QBE - QBE Insurance Group

[McLovin]

but admittedly still really don't understand how to value it in some kind of meaningful way (as much as I probably have convinced myself otherwise at certain stages).

Don't worry, I have convinced myself of that too. Sold out this morning. My average buy price was ~$13.50, so not too much damage done, but a good lesson learnt.

FWIW, my bunk analysis would be that QBE's old business of running niche lines and generating higher ROE was not scalable once they became a large insurer. They will probably never get back to where they were in that sweet spot back in the early 00's.

 

[bigdog]

There were folk tipping QBE as a buy over the weekend!!!

http://news.theage.com.au/breaking-news-business/qbe-shares-drop-20-20131209-2z016.html

QBE shares drop 20%
December 9, 2013 - 10:32AM

Shares in insurance giant QBE have dropped almost 20 per cent after the company flagged a $250 million net loss this year.

QBE on Monday said it expected to post the $250 million loss due to weakness in its North American business.

The company also announced chairman Belinda Hutchinson would leave QBE in March.

At 1020 AEDT QBE shares were trading at $12.43, down $3.00 or nearly 20 per cent, from Friday's close.
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QBE said the 2013 result would be affected by $600 million in goodwill writedowns, primarily relating to the North American business.

The North American business experienced an increase in prior accident claims provisions of around $300 million and the company was also exposed to higher claims due to weaker-than-expected US crop yields and prices.

It also said expected its insurance profit margin to fall from eight per cent to six per cent.

Chief executive John Neal on Monday said the writedowns came as a result of a strategic review of the North American business.

"Regrettably, these charges and provisions increase our target combined operating ratio and reduce our expected insurance profit margin and reported profit for 2013.

"As painful as these decisions are, we are confident that our business in North America will trade profitably in 2014."

 

[ROE]

I sold out around $16 ...back in today...

QBE now fall into I am sick of this stock and people start to bail .... Serial under performer for a while
So have to be vigilant and get in and out ...

Could go lower but I can pick up some more $11 ish and write covered call ....

I think Current CEO doing a good job....most of this problems aren't his but he is fixing it..
Frank gone a bit crazy in the last few of his tenure at QBE and now things start to come out of the closet...

Chairman step down is the right move too .... Need clean deck to restructure...

 

[skc]

I sold out around $16 ...back in today...

QBE now fall into I am sick of this stock and people start to bail .... Serial under performer for a while
So have to be vigilant and get in and out ...

Could go lower but I can pick up some more $11 ish and write covered call ....

I think Current CEO doing a good job....most of this problems aren't his but he is fixing it..
Frank gone a bit crazy in the last few of his tenure at QBE and now things start to come out of the closet...

Chairman step down is the right move too .... Need clean deck to restructure...

Fundamentally probably not a bad play, especially seeing it as a play on tapering + increasing investment returns on rising yields.

I tried to trade this today and basically failed in every attempt. I mapped it out in the morning ok... open low, bounce up, drift lower rest of the day. But somehow managed to just get whipsawed around 12.40-12.60 levels - the ranges were much smaller than I'd expect. By the time it really starts to drift down it's already lost my attention. Oh well.

Judging by the way it closed, there's probably more immediate downside to come. There'd be some very disappointing analysts giving up on this name tomorrow, and the raft of downgrades will likely put more pressure on the stock price.

 

[ROE]

Yeah I figure lot of sentiment will play into the next few weeks, when people throw in the towers -
Human psychology most can't withstand pro long serial under performer and at some stage they decided
They had enough and that about the time the asset hit rock bottom ..

I do this for many stocks, most is not long termer but enough to get decent profit out of it ...
I save some ammunition left for it when I see volume driven down price and make a calculated move in
Sit and wait and write covered call

 

[McLovin]

Fundamentally probably not a bad play, especially seeing it as a play on tapering + increasing investment returns on rising yields.

Yeah this was my initially reason for entering + the few bad years they'd had. The issue I have is that there seems to be some company specific problems to, which management just hasn't got a handle on, so it's not a clean play on interest rates + fewer major catasrophes. I'd be surprised if there's more downgrades to come, but I wouldn't want to put money on it. To be honest, I've put this in the "too hard basket".

It was kind of convenient too because I need some money for a project and was wondering what to sell. Question answered for me.

 

[UMike]

I sold out around $16 ...back in today...

QBE now fall into I am sick of this stock and people start to bail .... Serial under performer for a while
So have to be vigilant and get in and out ...

Could go lower but I can pick up some more $11 ish and write covered call ....

I think Current CEO doing a good job....most of this problems aren't his but he is fixing it..
Frank gone a bit crazy in the last few of his tenure at QBE and now things start to come out of the closet...

Chairman step down is the right move too .... Need clean deck to restructure...

I've been lucky to Sell at the top and buy at the bottom of this stock a couple of times.

Back in again @ $11.25. Hoping to pick the bottom again.

 

[McLovin]

Getting pummelled again today.

 

[ricee007]

I've been lucky to Sell at the top and buy at the bottom of this stock a couple of times.

Back in again @ $11.25. Hoping to pick the bottom again.

Brave person trying to catch this knife. Currently $10.69.

Just thinking about it... it got to 10.27 12 months go..... and, to me, the company is in a worse situation now than back then.

Given this, current trend, how many people are getting out of this stock... even if it got to $9.99, I'd still not consider it.

 

[skc]

Brave person trying to catch this knife. Currently $10.69.

Just thinking about it... it got to 10.27 12 months go..... and, to me, the company is in a worse situation now than back then.

Given this, current trend, how many people are getting out of this stock... even if it got to $9.99, I'd still not consider it.

Hmm.. Not sure about that. The losses stem from past actions. There's nothing terribly bad (industry outlook wise) for QBE. You also have macro tailwinds in rising investment income and falling $Aud helping along. The question is whether there are even more skeletons in the closet.

