interest rates, page-35

Using PE ratios for Insurers requires careful consideration since insurers are subject to large random fluctuations in claims. QBE (and other general insurers) have been hit with several years of above average disaster events. Hence the earnings have been below normal so a PE of 16 is actually quite low if you believe disaster events will normalise this year (or soon). If you believe the latest series of events is the new norm (eg, as a result of climate change) then it may be that 16 is not low!!

My view is that history tells us that there are clusters of years of disasters and that things will improve, even if there is a gradual upward trend in disasters as a result of climate change. Also,
- there have been premium increases that will aid underwriting profits over coming years
- improvement in world economies will soon lead to increases (normalisation) in interest rates which will also lead to increased profits

I am a long term holder who was attracted to QBE when it got down under $12 and keep telling myself that it will recover when the current series of events is over. I would hope to see it over $20 within 3 years!! BUT???