QBE Renaissance Continues




Global insurer QBE has boosted full dividends for its December, 2021 financial year to more than seven times the small 4 cents paid for Covid-hit 2020.

In a release to the ASX on Friday morning QBE said the final of 19 cents will take the full year payment to 30 cents after net profit staged a dramatic turnaround.

But the generosity is only apparent and QBE is starting a new, more restrictive payout policy for coming years.

Citing what it called “a material turnaround in underwriting profitability” QBE reported a statutory net profit after tax of $US750, compared with a net loss after tax of $US1.517 billion.

Adjusted net cash profit after tax was $US805 million for the year.

"Insurance trading conditions were favourable throughout 2021, supporting our focus on driving further improvement in profitability while also achieving targeted growth.

“Statutory gross written premium grew by 22% to $US18.457 billion reflecting the strong premium rate environment as well as improved customer retention and new business growth across all regions,” directors explained.

QBE Group CEO, Andrew Horton, said: “I am pleased with the strong premium growth and significant uplift in underwriting margin. The strong result was achieved despite the heightened level of catastrophes during the year which remain a major issue for the industry.”

“In targeting ongoing premium growth, we will remain vigilant in pricing adequately for an appropriate risk-adjusted return on capital, with claims inflation, catastrophe costs and overall portfolio volatility key areas of ongoing focus.”

But while lifting dividend for the year, the company has gone all parsimonious for future years.

"While recognising QBE’s improving profitability and earnings resilience, the Board has revised the Group’s dividend policy to 40-60% of annual adjusted cash profit from “up to 65% of adjusted cash profit” previously.

The company said that was being done "to retain capital to support our growth ambitions and facilitate the gradual normalisation of our investment asset risk profile.”

The 30 cents a share to be paid for 2021 was a payout ratio of 41%, so the company is being relatively tightfisted here despite the strong recovery seen in 2021.

In other words, rather relying on borrowing or using cash generated in the business to finance expansion, the company will now take money that would have been paid to shareholders under the old policy.