QBE is not an NTA play, it is or at least was an earnings play....

QBE is not an NTA play, it is or at least was an earnings play. The intangibles of $6B relate to the various acquisitions made over the past years. What is interesting is that this number has not increased that much over past 2 years despite their large acquisitions. This indicates that they are not paying much goodwill on acquisitions. When they reported in February they indicated that all acquisitions had performed well ( despite the group result) and thus I see little risk in a wholesale write off in intangibles.

Holders or investors should have a look at page 1 of 2011 Annual report. This to me shows what the earnings potential really is. Net Earned Premium rose from $9.4B to $15.4 B from 2009 to 2011, i.e. an increase of 63%. Net profit after tax in 2009 was $1.5 B. If all the metrics remained the same then 2011 could have seen an NPAT of $2.5 B versus their actual result of $494M. OK so risk free rates have changed, investment earnings also and they have had large cat losses like never before. This will change. Don't be surprised by a $1B H1 profit. Roll arm over on this and a full year of $2b. At 10 times PE this gives a share price of $18. Oh and that gives us a divi back to $1.28 at their stated 70% payout ratio.

Also have a read of page 19 of 2011 Annual, and I think you'll see why the above is not a stretch.

Yes $18 at a 10 x PE, that's my initial target.

I hope we get early guidance post 30 June, of likely first half result.

Good luck to all.