Executive Summary:

In this paper , it has been served that the nature of operation , services offered by Insurance
companies existing in the market is understandable. This can be made possible due to the
thorough analysis of a globally applauded leading insurance company , QBE Insurance Group
Limited.

The principal activity of this company is to provide general , transportation , health and specialty
insurance and reinsurance solutions. The company originated in Australia and now has reached
to several other continents worldwide

Keeping this company as the focus, this paper has been seeking answers regarding the
company’s product offerings , strategic position , it’s social responsibilities. In order to obtain
insight about its challenges and opportunities analysis has been done which resulted in sorting
out it’s position economically and in correspondence to the current world of insurance markets.

This paper has also been constructed to gain insights about the company’s financial performance
over the years. This helped to identify how an insurance company handles its financial factors as
assets, liabilities and how it differs in its performance from the other financial institutions.

As an insurance company it’s natural to have many competitors in the market. Henceforth, the
paper has also addressed this situation. Horizontal analysis with one of the potential competitor
of the given company according to available data has been done. Thus the paper has achieved in
measuring the competitiveness.

The paper has aimed to summarize the overall performance of the QBE Insurance Group Limited
by giving a collaborative result to it’s qualitative and quantitative factors as well. The limitations
of the paper have been briefly discussed.The overall culmination of the paper suggest that the
company although is strong and well defined was falling behind by the end of last year due to its
capital crisis and other deficits. However , it is hopeful because the company has been
overcoming it’s challenges and has been regaining prior financial position by the June quarter of
2018.

Therefore , this paper has attempted to reflect the company’s operation ,financial performance
nature , while also analyzing it’s challenges , opportunities and competitiveness.
CONTENTS
1. Introduction…………………………………………………………………………….....4
1.1.1 Background…………………………………………………………………….4
1.1.2 Operation…….……..……………………………………………………….....4
1.1.3 Management…………………………………………………………………...4
1.1.4 Subsidiaries………………………………………………………………….4-5
1.1.5 Objectives……………………………………………………………………...5
2. Literature Review………………………………………………………………………...5
3. Methodology………………………………………………………………....................6
4. Product
Offerings………………………………………………………………………………...6-7
5. Strategic Positioning……………………………………………………………………...8
5.1 SWOT analysis…………………………………………………………………...9
5.2 PESTEL analysis………………………………………………………..............10
6. CSR
Activities………………………………………………………………………………....11
7. Financial Statement Analysis………………………………………………………...12-15
8. Competitive Analysis………………………………………………………………...15-16
9. Conclusion……………………………………………………………………………….16
9.1 Summary…………………………………………………………………………16
9.2 Limitation……………………………………………………………….............16
9.3 Recommendations………………………………………………………………..17

References……………………………………………………………………………………….17

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1.Introduction:
QBE Insurance Group Ltd. has an enriched history of serving with insurance services for 134
years from it’s origin back in January of 1886. The Company was established by two Scottish
Migrants named James Burns and Robert Philips

The company received enlistment in the Australian Stock Exchange during 1973. The three
letters QBE in its name were extracted from the mergers of three companies , namely ,
Queensland Insurance , Bankers’ and Traders’ Insurance Company , and Equitable Life and
General Insurance Co. Ltd.

1.1 Company Overview

The headquarter of QBE Insurance is situated in New South Wales of Sydney , Australia.QBE
has annual revenue earnings of 14.3 Billion Dollars. QBE’s major competitors are Chubb, IAG
and Allianz.

1.2 Operation:

Although founded in Australia , QBE Insurance Group now provides insurance and reinsurance
services to 37 countries around the world. The company’s major operation is in the continents of
Australia , America , Europe And Asia Pacific Region.

The operations are mainly conducted through North American Operations , European Operations
, Australian & New Zealand Operations , Equator Re-segments and Asia pacific Operations.

1.3 Management:

The present CEO of this renown insurance group is Patrick Regan. The huge number of
workforce working under the QBE insurance company sums up to 17000 employees.

1.4 Subsidiaries:

As QBEinsurance Group limited is a vastly expanded global insurance company , it has

numerous subsidiaries. Out of which some noteworthy ones are mentioned here :

QBE Holdings , Inc., QBE Specialty Insurance Company , QBE Americas , QBE Group Shared
Services Limited , QBE Insurance Corporation , QBE Management Services Pty. Limited , QBE

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Asia Pacific Holdings Ltd , QBE Life Australia Ltd. , QBE First Property Tax Insurance , LIC. ,
QBE IT Services Pty Ltd , QBE Regional Insurance Group , QBE Capital Funding III Limited ,
QBE Workers Compensation (NSW) , QBE Investments (North America) Inc , QBE Latin
American Insurance Holdings , QBE Management (Ireland) Limited .

