Long run insurance premium growth should somewhat sit around the GDP growth in regions that QBE do their business, because if there are less business activities, less people will take out insurance.
The market will create its own dynamics. On one hand, the sluggish economy outlook for Europe and US may effect QBE's premium growth (or even negative growth), and rising risk aversion and risk premium on equity will lower the share price. On the other hand Aussie dollar is appreciating strongly, means less AUD value for its foreign units.
QBE is a cheap blue chip company now, but as the trend goes, it may get even cheaper, when the market is trending down, who knows how many institutions are facing redemption flows and are forced to give up their holdings in QBE.
Over time, mean reverting will eventuate, some big institutes just have to sell now.
QBE Price at posting:
$13.89 Sentiment: LT Buy Disclosure: Held
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