Analyst Note| Nathan Zaia |
QBE Insurance shares have fallen around 8% since reporting first-half results in August, with shares now at a modest 5% premium to our AUD 11 fair value estimate. Still, it’s the best performing insurer in our coverage year to date. QBE shares have risen 33%, while Australia-focused Suncorp is up 9% and Insurance Australia Group down 11%. Insurers face similar challenges globally, such as more costly large peril events, claims inflation, and suppressed returns on investment income. But the hit to short-term earnings from such events has not been even across these names given business mix and different reinsurance programs. In November, we lowered our Suncorp fiscal 2022 earnings by 9% and Insurance Australia Group by 22% due to large hazard events in Australia.