June to December are hurricane season and US crop performance.

While the headline focus is usually on premium rates, what’s more important is rate adequacy, being the outlook for rate in the context of their claims experience. QBE is confident claims are in a good position, and they have the prior year reserving to buffer downside risks.

From 1 to 5, where 1 is cheap and 5 is expensive, how much value are you seeing on the ASX today?

5. The market is expensive, but with a cash rate easing cycle underway, barring inflation shocks we expect this momentum can continue.