1.5 Objectives of Analysis of QBE Insurance Group:

 To derive the product offerings of QBE insurance group

 To determine the strategic position of QBE insurance group
 To do comparative analysis with competitors
 To synthesize recommendations on the basis of outcomes

2.Literature Review:
Different types of background have been considered to conduct this paper. These are practical ,
informational , analytical , as well as quantitative. Since the paper is firstly based on qualitative
data like SWOT analysis , PESTEL analysis , Product offerings provided by an insurance
company.

Therefore to understand their implications the term insurance and it’s origin should be defined by
literary terms first.

According to the Commission on Insurance Terminology of The American Risk and Insurance
Association,

“Insurance is the pooling of fortuitous losses by transfer of such risks to insurers, who agree to
indemnify insured for such losses to provide other pecuniary benefits on their occurrence , or to
render services connected with the risk.”

It was required to identify the strategic positioning of the company. Strategic positioning is done
to identify the target group, segmentation , position and then determine the SWOT And PESTEL
analysis through their strategic positioning.

The financial statement analysis provides insights about how the company operates in the
concurrent years. The competitive analysis is done to ascertain the company’s position in terms
of their existing competitors.

Thus using the informational background of the company , and the above comprehensive tools
this paper has been constructed.

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3.Methodology:
As the paper is based mainly upon analyses of the QBE insurance groups services, positions and
performances , it is mainly qualitative in nature. But in order to compare with the existent
competitive companies , there has been a brief quantitative part too. First this paper has
identified the products offered by the In the qualitative part the strategic positioning , strengths
and weaknesses of the insurance group has been clarified. In the quantitative section financial
analysis has been done with the data of a fiscal years 2013, 2014 , 2015 , 2016 , 2017 collected
from the U.S. edition of The Wall Street Journal. For the competitive analysis a comprehensive
comparative discussion was done with the QBE Insurance Company’s Competitor IAG
(Insurance Australia Group Limited) .Lastly , the limitations of this report has been identified
and recommendations has been provided to the QBE insurance group.

4.Product Offerings:

The principal products offered by the QBE insurance group are :

 Personal
 Commercial
 Specialty General Insurance

However , the company has numerous other insurance product offerings depending upon the
region they are operating in.

Personal Insurance Products:

QBE in Asia Pacific region provides insurance and reinsurance for personal products. The
protection for personal products account for Accident & Health , Domestic Property , Personal
Motor , Personal Travel , Pleasure Craft etc.

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Commercial Insurance Products:

QBE in the Australian Zone is based on providing insurance and reinsurance opportunities for
Commercial and business products mainly. The business or commercial products when discussed
broadly can be subjected to:

 Builder’s Warranty
 Public Liability
 Commercial Motor
 Commercial Package
 Construction and engineering
 CTP Business
 Farm
 Marine
 Multinational
 Professional liability
 Property
 Surety.
 Trade Credit
 Workers Compensation

Specialty General Insurance Products:

QBE at North American zone provides the specialty general insurance. The sections that they
cover under specialty insurance products are :

 Accident & Health

 Aviation
 Cyber
 Healthcare:
 Management Liability & Professional Lines:
 Transactional Liability
 Specialty programs

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5.Strategic Positioning of QBE Insurance Group:
In order to do strategic positioning of QBE Insurance Group Ltd. , at first it is needed to define
the Segment , Target Group and Positioning of that QBE Insurance Group Ltd. belongs to.

Segment: QBE Insurance Group Ltd. falls in the segment of General insurance and Reinsurance
services

Target Group: Their target group for providing services are both firms and individuals , so it
can be said their focus is oriented towards Broad Marketing (reaching more than specified
customer groups) rather than Niche Marketing , which is only oriented towards a specific
customer group. They also targets brokers and commercial individual

Positioning: QBE Insurance Group Ltd. is an 132 year old organization that has played
significant role towards the commercial history of Australia.

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 5.1 SWOT Analysis of QBE Insurance Group Ltd:

Strengths  QBE Insurance group Ltd has a workforce of 17000

employees in 37 countries worldwide
 Possess a well defined broad range of highly competitive
products
 They have been classified as one of the world’s top
General Insurer.
 They render superior level of flexibility and service.

