General Insurance: Intuitively Defensive

Research evidence excerpt

General Insurance: Intuitively Defensive

als that while operating 14.0x

results remain resilient during a market downturn, bottom-line profitability can experience 12.0x

temporary volatility due to MtM adjustments on investment assets. This was evident in the . Mar-21 Nov-21 Jul-22 Mar-23 Nov-23 Jul-24 Mar-25 Nov-25 Source: FactSet

analysis, with the AU GIs underperforming at the onset of a financial crisis. However, on almost

all occasions, strong outperformance was recorded in the first eight weeks following the index Figure 2 - QBE Historical P/E Ratio

low point. Importantly, the AU GIs, should perform differently in the next financial crisis, with QBE P/E QBE Average +1 Stdev -1 Stdev

AASB17 (introduced in 2023) resulting in less volatile financial reporting and a more resilient 17.0x

balance sheet. 15.0x

13.0x

Interest Rate Expectations have changed materially over the course of 2026, with Central 11.0x

Banks either halting rate cuts (the Fed) or resuming hikes (the RBA). The pivot is in response to 9.0x

energy shocks, structurally higher inflation, and elevated geopolitical risks. As of June 26, the 7.0x

US Fed remains divided, with markets pricing in an extended hold period. In response, yields . Mar-21 Nov-21 Jul-22 Mar-23 Nov-23 Jul-24 Mar-25 Nov-25

Source: FactSet

on 2YR Treasuries have increased 62 bps, thus far in 2026. The RBA has reversed all 2025 rate

cuts, with three hikes in 2026 and the probability of at least one more hike by Aug-26 (forward Figure 3 - SUN Historic P/E Ratio (Cons.)

curve). Domestically, the 2YR CGB yield has increased by 49 bps, thus far in 2026. In our view, SUN P/E SUN Average +1 Stdev -1 Stdev

yield curves signal a lack of confidence in Central Banks' ability to contain inflation, a view the 21.0x