QBE Insurance Group Ltd (ASX: QBE)
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QBE Details
Announced a new CEO: QBE Insurance Group has announced that John Neal, Group Chief Executive Officer will be stepping down after five years in the role. The Board of Directors has appointed Patrick (Pat) Regan, Chief Executive Officer Australian and New Zealand Operations and previously Group Chief Financial Officer, to succeed John on 1 January 2018, with a four-month leadership transition. Thereafter, Pat will remain on the Board as an executive director.
For H1FY17, the group reported a 30% year on year (yoy) growth in net profit at $345 million and 76% growth in adjusted net profit after tax of $464 million. The Group’s adjusted combined operating ratio stood at 95.3% compared with 94.5% in the prior period and is in line with revised combined operating ratio target range of 94.5% - 96.0%. The higher adjusted combined operating ratio was driven by a weaker underwriting result in Emerging Markets coupled with a reduced level of positive prior accident year claims development, which more than offset a 1% improvement in the combined commission and expense ratio. The result included a sixth consecutive half of positive prior accident year claims development of $107 million, slightly lower than $196 million in the prior period. Following slightly better than expected top-line growth during 1H17, particularly in North America and Australia & New Zealand, QBE has revised its FY17 gross written premium target from “relatively stable” to “modest growth”. The stock was up 2.5% on September 12, 2017. Given the challenges in the emerging markets business and overall scenario for the insurers, we maintain an “Expensive” recommendation on the stock at the current market price of $ 10.50
Myer Holdings Ltd (ASX: MYR)
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MYR Details
Continued weakness in retail trading conditions: The period of the June - July Stocktake sale has traditionally been an important period of profit generation for Myer. This year it has executed several new initiatives to engage with customers, drive foot traffic to stores and increase average transaction value. These initiatives have delivered positive results and have provided some mitigation against volatile and challenging trading conditions. However, as a result of continued weakness in retail trading conditions, and particularly in July, the Company anticipates FY2017 NPAT to be between $66 million and $70 million while expecting FY2017 implementation costs (pre-tax) to be between $18 million and $20 million.
Further, Myer had announced the write down of the full carrying value of Myer’s 20% stake in Austradia of $6.8 million. In addition, it has been unable to secure a deal on acceptable commercial terms with UK based brand owner Arcadia Group to allow for the continuation of TOPSHOP TOPMAN concessions in Myer. Given the ongoing initiatives to improve the operational performance and financials while retail challenges prevail, we maintain a “Hold” recommendation at the current price of $ 0.72, ahead of the full year results to be announced on September 14, 2017.
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