QBE Insurance Group’s FY20 statutory loss of –US$1.5bn was in-line with the company’s December market update. FY20 underlying gross written premium (GWP) growth was up 10% on pcp and included 4% real volume growth.
Regarding guidance, management has indicated its exit combined operating ratio (COR) was 95% and expects margin expansion in FY21. A further efficiency program will be undertaken to help reduce the expense ratio to 13% by 2023.
Add rating and target is reduced to $10.08 from $10.37, as Morgans lowers FY21-22 EPS forecast by -8% and -1%, mainly reflecting lower investment income assumptions.
Target price is $10.08.Current Price is $8.99. Difference: $1.09 – (brackets indicate current price is over target). If QBE meets the Morgans target it will return approximately 11% (excluding dividends, fees and charges – negative figures indicate an expected loss).