Ann: QBE ANNOUNCES SALE OF AUSTRALIAN AGENCY BUSINESSES, page-10

As noted above the cash price received now is 8X EBITDA but like most deals has an earn out where a good performance of the business in the next two years increases the purchase price payable.

What QBE was saying about the agency business was that they most valued the underwritting business it generated, so having retained this business for 10 years must be considered as part assessing the deal.

Given the share price performance yesterday the market liked the news. And more so than the sale price I think the market likes the fact that management are executing their stated strategy of selling their non-core businesses first with the US and now the Australian agency business and improving their balance sheet after the spending spree the former CEO went on. A robust balance sheet which lets face is critical for any insurance company will only help in the company being able to meet future events. Next up is the LMI business float.

All in all if QBE provides a no surprises profit result next week with pro forma guidance for the 2016 year, executes the LMI sale/float, fixes up its overseas businesses and continues to focus on markets it has a competitive advantage in then the market will start to buy into the whole turnaround story and I cant see us trading at these levels much further, particularly with QBEs leverage to the falling AUD and rising US long term bond rates.