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QBE - QBE Insurance Group

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skc said:
Market's a bit confused with QBE. Open 13.15, low 12.25, now 13.06. So just done a big 6% turnaround...
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The insurance profit margin number was pretty bad (11.8%). But overall the result isn't that bad, and it's hardly a surprise.
 
McLovin said:
The insurance profit margin number was pretty bad (11.8%). But overall the result isn't that bad, and it's hardly a surprise.
Click to expand...

Ive only had a quick flick through the report. But a glance at the statement of cash flows had one section glaring back at me ... Look in investment cash flows.

(Payments for purchase) proceeds from sale of other investments (2200mil)

Why the blow out ? Anyone make sense of that ?
 

The ( ) denotes that the $2200m amount is "payment for purchase". I.e. they bought $2.2B worth of investment net. Compare that with last year they sold $700m of investments.

It's not a blow out.
 
skc said:
The ( ) denotes that the $2200m amount is "payment for purchase". I.e. they bought $2.2B worth of investment net. Compare that with last year they sold $700m of investments.

It's not a blow out.
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Yes, I phrased that poorly, i meant as in 'blow out' in terms of the increased expenditure, not 'blow out' in terms of lost money.

Im just trying to identify what the money was used to acquire.
 
RandR said:
Yes, I phrased that poorly, i meant as in 'blow out' in terms of the increased expenditure, not 'blow out' in terms of lost money.

Im just trying to identify what the money was used to acquire.
Click to expand...

The money was used as described: "Payments for purchase of other investments". This would be investments in treasuries and floating rate notes.
 
I actually bought a parcel of QBE today, bought in at 12.29 after watching stock hit a bit of a selling climax and hold on the support at 12.20. Was looking at this strictly as a short term trade, the plan is to take and free carry the profits tomorrow. I dont want to risk being open in the market for any longer then that, with the volatility making it hard to rely on stop losses.

**** me even the Athens Index is green tonight, so im expecting to see QBE bounce back on open in the morning and me cut and run with a small but tidy profit. Which I will leave in and free carry, to be left forever in the bottom drawer.

At least thats the plan ...
 
QBE has me very miffed at the moment. Yeh there are some headwinds and the market is extremely volatile at the moment but the dividend yield is at 10% and the current share price is below where it got in March 09.

Is the current price factoring in more natural disasters and a major fall in EPS and therefore DPS as well?

I may have my rosey coloured glasses on but I personally can't see it happening and think QBE is just a rediculous buy at the moment. Obviously yields on their US investments will remain low for quite some time, but i'm more than happy to lock in a dividend yield of 10% for the future of my investment, dividend re-invested at these prices i deem as low, in preparation for some capital appreciation if/when the US and EU can start their path back to 'normality'.
 

Keep in mind that the payout ratio was over 100% recently...
 
I like QBE too but don't think we should regard the dividend yield as "locked in", despite the optimism expressed at the half year profit announcement. Another few years with virtually "nil" short term US interest rates could play havoc with earnings, regardless of underwriting results.

I'm treating QBE more as a trading prospect at present, when/if the SP trends upwards.
 
VSntchr said:
Keep in mind that the payout ratio was over 100% recently...
Click to expand...

I know, the stock's dividend yield is just so attractive and the company's management is rational and competent, but that payout ratio is a major deterrent.
 
I bought into QBE today at 13.84 (after missing buying in at close yesterday. Damn work distracting me). I just think it's such great value at that price and even if Europe and the US continue to struggle, they're well placed to weather the storm with low risk investments, decent underwriting profit and a quality management team. Plus they can't keep rates at close to zero forever, just look at what is happening to the UK inflation rate.

Granted, I'm only about 4 weeks and 2 books into this investing lark, so I admit I could well be about to learn a valuable lesson!
 
Really interesting chart formation over the last few months for QBE looks like a head and shoulder bottom has formed and this thing could really take off.
 


Can you 2 update us on what happened with your trades?..did you learn anything rob?

----

QBE taking a double dip has attracted my interest, as i will have enough money in my super fund for a new position early next week...is the consensus view that the dividend cannot hold at the current level? what sort of dividend fall is the market factoring in? 10 > 20 > 30% :dunno: i don't actually follow QBE.

Thoughts anyone.
~
 

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Well the only article I can find on why QBE 'out-crashed' the rest of the market from Wednesday mentions 'negative broker sentiment' with no thought out reasons behind it, so the opportunity for learning has not presented itself as yet. If the issue is Europe's debt crisis then nothing new has come to light there, except that Italy is in trouble now but you'd have to be living under a rock if you hadn't already priced that in earlier in the year.

Clearly, the market is worried that their exposure to 'low-risk' bonds (is there any such thing atm?) will result in a dividend drop and is pricing that in. No idea how to calculate how much of a drop is priced in though. Maybe an earnings warning is expected too.

I still have the shares I bought in on, but they were always going to be a long-term prospect. If more information comes to light then I'll consider changing tack but I'm not really concerned at the moment. Maybe I'm just being naive.
 
I heard they have some bad investment issue. I wasn't listening that closely - it came across the news wires. I haven't verified it, nor do I know the size of it. Not that big I imagine. With the sentiment last week it took a pounding.
 
The dividends don't have much franking, there are more sellers than buyers and technically it has further to fall even to make a reverse head and shoulders. Long term it is probably a good buy but there is no rush. Happy to look only.
 
I don't think the dividend will be cut. As knobby pointed out the dividend is almost entirely unfranked so the current dividend is about where the banks are. The hurricane season wasn't as bad as predicted and the Balboa acquisition will add about 30% to GWP this year. They've also raised reinsurance premiums this year so that should take the pressure off. Their catastrophic claims last year were ~15% of NEP v the year before being ~10%. QBE is like a casino that has had a couple of whales come in and win big (Japan, Christchurch earthquake etc). It will return to the mean.
 

Hey SC, my trade went really well and I was quite pleased. Once it was up 15% on my entry at 12.29 in september I decided to exit the position (given the current situation overseas), at which point I took my capital out and have left the profits in .. for .. possibly forever.

There is the possibility of a 'slight' dividend cut, but im quite optimistic it wont be, large natural disasters that occured in the previous financial year, (aus floods, christchurch, japan etc) have been avoided in the second half of this year, and we are unlikely to see a repeat of the magnitute of those. So my thoughts are QBE should bring its underwriting profits back up to a more normal level. Combined with the acquisitions made last year, which should now start to add to there revenues.

Im not too keen to enter again into qbe though until europe starts to settle, that and I think at the moment its about just fairly priced. Id rather wait for another possible plunge.
 
QBE - termination benefit of US$1871 Million?!!!!

According to the 2010 annual report of QBE, Mr ten Hove's termination benefit is US$1871 Million, which will be paid in 12 months.

Is it right. I can't believe it. Anyone can explain this?

Thanks
 
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