QBE profit climbs 5pc, insurer announces $1b share buyback

Monday, 27 Feb 2017 07:30:59 | Michael Janda

The QBE building in Sydney (AAP: Paul Miller, file photo)

Insurer QBE has reported a 23 per cent rise in profit to $US844 million ($1.1 billion) and plans to hand it back to shareholders through a billion-dollar share buyback.

The global insurance giant - which, like much of the industry, has had its ups and downs over recent years - revealed a 4 per cent increase in full-year revenue to $US17.27 billion for 2016.

The company said it benefitted from a rise in return on equity and insurance profit margins, despite a small fall in the value of insurance policies written (down 2 per cent to $14.1 billion).

QBE said cash profit after tax, which is the key determinant of its dividend payments was broadly stable at $898 million, but up 12 per cent on a constant currency basis - as if exchange rates had not moved since last year.

That has allowed the company to announce a share buyback worth up to $1 billion, as well as a 10 per cent increase in its final dividend to 33 cents per share.

However, investors will have to be patient to see the benefit of the buyback, which will take place over three years.

They seem willing to wait, though - QBE shares had risen more than 6 per cent to $13.07 by 10:30am (AEDT).

The buyback is premised on continued earnings growth, which QBE hopes will be assisted by a rise in global interest rates on safe investments, such as government bonds.

The insurer is targeting an investment return of 2.5-3 per cent for 2017.

AustraliaPlus

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QBE profit climbs 5pc, insurer announces $1b share buyback

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