Why QBE Insurance (ASX:QBE) reported hefty full year loss

  • February 19, 2021 08:42 AM AEDT
  • Ashish
    Ashish
    Financial Journalist Ashish
    145 Posts

    Ashish is a Financial Journalist with an experience of nearly 9 years in the field of economy, stock market and foreign affairs. He has also spent a few years in the corporate sector. A mechanical engineer with post-graduation in marketing and operat...

Why QBE Insurance (ASX:QBE) reported hefty full year loss

Summary

  • QBE Insurance Group Ltd (ASX:QBE) posted dismal FY20 results, having incurred a hefty statutory net loss after tax.
  • The adjusted net cash loss after tax stood at A$863 million, against A$733 million in the corresponding period of last year.  
  • The premium rate momentum in Australia Pacific recovered in the fourth quarter as coronavirus pandemic-related pricing relief initiatives ended.

QBE Insurance Group Ltd (ASX:QBE) on Friday announced a statutory net loss after tax in 2020 amid a significant fall in investment income, impairment of goodwill and deferred tax-assets in North America. What further hurt the insurer were the charges related to rationalisation of legacy IT platforms and real estate footprint. QBE reported a statutory net loss after tax of A$1.517 million in 2020, against A$550 million in the year-ago period.

Image Source: © Cmmeraydave | Megapixl.com

The adjusted net cash loss after tax stood at A$863 million, against A$733 million in the corresponding period of last year.  

Premium rates

Group-wide premium renewal rate increased at averaged 9.8 per cent, against 6.3 per cent in 2019. The premium rate momentum in Australia Pacific recovered in the fourth quarter as coronavirus pandemic-related pricing relief initiatives ended. The Group-wide renewal rate recorded an average increase of 11.3 per cent during the second half of 2020 and 12.6 per cent in the fourth quarter of Q20.

Image Source: © Guyerwood | Megapixl.com

Management commentary

Commenting on the earnings update, Interim QBE Group CEO, Richard Pryce, said the company plans to improve the positioning of the underlying business this year. Pryce said that his primary focus would be the performance improvement and taking full advantage of current favourable market conditions. The company would maximise premium rate increases while driving targeted growth in portfolios and regions offering the most profitable new business opportunities, he said.

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Stock performance

On Thursday, 18 February 2021, shares of QBE Insurance closed at A$8.72, down 0.040 points, or 0.46 per cent, against the previous closing on Wednesday, 17 February 2021. The stock is up nearly 2 per cent so far this year. The stock is down just over 19 per cent in the last six months.


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