It's a tough one to value that's for sure.

 

[ROE]

Wrote some naked put at $10 and got taken out pretty fast as it fall toward $10 -
Fear alive and well
For the first time in many years bond yield start to rise above dividend payment in the US, can't be bad thing for QBE

 

[robusta]

Brave person trying to catch this knife. Currently $10.69.

Just thinking about it... it got to 10.27 12 months go..... and, to me, the company is in a worse situation now than back then.

Given this, current trend, how many people are getting out of this stock... even if it got to $9.99, I'd still not consider it.

Not a screaming buy in my opinion but good enough for me to pick up a small parcel @ $10.93 today. The downside is if there are more write downs to come.

 

[Sharkman]

Wrote some naked put at $10 and got taken out pretty fast as it fall toward $10 -
Fear alive and well
For the first time in many years bond yield start to rise above dividend payment in the US, can't be bad thing for QBE

that's essentially my thinking too. was mulling over putting on a 3 legged structure - sell the dec 10 puts, sell the dec 11.50 calls and buy the feb 12 calls, which could be done at basically zero cost (assuming a fill one tick to their side of the spread on each leg - but i'm not really sure i'd get a fill there, the blasted MMs tend to make you cross most of the spread when the underlying is bouncing around all over the place) when it was trading around 11 today. 10 is a pretty strong support level in my opinion, so i also don't mind selling cash covered puts at that strike.

there's plenty of past evidence from previous downgrades to look at - of course you can't use the past to predict the future but i'm willing to take a punt that after being beaten down savagely it'll stabilise, potter around for a bit then slowly recover as the market gradually "forgets" about the profit warning and refocusses again on the tapering and falling AUD/USD benefits, as it has done time after time over the past 2 years. so i felt selling a front month strangle to finance the back month long OTM calls is a good way to bet on that view, if the whole thing can be put on at close to zero cost.

in the end i opted not to put the structure on today, i remember from last years profit downgrade + hurricane shock that the front month ATM IV remained elevated in the mid 40s for a few days after the news came out, even after the underlying had calmed down a bit (lower volumes and smaller daily trading range). so i'll reassess tomorrow, see if it starts to hover around the high 10s-11 level, and perhaps put the trades on then.

 

[Garpal Gumnut]

I guess this sad sack could very well be a buy at these levels, or at $5.

$10 or thereabouts should provide some support.

A 20 year quarterly chart shows that this has been both resistance and support in the past.

The long term RSI, however, shows a sickly descent for this uber insurer.

I agree these are good prices, but a stop loss may be advisable, should it plummet further to $5.

Anything may happen with this stock. The Directors need to look to selling cafe au laits instead of hope.

gg

 

[notting]

A very cold winter in the US.
A very bad drought in the US that QBE had to pay farmers for.
Images of frozen Niagara Falls.
Climate change has had a bit of a lull lately yet QBE has not benefited much from that and one has to wonder what's next!
The Ausi $ is looking stronger with RBA downramping finished.
US bonds are providing a safe haven yet again.
Downgrades galore.
The smart money came in twice before at around 10 to 11.
I don't trust it the third time.
It's not a pretty picture.
But I don't feel sure about anything as I think about it.

 

[jank]

Seems stuck around the $11.50 mark. Looks there are huge structural issues with the company which I hope they can put right sooner rather than later.

 

[McLovin]

Another shocker for QBE. This time it's in Latam.

Embattled global insurer QBE Insurance Group has disappointed shareholders with yet another shock profit downgrade, signalling a drop in insurance profit for the six months to June due to problems in its Latin America division.

QBE, which has shaken investors’ confidence in recent years with consecutive earnings downgrades each profit season, expects to book an insurance profit margin of 7 per cent to 8 per cent for the first half, compared with consensus expectations of around 10 per cent.

The group’s net profit is now expected to be around $390 million, a significant drop from the $477 million posted in the first half of fiscal 2013.

 

[skc]

Another shocker for QBE. This time it's in Latam.

Don't cry for me Argentina! QBE seems to have expanded to the extent that the right thumb doesn't know what the kidney is doing.

UBS was just talking about their crop protection business in North America facing potential headwinds, next thing you know it's Argentina. I can just imagine the face of the MD when the head of whatever department/region (that he has little handle on) emails him with the subject something like "Update from my region - sit firmly before open".

And all the talks late last year about tailwinds from currency and rising yield simply haven't eventuated.

Unfortunately still in the too hard basket for me valuation wise.

 

[McLovin]

Don't cry for me Argentina! QBE seems to have expanded to the extent that the right thumb doesn't know what the kidney is doing.

UBS was just talking about their crop protection business in North America facing potential headwinds, next thing you know it's Argentina. I can just imagine the face of the MD when the head of whatever department/region (that he has little handle on) emails him with the subject something like "Update from my region - sit firmly before open".

And all the talks late last year about tailwinds from currency and rising yield simply haven't eventuated.

Unfortunately still in the too hard basket for me valuation wise.

I agree. There are too many moving parts in this business. It seems like even management don't really have any idea what the numbers will look like until they close the books. I'm glad sold this when I did, and that the damage was limited. If management can't understand the business then what hope do we have?

 

[ROE]

I agree Management still not 100% on top of the business but they are looking at it and I think it may takes a bit longer than they are anticipating...

They need to do a clean sweep, hunker down, sell off, chopped thing out, write down make it more compact and manageable and get each division to monitor their cost and margin with hawk eyes.

SUN went through this stage not long ago with their banking and under-performance in some area and they did exactly that and what a turn around.

QBE has heaps of room to move they need to get on top of it and action action action.

I have no doubt they will turn the question is When?