Weaknesses  Owing to intensified levels of market competition , the

company has fallen victim to low prices of market shares
 The company has been suffering from declines of the
operating ratios too.
.

Opportunities  Expanding globally to places like unreached countries of

Africa ,can cause their revenues to rise.
 QBE Insurance Group is supposed to be adopting
automated underwriting , which is huge step forward.
 They have a potentially expanding group insurance market

Threats  Exposure to political risks can hamper the company’s

operation substantially
 Emergence of new technological advancements can lower
their premium earnings.

In order to identify and analyze other factors of the strategic position of QBE Insurance Group
Limited , apart from the strengths and weaknesses the PESTLE analysis has been done as below:

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 5.2 PESTEL Analysis Of QBE Insurance Group Ltd. :

Political  Subsequent waver of regulations in the insurance industry.

 The insurance market has been undergoing through series of
globalization , harmonization and standardization.

Economical  The taxing policies are issues of economic concern for the
company.
 Reforms in actualization and financial functions need
consideration for economic factors.

Social  Demographic changes should be materialized while assessing

the social factors by the company

Technological  The contributions of Advanced Data analytics should be a

matter of concern.
 Advanced technologies have an impact on Insurance industry.

Legal  Recurring changes in laws regarding conducting insurance is

also a matter of consideration for this widely expanding
company.

Environmental  Radical changes in global climates and environmental

situation is a factor of concern , because catastrophes related to
weather factors influence insurance industry.

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6.CSR Activities of QBE Insurance Group:
The employees at the QBE Insurance Group Ltd. are committed to make efforts for their society.
Since they feel a sense of obligation for communities and societies they reside in and work for.
They participate actively in several charity and fundraising activities in order to aid in the
success of the society and help reach its goals.

Community spirit:

The sincere community spirit of the QBE employees inspire the people and institutions of their
community.

Widely Expanded Support:

The employee driven relentless support initiatives of QBE insurance Group is directed to all
levels of support for the community. Whether it is a minimal charity event ,or welfare activities
for the cause of saving the environment , prosper the community , the support from QBE is
existent.

The QBE Foundation:

The reason why the workforce at QBE is so dedicated to community activities is because they
are supported by the QBE foundation too. The Foundation provides special attention and
framework to the charity activities and corporate support held by its employees. The employees
who are enthusiastic towards the support are positioned as community mirrors , who participate
and aid the members of the community to overcome the hurdles and meet their goals.

The foundation organizes an event named The QBE Foundation Event , that aims on supporting
people to minimize their disadvantages , strengthen their potentials and have more liberating ,
thriving and effective lives.

QBE Premiums For Good:

QBE Insurance group claim that they do not collect premiums for the sake of doing business
only but also to change the communities for the better. They possess a new policy named “QBE
Premiums4Good” , when enrolled in it the insured will be able to donate 25 percent of their
premium payments to causes that enhance sustainable development at communities , aid to
relieve environmental situations etc.

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7.Financial Statement Analysis Of QBE Insurance Group Limited:

To analyze the performance of the company , the annual data from the QBE Insurance
Australia’s income statements have been collected.

Sales & Revenue:

Fiscal Year Monetary Units(in Quarterly Period Monetary Units

AUD millions) (in AUD
2017 16,521 millions)
2016 15,580 June 2018 7766

2015 17,157 December 2017 8107

2014 16,377
2013 16,653

The sales and revenue earnings of QBE insurance group reached it’s peak during the year 2015
and its continuing at a reduced rate during 2017. During quarterly of June 2018 the sales and
revenue earnings were 7766 millions which is a staggering fall from December 2017.

Premium Earnings:

Fiscal Year Monetary Units (In Quarterly Period Monetary Units(In

AUD millions) AUD Millions)
2017 15709 June 2018 7326

2016 14886 December 2017 7701

2015 16410

2014 15626
2013 15964

Here, The premium earnings had the most satisfactory height at 2015 while it reduced in the next
year but could measure up to 15709millions during the year 2017. However when the quarterly
earnings from premiums is considered QBE fell behind from its earnings of December 2017.

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Selling , General and Administrative expenses:

Fiscal Year Monetary Units (in Quarterly Period Monetary

AUD millions) units(in AUD
2017 5379 millions
June 2018 2391
2016 5378
2015 5729 December 2017 2768

2014 5214
2013 5979

The selling , general and administrative expenses of QBE insurance Group was highest at 2013
and by the year 2017 it came down to 5379 million AUD. On the other hand it reduced to 2391
millions in June of 2018 from 2768 millions of December 2017. This is a positive factor that the
expenses has reduced for the company.

