UBS anticipates a more subdued August reporting season for Australian insurers and diversified financials following a volatile period in February. According to UBS analyst Kieren Chidgey, general insurers, including QBE, IAG, and Suncorp, are expected to deliver solid results, potentially alleviating market concerns regarding slowing insurance premium growth and margin pressures. QBE, a multinational insurance company, is projected to demonstrate robust premium growth. Insurance Australia Group (IAG) is predicted to benefit from reinsurance profit commissions.
Suncorp, a financial services and insurance provider, may announce a share buyback of $500 million. Insurance brokers Steadfast and AUB are also under scrutiny. Looking ahead to FY26, UBS favours Steadfast due to its reduced exposure to softening markets. Private health insurers are poised to report strong net margins for the second half, driven by premium increases implemented in April and a moderation in claims inflation earlier in the year.
Medibank is considered better positioned to surpass expectations, although NIB may offer greater long-term value. Diversified financials face limited earnings risks for FY25; however, the outlook for FY26 is mixed. UBS has identified potential cost pressures for the Australian Securities Exchange (ASX), margin headwinds for Computershare, and uneven property settlements for PEXA.
Despite these challenges, Challenger and PEXA UK are highlighted as medium-term outperformers. Investors will be watching closely to see if these predictions materialize during the upcoming reporting season.
