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QBE Insurance

By Dan Stratful

Monday 16th April 2012

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The 2011 year was a tough year to be an insurance company and QBE Insurance (ASX: QBE) soon found this out as a range of natural disasters struck around the globe including the Christchurch earthquakes, the Japan earthquake and tsunami, the Queensland floods and Cyclone Yasi and a troublesome North American Hurricane season.

This sent local insurance company AMI into financial difficulty which led Insurance Australia Group (IAG) to make an acquisition bid for AMI.

QBE reported that the year to 31 December 2011 (FY11) was similar to 2001, in reference to the 9/11 terrorism attacks on the World Trade Centre in New York where QBE beared some of the brunt of what could have been a catastrophic claim.

The steep slide in QBE’s share price over 2011 has adequately priced in FY11’s bad result, and its shares appear to have bottomed, after it reported a 45% decline in FY11 net profit to $US704 million.

QBE reports that it sees a positive outlook for premium rates and profitability in FY12, and while investors’ shouldn’t expect explosive growth in the coming year, QBE will produce a decent dividend yield while investors are waiting.

About QBE Insurance Group:
QBE is a top 20 global insurance and reinsurance company as measured by net earned premium and it has operations in 52 countries. Generally regarded by the market as a well managed, conservative company, QBE has a good track record of risk management and re-insurance. QBE has made bolt-on acquisitions over the years steadily growing the group and it has recently agreed to acquire the general insurance businesses of 2 indirectly owned subsidiaries of HSBC Holdings.

Status: HOLD

QBE’s shares today traded at $13.56

For portfolio, sharemarket and fixed income enquires contact:
Dan Stratful at Investment Research Group (IRG)
Authorised Financial Adviser (AFA)
0800 437 8489, 09 304 0232, dan.stratful@irg.co.nz
**A disclosure statement is available, on request and free of charge.


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DISCLAIMER: To the extent that any of the content above constitutes advice, it is general advice that has been prepared without reference to investor’s objectives, financial situation or needs. Before acting on any advice, investors should consider the appropriateness of the advice and IRG recommend that investors should obtain appropriate financial, legal and taxation advice before making any financial investment decision. The report is based on information compiled from public information and private research. IRG have completed the report on a best endeavours basis and do not accept any liability of loss or damage. IRG suggest that clients use this as part of a decision making process and check key data before making any investment decisions.
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