QBE - QBE Insurance Group

skc · 4 January 2012

Re: QBE - termination benefit of US$1871 Million?!!!!

crochunt said:
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

Lol pretty sure that's just a typo.

ROE · 4 January 2012

Re: QBE - termination benefit of US$1871 Million?!!!!

probably 1.8m

crochunt · 4 January 2012

Re: QBE - termination benefit of US$1871 Million?!!!!

Thank you
I will check with the company

crochunt · 4 January 2012

Re: QBE - termination benefit of US$1871 Million?!!!!

Yes. It is a typo. I found several other same numbers in the report. Those numbers end with 000 instead of millions.

thanks guys.
:!

notting · 12 January 2012

Smashed! High frequency of catastrophies. Earnings down by up to 60%, final dividend cut from 66 to 25c!
down %19.
Guess all those 'lunatics' who believe in climate change did very well having shorted insurance companies!!!
It's a furfie when accepting climate change looks like it will cost money. Then suddenly it becomes real!

McLovin · 12 January 2012

McLovin said:
I don't think the dividend will be cut.

Looks like I got that terribly wrong!

This really should be the bottom, assuming this Balboa issue doesn't snowball.

skc · 12 January 2012

Ouch!

So it turns out what we don't see on TV can still hurt QBE's bottom line. A 20% fall in share price thanks to 50% fall in profit and a sharp cut to dividend.

I just entered a pairs trade yesterday for long QBE and short another insurer. And I exited on open like an amateur. Can't get the timing any more wrong and there goes all my profit for the new year

McLovin said:
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.

May be now it's the time for long term investors to buy the mean reversion...

notting · 12 January 2012

skc said:
May be now it's the time for long term investors to buy the mean reversion...

It's hope from here is if the AU weekens against the US which many are thinking is on the cards, but not really any big signals of that just yet.

I am starting to by a few US$ on further AU$ strength.

skc said:
and there goes all my profit for the new year

Fortunatly the year is young!

compensation - coh looking juicy

suhm · 12 January 2012

I've been looking at QBE on and off for 5-6 years as always thought that they were a well run outfit. The thing about this downgrade is that they are still profitable which is more than we can say for a lot of other insurers.

QBE's problem is that they invest their money in fixed interest and bond yields have been going south all this time and it is not just real yields that are negative now it is the headline yield which is negative. The whole world is going to become like Japan and hide money under the bed covers instead of putting it into the bank.

I would only buy QBE when I see bond yields go up in the US and EU.

McLovin · 12 January 2012

skc said:
May be now it's the time for long term investors to buy the mean reversion...

I think you maybe right. Unfortunately I started buying at around $13.50.

robusta · 12 January 2012

Have got my order in @ $10.47, maybe I have missed the party..

dillybag · 12 January 2012

Mc Lov - you have started buying around $13, well I can trump that - I had bought at $17 when sun was shining and the world looked good. Never mind, I still believe that QBE will overcome the problems and, as far as I am concerned, it is a medium/long term buy. My opinion only, don't forget my nickname . It speaaks for itself.
.

skc · 12 January 2012

McLovin said:
I think you maybe right. Unfortunately I started buying at around $13.50.

You can't help but get the feeling that the actuaries' work are being blown out of the water these days on much more regular occurences.

Although insurance premiums appear to be pretty inelastic to price and often customers have little choice not to accept the higher costs being passed on.

A couple of things looked interesting in the announcement.

1. For 2012 they are planning to double the margin back to 15%.
2. Yield on cash and fixed interest to be 3% in 2012 c.f. 2.1% in 2011. Where's the increase yeild coming from, and what about the increase in risk?
3. There was no mention about some US regulatory issue which was the newspaper headline this morning before the announcement.

robusta · 12 January 2012

Love the last line of this article in The Australian

an.com.au/business/companies/qbe-results-disappointing-says-ceo-as-shares-plunge-23pc/story-fn91v9q3-1226242701775

Seems there are a few investors braver than me.

suhm · 12 January 2012

Not sure about bravery, its the big boys who will decide how this goes over the next couple of days, trading range of 9.88-11.41 just shows that they aren't sure what to do either.

I'm thinking the ones who got out will prove prescient in the future because it has traded down recently to 11.89 prior to the market update. I don't see why it should be above that level given the profit downgrade which doesn't give you much cream at the current market price.

robusta · 12 January 2012

suhm said:
Not sure about bravery, its the big boys who will decide how this goes over the next couple of days, trading range of 9.88-11.41 just shows that they aren't sure what to do either.

I'm thinking the ones who got out will prove prescient in the future because it has traded down recently to 11.89 prior to the market update. I don't see why it should be above that level given the profit downgrade which doesn't give you much cream at the current market price.

Good point bravery can easily be confused with stupidity.

Not sure what label I deserve.

suhm · 12 January 2012

Were you trying for a swing trade or long term hold? If its the former I would call that bravery and it would have paid of if its the latter I would call it the other because I wouldn't want to be holding the parcel for tomorrow, not everyone is glued to their computer screens to check for announcements and there are going to be a lot of smaller investors who were expecting their dividend cheques to be a lot fatter and the earnings to be a lot more stable.

robusta · 12 January 2012

suhm said:
Were you trying for a swing trade or long term hold? If its the former I would call that bravery and it would have paid of if its the latter I would call it the other because I wouldn't want to be holding the parcel for tomorrow, not everyone is glued to their computer screens to check for announcements and there are going to be a lot of smaller investors who were expecting their dividend cheques to be a lot fatter and the earnings to be a lot more stable.

Long term hold I am afraid, IMO any price below $10.50 chould give a decent return when QBE numbers revert to somewhere near the long term average.

The reason my order did not get filled is because I am not glued to the computer screen, if I was I would have probably bought under $10.00

prawn_86 · 12 January 2012

robusta said:
when QBE numbers revert to somewhere near the long term average.

When or if??

I have always though insurance companies are a lot more riskier than the market makes out. Increasing population and a changing climate means there is a lot of environmental risk that simply cannot be factored in imo

robusta · 12 January 2012

prawn_86 said:
When or if??

I have always though insurance companies are a lot more riskier than the market makes out. Increasing population and a changing climate means there is a lot of environmental risk that simply cannot be factored in imo

Funny thing insurance, have you ever noticed when there are a lot of payouts the insurance companies simply raise the premiums and people pay them? Seems like a good business to be in to me.

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