dividend, cr or nada, page-50

Fat Bloater,

In 2011, Qbe had a major cats allowance of 8% of NEP based on previous years experiences. This blew out to 10.5% reducing the insurance margin.

In 2012, Qbe allowed a 10.5% major cats allowance. This is forcast to blow out to 12%.

Do you get my point?

Qbe mngt have responded by giving up a lot of unprofitable business especially in high risk areas of Nth Qld and the tornado states of the US and have achieved over 5% price rises on renewals. Even with these actions, the major cats have blown out.

I understand the historical average over the last 10 years has been in the vicinity of 6 to 8% of NEP.

So, can you imagine if we get back to average major cats allowance. There is a 4% upside already without any other factors going our way.