share price this week, page-8

govr is right, QBE operates in a highly regulated industry, not just in Australia, but the world.

But now am I going to create a stir with these next comments, especially with the full year result due tomorrow, but I grow tired of reading about smaller issues rather than the big ones.

(I could write a very long post, but will try and keep it short).

QBE has been hit by falling bond and interest rates, and had more than its fair share of catastrophe's. The banking and insurance regulations that have increased over the past 5 years across all 50 countries have been costly and incredibly difficult to implement, especially with APRA wanting to oversee it’s entire operation. (QBE is a little like Qantas, they are stuck in an Australian framework, need to compete internationally, also compete against internationals in its own space).

The greater concern that people never talk about on H.C. is actually QBE's underwriting performance, the businesses they are in and the culture that has formed over the past 5 years.

The QBE share price has come down from $35 to $12. If this was any other company, boards would have been rolled wouldn't they? So why hasn't QBE's? Has anyone even murmured this point?

Why did QBE buy a very large crop insurance business in the U.S.?

Why did it buy Elders insurance business for $500m? Elders complete business is now be worth a carton of Corona? and why would you want businesses that are directly related to weather extremes? Okay, a couple of senior managers were bulleted for this and Frank took a hit to his reputation, but the board signed off these deals, so who has been held accountable for that?

QBE had the opportunity to grab Mike Wilkins (now head of IAG) when Promina was bought out, but nope, decided to go inhouse - again. They continue to believe that in-house is the only way to keep this business rolling – Wrong.

What do I think needs to happen?
They need new people on the board, they need fresh management and ideas and more than any other issue, they need to stop raising money and buying businesses, and start selling some (good businesses do both), they are just too big and cumbersome in their current form. How many Australian companies work in 50 countries!!!

Another problem they have is this. They can’t grow their existing books (look at previous years numbers), they just use the idea of buying premium on one year’s profit. QBE may have been good at buying businesses a few years ago, but it’s about managing them as well. (If I read tomorrow that management are looking at further details around the world - I will scream).

As for the culture, something I think is incredibly important, read today's Fini Review regarding it's Australian staff. There is also this article on news.com

http://www.news.com.au/business/breaking-news/union-urges-qbe-to-talk-on-jobs/story-e6frfkur-1226585116667

Sure to ruffle feathers, but that's how I see it.

Pep