In a recent announcement to the ASX, QBE Insurance Group (ASX:QBE) discussed its financial results for the 2014 year. After years of underperformance and the threat of a profit downgrade, QBE Insurance has lifted its financials in a major way. Cash profit after tax was up 8 per cent to $821m. Net profit after income tax rose significantly, from a loss of $254m in 2013 to a gain of $742m in 2014. Earnings per share diluted also increased and came out of the red significantly, up 78.6c to 55.8c per share. The dividend per share was increased from 32c to 37c per share, a 16 per cent increase. After selling its underwriting agency to Steadfast Group for $290m and improving its balance sheet, QBE has beaten projections and lifted its share price.
In the announcement to the ASX, QBE chairman Marty Becker discussed raising the company’s dividend payout. “Given our focus to return to more consistent and predictable earnings, I am sure many of you may have questions regarding the dividend policy and any potential changes as we return to more stable earnings,” he said. The company is current paying a dividend payout ratio of up to 50 per cent of cash profits, but many analysts are projecting that this will be increased further. Mr. Becker confirmed the analyst’s sentiments in the announcement to the ASX on Thursday. “With such forecasts and a much stronger balance sheet, we can understand why some shareholders have now questioned the current payout ratio policy of 'up to 50 per cent' of cash profits, and whether this should be revisited.”
Shares of QBE are up 56c, or 4.38 per cent, at $13.35 around 1:40pm on Thursday. Although the share price of the company has only advanced 4.38 per cent in the last 12 months, it has made gains of 19.18 per cent so far this year.
Author: Imran Valibhoy
Apr 02, 2015
Since Joining the firm in 2006, Imran has worked on a range of M&A and Capital Market transactions in the natural resources, mining as well as projects in the renewable energy sector. Prior to joining Wise-owl, Imran worked at Euroz Securities in Perth, aiding in the advisory and valuation of companies in the mining and industrial sectors in Australia. Imran has a Masters in Banking & Finance from City University's Class Business School in London and a Bacheloor degree in Commerce from UWA.