Peppie,I have thought about your comments for a few days now.Let...

Peppie,

I have thought about your comments for a few days now.

Let me respond.

Your statement of "EPS of 80-90c for FY14 x 15 = $12 -$13.50" would be based on a very negative outlook for next year. I understand that 2012 & 2013 have not been great years for QBE so you have a reasonable case to suggest this outcome.

However, with FY 2013 still having 2.5 months to go, I suspect the 2nd half is tracking a lot better than consensus.

I will now respond to your points.

1. Agreed- poor 1st half results

2. US business is definitely a problem.
I think the crop business needs Congress to pass the 5 year farm bill to give security to the crop insurers what govt assistance wlll be provided. 2013 is looking like a bumper year so I suspect 13 to 14% return on $1.7 billion earned premiums will be achieved. The Lender placed business is the real problem. This cyclical business has had its margins squeezed by regulators and the volume reduced due to better economic conditions in the US. A lot of costs will have to be taken out of this business to make it profitable again or gaining new business to make up for the drop in premiums to around $1 billion a year.

3. Frank and Rumpler need to take responsibility for the balboa acquisition. I suspect any further bank distribution deals would deal with this issue better.

3. US hurricane season technically finishes at end of Nov but it looks more than likely that the US mainland missed any events

4. Belinda Hutchinson needs to be accountable and I think her future will depend on the success of Neal next year

5. Disagree. the new board appointments are experts in their fields in the US and Asia. Should help manage the expansion into Asia & Latin America and new markets in the US.

6. Business model is becoming universal with the Manilla Claims Centre handling claims for Aust, US & Europe.

7. Disagree. I think Frank's role as chairman of Steadfast is neutral if not slightly beneficial to the development of new business between QBE & Steadfast.

8. Purchase of Elders shares was terrible. However the acquisition of the Elders insurance business was a masterstroke and will only get better with the rapid development of the Agriculture industry in Aust to feed the burgeoning Asian middle class.

9. The global warming argument can be said about any casualty insurer.

10. This is true but with currency, interest rates and bond rates all tending to return to long term averages, this will massively increase Qbe earnings over next few years

In regards to their assets, Qbe's only business running at top of its cycle would be the Australian business so I dont that is an option. If they can sell Pitt street on a 6% yield and they can use that capital to return 12%, it may be earnings accretive.

Qbe is the number 1 business insurer in Australia and is Australia's only true global insurer. The years of massive expansion has finally caught up but they are being addressed.