Morgans rates QBE as Add

While FY23 overall growth guidance for QBE Insurance was increased to 10% (from mid-to-high single digit), Morgans was disappointed by increased guidance for the combined operating ratio (COR) to 94.5% from 93.5%.

A prior year reserve top-up and higher CAT claims were responsible for the higher COR at the 1Q performance update (released at the AGM), explains the analyst. As a result the target falls to $16.50 from $16.96.

Morgans still sees a clear pathway for improved profitability over the next few years and maintains its Add rating.

Sector: Insurance.

Target price is $16.50.Current Price is $14.61. Difference: $1.89 - (brackets indicate current price is over target). If QBE meets the Morgans target it will return approximately 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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