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UPDATE 2-Australia's QBE unveils $767 mln share buyback as outlook improves
February 27, 2017 / 1:50 AM / 10 months ago

UPDATE 2-Australia's QBE unveils $767 mln share buyback as outlook improves

* QBE cash profit rises 1 pct, beats estimates

* Insurer unveils A$1 bln buyback plan

* Pricing outlook improving: CEO (Recasts, adds share price reaction, CEO and analyst comment)

By Jamie Freed

SYDNEY, Feb 27 (Reuters) - Australia’s No. 1 insurer by premium income, QBE Insurance Group Ltd, on Monday said global insurance pricing appeared to have bottomed as it announced plans to buy back up to A$1 billion ($767 million) of shares over the next three years.

The insurer, which generates almost three-quarters of its premiums abroad, posted a better-than-expected 1 percent rise in full-year cash profit as it lifted prices in Australia and New Zealand and better managed claims.

Global insurance premiums had fallen over the past few years, with increased competition driving down prices and lowering QBE’s returns.

However, QBE Chief Executive John Neal told analysts prices were expected to be broadly flat this year in most markets, and higher in Australia as rivals responded to higher claims costs and lower investment returns.

“For the first time in a long while we are showing some modest growth in the top line,” he said in reference to a 2 percent rise in gross written premiums to $14.1 billion adjusted for currency changes, the first increase since 2010.

QBE shares rose as much as 8 percent to the highest level in 15 months in a relatively flat market.

“At long last QBE has delivered a strong result after several years of disappointment,” Morningstar analyst David Ellis said.

Cash profit after tax increased to $898 million in the 12 months to Dec. 31 compared with $893 million a year ago, beating a $769 million forecast of 13 analysts polled by Thomson Reuters I/B/E/S. Adjusted for currency changes, cash profit was 12 percent higher than a year ago.

Under Neal’s leadership, QBE has been taking steps to boost earnings and reinstate investor confidence after years of underperformance. Those efforts include cutting costs, putting in place a comprehensive re-insurance plan, changing key management teams and selling non-core or underperforming businesses.

Signalling its commitment to good governance, the company said Neal’s short-term bonus had been cut by 20 percent, or A$552,000, due to “recent personal decisions” which were not consistent with the board’s expectations.

Neal said he had not disclosed a personal relationship to the QBE board immediately as required by the company’s code of conduct. He declined to elaborate.

QBE lifted its final dividend by 10 percent to A$0.33 a share, 50 percent franked.

$1 = 1.3031 Australian dollars Reporting by Jamie Freed; Editing by Stephen Coates

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