QBE: Positive Earnings Momentum Amidst Valuation Concerns Despite Market Skepticism on Future Growth

by Ella Walker

Analyst

1 December 2025

Fund managers highlight QBE Insurance's turnaround, improved North American performance, and risks from premium rate cycles and claims volatility.

Key Takeaway

Fund manager sentiment towards QBE Insurance Group Ltd is cautiously optimistic, reflecting a belief in the company's turnaround after years of challenges. A key takeaway is the significant improvement in underwriting profits and consistent earnings growth, while a key risk remains the potential volatility in premium pricing and claims management as the market environment evolves.

QBE Insurance Group Ltd: A Turning Point in Performance and Valuation

Recent Performance Highlights

QBE Insurance Group Ltd (ASX:QBE) has demonstrated significant progress in its operational performance over the past year, particularly in its North American division. As of March 2024, the company reported earnings doubling compared to the previous year, with cash NPAT exceeding consensus estimates by 15-20%. This robust performance underscores the effectiveness of management's strategic initiatives aimed at improving profitability and operational efficiency.

Market Dynamics and Investor Sentiment

Investors are closely monitoring several key factors influencing QBE's trajectory. The company's share price has experienced notable fluctuations, rallying from approximately $12.07 in August 2022 to around $18.04 by March 2024. This increase reflects a broader positive sentiment among institutional investors, such as L1 Capital and Cooper Investors, who have expressed confidence in QBE's turnaround strategy. The market is increasingly recognizing the potential for improved margins and returns on equity as the company exits underperforming business lines and focuses on core operations.

Strategic Exits and Operational Improvements

In June 2024, QBE announced the closure of its North American middle-market business, a decision viewed favorably by analysts. This strategic exit is expected to enhance the company’s financial profile and reduce exposure to loss-making segments. Fund managers have noted that this move, alongside improved underwriting practices and a disciplined approach to capital management, positions QBE for sustainable growth in a competitive landscape.

Investment Income and Underwriting Profitability

QBE's investment income has also seen a substantial uplift, driven by rising bond yields. The company’s investment book, valued at approximately $30 billion, has benefited from a favorable interest rate environment, contributing significantly to overall profitability. Analysts highlight that QBE's underwriting profits increased by 30% in FY23, supported by premium rate growth and effective risk management strategies.

Valuation and Future Outlook

Despite the positive developments, QBE continues to trade at a valuation discount compared to its peers, with a current P/E ratio of around 10x for FY24, versus a historical average of approximately 13x. This discrepancy indicates that the market has yet to fully recognize the structural improvements in underwriting quality and operational efficiency. Analysts suggest that as QBE continues to execute its strategic initiatives, there is potential for a re-rating of its stock, making it an attractive proposition for long-term investors.

Conclusion

In conclusion, QBE Insurance Group Ltd stands at a pivotal juncture, with substantial improvements in operational performance and a clear path towards enhanced profitability. Institutional investors are encouraged to keep a close watch on the company's progress, particularly in relation to its North American operations and overall market conditions. For further commentary and insights on QBE, please visit this link.