Operating Income (after interest expenses):

Fiscal Year Monetary units Quarterly Period Monetary

(in AUD millions) Units(in AUD
2017 (103) millions)
June 2018 498
2016 1334
December 2017 (677)
2015 1362

2014 1112

2013 97

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Therefore, the performance of QBE Insurance Group Ltd. is quite unsatisfactory in terms of
operating income. Because the operating income declined dramatically on 2017.Althought it is a
positive matter that QBE restored such decline by a lot in June 2013 quarter to 498 millions.

Net Income:

Fiscal Year Monetary Units (in Quarterly Period Monetary Units

AUD millions) (in AUD millions)
2017 (1629) June 2018 464
2016 1135
December 2017 (2047)
2015 916

2014 823

2013 286

Here , the net income received the highest rise during the year 2016 again declining to a drastic
fall during the year 2017. But in the quarterly of June 2018 it recovered from the devastating fall
rising up to 464 millions.

Earnings Per Share (EPS) :

Fiscal Year Monetary Units (in Quarterly Monetary Units

AUD millions) Period (in AUD
2017 (1.19) millions)
June 2018 0.34
2016 0.82
2015 0.66 December 2017 (1.50)
2014 0.62
2013 (0.24)

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Therefore , the earning per share of QBE Insurance Group was highest in 2016 falling rapidly
again at 2017. But , it soon rose up to 0.34 during the June quarter of 2018.

8. Competitive Analysis of QBE Insurance Group Ltd:

To do the competitive analysis QBE Insurance Group Ltd. QBE Australia has been chosen for
precision. As the competitor, IAG (Insurance Australia Group) has been chosen.Then Horizontal
analysis has been done to do the comparison.

 Price to sales ratio:

QBE: 0.88 , IAG: 2.62

 Price to Book Ratio:

QBE: 1.28 , IAG: 3.03

 Earnings Per Share:

QBE: -0.72% , IAG: 0.39%
Therefore IAG has more earnings per share than that of QBE.

 Current Ratio:
QBE: 0.50:1 , IAG: 0.78
Therefore , the current asset against each dollar of liability IAG is more than QBE.

 Total Asset Turnover:

QBE: 0.29 times , IAG: 0.27 times.

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 Therefore QBE has 0.02 dollars of more total assets to finance each dollar of fixed and
current assets.

 Return on Equity:
QBE= -12.77% , IAG= 14.31%
Therefore , the return on equity for each share is 27.08 dollars more for IAG than QBE.

 Net Profit Margin:

QBE= -9.86 , IAG= 11.57%
The net profit margin of IAG is tremendously higher than that of QBE.

Therefore , IAG is performing more satisfactorily than QBE on the basis of above factors.

9.Conclusion

9.1 Summary:

To summarize , the company as a widely expanded global insurance , has huge service of
product offerings and is also socially contributing. Strategically , the company has some
weaknesses and threats for which it needs to tread carefully. Financially , the company declined
very negatively in some factors during the year end 2017.But somehow , the company started
recovering as per the Quarterly performance of June 2018.

9.2 Limitations:

 As the company is expanded vastly all over the world while handling the financial
information , it has been considered that the performance and data are extracted from the
father company , i.e. QBE Insurance Group Ltd. Australia.

 The QBE Insurance Group Limited has many competitors like the AIG , Zurich
Insurance, Allianz etc. But for the Competitive analysis has been done by taking IAG
(Insurance Australia Group) for more precision.

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9.3 Recommendations:

 QBE insurance group limited certainly needs to work on it’s financial sectors by getting a
hold on the assets , Return from Equity and Capital as these have been declining
drastically.
 The steady improvements they incurred during the quarterly performance of 2018 need to
be retained.
 QBE Insurance Group Limited should work in unison to survive the political and
economical threats
 Besides expanding their product offering lines , they should also develop their customer
relationship , online presence etc.
 Lastly , the company should be prepared for the harmful effects of recent capital crisis
and the emergence of complex products in the insurance market.

References:

https://www.qbe.com/ ,https://www.qbe.com/us , https://www.qbe.com/au ,

https://www.owler.com/company/qbe , https://quotes.wsj.com/AU/XASX/IAG/financials ,

https://quotes.wsj.com/AU/XASX/QBE/financials

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Appendix:

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