The QBE Insurance Group Ltd (ASX: QBE) share price will be one to watch on Friday.

That’s because the insurance giant has just released its first-quarter update.

QBE share price on watch following Q1 update

All eyes will be on the QBE share price this morning after the company revealed that it has started FY 2023 positively.

According to the release, the company recorded an 11% increase in gross written premiums for the three months.

This would have been even stronger had it not been for currency headwinds. On a constant currency basis, QBE delivered gross written premium growth of 14% over the prior corresponding period.

Management advised that group-wide renewal rate increases averaged 10% for the period, supported by a re-acceleration across property classes, and higher rate increases for QBE Re.

Ex-rate growth of 9%, or 5% excluding Crop, exceeded expectations despite the impact of planned program terminations in North America, and a reduction in growth across certain Financial lines segments.

Positively, organic growth in Crop continued, and management currently estimates that Crop gross written premium will be ~US$4.0 billion in FY 2023, with a net earned premium of ~US$1.4 billion.

One negative is that catastrophe activity has remained elevated through the beginning of 2023. This is underscored by Cyclone Gabrielle and the North Island flooding events in New Zealand, alongside a series of storms in North America and Australia.

As of the end of April, the net cost of catastrophe claims is ~US$480 million, which compares to QBE’s catastrophe allowance of US$535 million for the half. It’s going to be tight!

Investment performance

Something that could support the QBE share price today is the company’s investment performance. QBE delivered a strong investment result for the quarter, underpinned by supportive interest rates.

The first-quarter exit core fixed income running yield improved to 4.2%. This is up from the FY 2022 exit running yield of 4.1%.

Outlook

A final thing that could boost the QBE share price today is the company’s outlook.

Management revealed that its strong start to the year for premium growth, alongside its expectation that premium rate increases will remain supportive, means that it now expects FY 2023 group constant currency gross written premium growth of ~10%. This is up from its previous guidance for mid-to-high single digits growth.

In addition, it also revealed that it expects its group combined operating ratio to come in at ~94.5%. In case you’re not familiar with this metric, anything below 100% means an underwriting profit.

The post QBE share price on watch following strong Q1 update appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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