QBE Insurance And NRMA Insurance

Analysis QBE Insurance And NRMA Insurance 1
ANALYSIS QBE INSURANCE AND NRMA INSURANCE
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Analysis QBE Insurance And NRMA Insurance 2
Table of Content
Introduction............................................................................................................... 3
Overview of the Companies........................................................................................ 3
Financial Ratio Analysis of QBE Insurance and NRMA Insurance...........................................3
Liquidity Ratios....................................................................................................... 4
Long-Term Solvency................................................................................................ 6
Asset Utilization...................................................................................................... 9
Profitability Ratios................................................................................................. 10
Market Value Ratios............................................................................................... 13
Conclusion.............................................................................................................. 16
Recommendation...................................................................................................... 16
Reference Lists......................................................................................................... 17

Analysis QBE Insurance And NRMA Insurance 3
Introduction
The report aims to present financial performance analysis of two Australian listed companies.
It presents comparison of the two companies and provides recommendation to different
potential investors on which of the two firms is more superior to the other. With these
considerations, the report would present comparison of the financial performance of QBE
Insurance and NRMA Insurance in order to provided recommendation on which between the
two firms offer the best investment opportunity for potential investors. The comparison
would be based on financial ratio analysis of the two companies where the company with
favourable ratios is considered to offer the best investment opportunity.
Overview of the Companies
QBE insurance is one of the Australian largest insurers across the world. It offers insurance
services mostly to the America, Asia Pacific, Australia and Europe region. The company has
over 14,226 staffs working across 37 nations across the globe. The company was ranked as
the top general insurers in 2012 (QBE Insurance 2017). On the other hand, NRMA insurance
is the largest non-government contents and home insurers. It is the most diversified
insurance companies operating throughout Asia, New Zealand and Australia. The company
has continued to focus on its strategic intent of creating portfolio of customer-focused, high
performing as well as diverse operations which offer general insurance in a way that delivers
superior experience for its stockholders as well as create value for its shareholders (NRMA
Insurance 2017). In other words, NRMA Insurance is one of the Australian firms providing
roadside assistance, car servicing, motoring advice, travel, international driving permits as
well as other insurance services in Australian Capital Territory and New South Wales. The
NRMA Insurance makes the car insurance easier with broad range of numerous levels of the
insurance cover.
Financial Ratio Analysis of QBE Insurance and NRMA Insurance

Analysis QBE Insurance And NRMA Insurance 4
Ratio analysis entails relationship which are determined from an organization’s financial data
and utilized for comparison purposes (Beaver, Correia and McNichols 2011). Besides, ratio
analysis give or offer small business operators with valuable tools used in measuring an
organization’s progress against the predetermined internal objectives, the overall sector or
specific competitor. Additionally, ratio analysis is a powerful tool in identifying the financial
trends in its early levels. Ratios are also utilized by investors, business analysts and bankers
in evaluating and examining an organization’s financial status (Megginson and Smart 2008).
They also enable business operators to assess relationship between different financial items
and examine that relationship. They are usually simple to compute, easy to utilize and offer
business operators with some insights into what has been happening in the firm, insights
which are not mostly apparent upon the review of financial information alone. Ratio analysis
could assist in pinpointing some of the areas that require greater attention before looming
issues in the area is readily visible.
Liquidity Ratios
These ratios usually demonstrate an organization’s capacity in settling all its current debt
commitments. They usually relate to availability of money as well as other liquid assets
available in covering short-term debts, account payables as well as other current liabilities
(Delen, Kuzey and Uyar 2013). Different organizations need specific level of the liquidity in
settling their bills, although the start-up and existing by young firms are usually not very
liquid in terms of their assets. In mature firms, low liquidity shoes poor management or need
for extra capital. As such liquidity ratios are crucial in providing business operators or
managers with important limits to assist them regulate spending and borrowing (Velnampy
and Niresh 2012). In this case, some of the best measures in evaluating financial liquidity of
the two companies include current ratio, cash to assets ratio as well as quick ratio.
Current ratio