QBE provided a trading update for the five months to May 24, which identified some of the noisier items; however, the important underlying profitability was not mentioned. QBE is historically very volatile on reporting day, which happens to be tomorrow, with an average earnings surprise of 10%, leading to an average 4.2% move in share price on the day of reporting i.e. not the faint hearted. Margins will be a focus tomorrow and we believe repricing continues to track in excess of loss trends, which drives margin expansion.
- QBE trades at a discount to many of its global peers due to its complexity and “messy” history of results. However, MM believes its 1H24 result will prove an opportunity for the company to continue building a track record of simplification and earnings improvement.
QBE is our preferred pick in the sector, though this will be dependent on tomorrow’s result. Value is emerging under $16.
MM likes QBE into pullbacks
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