Qbe

[Penfold]

Most of their business is written in other countries. That's why they wanted IAG a couple of years ago, to increase direct exposure to Aussie domestic market. Recent rise is beyond me, but there are a few financial stocks looking pretty under-priced at the moment.

Disc: Hold

[macduffy]

Arbitrage Why when most Australian insurers have the posablity of large exposures to claims for flood damage from present floods

There's always a large "claim event" either happened or about to happen. Insurers limit their exposure to such risks by off-loading through reinsurance .

Pricing for risk is critical to success in insurance and QBE have a good reputation in this regard, seemingly happy to let business pass rather than compete at uneconomic rates. Equally important is return on premium float where recent rises in bond rates won't be doing any harm.

Perhaps the market's decided that QBE just got marked down too far.

[Arbitrage]

Yes it has come down a long way so I was thinking the same thing at $16.68 so started accumulating. It seems to have broken through some of Phaedrus's indicators. Any comments Phaedrus?

[RRR]

No bounce back for QBE after the panic! May be due to the fact the interest rates in the US will stay low and close to zilch, at least until 2013 - The Fed has guaranteed the market! Not good news for the investors and the current dividend yield is about 10%.

Others in my buy watch list is not performing too well either - CPU and WPL!

[Lizard]

Big fall through $10 on todays Market Update. Looks interesting down here, but I find insurers a bit hard to assess. Anyone else follow and have any comments?

[soulman]

Ouch.....Last sold at $14 for a loss. Divy drop to 25 cents in the upcoming report on late Feb doesn't bodes well for QBE going forward. Wished I can short this baby today as tomorow could be another 80 cents drop.

I am starting a new thread called shortings later.

[Jaa]

Big fall through $10 on todays Market Update. Looks interesting down here, but I find insurers a bit hard to assess. Anyone else follow and have any comments?

Wow that's a huge drop. Up almost 10% from the day's low though.

They are a well run, diversified insurer. QBE is a good play on an increase in global interest rates (they can't go much lower!).

A couple of optimistic points stand out for me:

• Net earned premium increased by 35% to $US15.3b, forecast $US15b
• A normal year's allowance for large individual risk and catastrophe claims is 8.1%, they have allowed 10% for 2012 (estimated in 2011 to be 15%).
• Yield on their cash and fixed interest portfolio for 2012 is expected to be 3%.

QBE still has an 8% dividend yield after today's cut and a history of growing net earned premium 20% year on year.

[Aaron]

Nothing really useful to add but ASB Securities has it as a buy at $21.10 as of November last year. Intelligent investor sent a teaser recommending it as a buy and the motley fools in Aussie had it as a buy not so long ago.

I was tempted by the 9% dividend but am still waiting for the next financial crisis to happen.

I guess they generate profits from taking in more in premiums than they pay out as well as investment returns. I imagine they would be required to hold less risky investments but govt bonds in europe and US don't inspire any confidence at the moment. If premiums go up and investment returns improve and natural disasters stop it should be good.
The yield is still close to 9%(8.7%) after the price crash. Maybe I'll buy if the yield hits 10% at $8.70

[winner69]

What a disaster,” said Prasad Patkar (some analyst quoted in the The Age)

Sure is

In spite of all the good numbers mentioned by Jaa the shareprice has been in steady decline since 2007 ... no chart duration looks good .... esp the 10 year one ...... as Mr P says the market giveth and the market taketh away ... sure has

Interesting at these sort of levels eh Liz but one for the traders for a few days I think

[soulman]

Yield might not matters much when they might also announce a cut in the Aug reports of 25 cents to make it annualised at 50 cents. Then a share price in the order of $7 to $8 might be possible. That's a possible scenario.

You are right there Jaa, a nice handy profits if you get in early on open but too much risk for me. I don't like to roll the dice. I would prefer to short QBE from here.