FB wrote: What weather and natural disaster forecaster were you...

FB wrote: What weather and natural disaster forecaster were you using?

Sorry for the delayed response - I assumed that the allowances made by the company would be all used up - hence 10.5% of NEP or $1.75Bn in catastrophic claims. I know you think QBE is somehow pre-disposed to underestimating such disasters but they have made a fairly generous allowance for it in their 2013 outlook - only once in QBE history have they exceeded 10.5% NEP for such claims (2011). Essentially they are assuming a worse year than last year, where they had $1.65Bn in such claims, including Sandy and the worsening drought. They have also beefed up their reinsurance for such events, so disasters over the next 9.5 months have to be quite severe indeed to exceed the allowance.

I don't think anyone has a natural disaster forecaster, and clearly there is risk of exceeding allowances, but as a shorter you should see that there is also significant risk to the downside: Ie if 2013 were to more reflect 2007 or 2008, instead of 2011 or 2012, in terms of catastrophes, we could see most of that $1.75Bn allowance being returned to earnings. Under that scenario a $2Bn profit could be secured by QBE for 2013 and the SP would be substantially above $20 by years end.

Therefore, setting aside the moral repugnancy of looking to profit from others misery, I would say there is at least an equal chance of catastrophic claims coming in less than allowances, as there is more.