Good to see the diverging views on QBE (like any good out of...

Good to see the diverging views on QBE (like any good out of favor stock). Here's my two cents on the more positive side:

- The simplification strategy is the right one in my view. QBE tried to develop itself into a leading global insurer by aggressive M&A, whereas in reality this takes centuries to do properly. It just turned out to be a random collection of good and bad businesses. Accordingly, shrinking back to their best businesses should make them an attractive bolt on to a leading global player.
- While Pat Regan has been with the company for some time, he has not been CEO, he did well in the A&NZ business and has had success with turnarounds in a previous life. So I'm happy to give him time to deliver.
- Key underwriting appointments take time. If I was a leading underwriting exec, I would want to see most of the senior mgt team in place before I commit, and would also want to do a lot of due diligence on the underwriting book, so these things take time. I'm also happy for QBE to pay well above market for the right underwriting/risk execs, as long as those benefits are tied to share price performance;
- The low share price is also an important selling point for good execs. They will see more upside here than in many high performing insurers;
- QBE is a big enough stock that when the news starts to turn positive (and it will..at some point), funds that are underweight will be falling over themselves to buy it so the price can move quickly.
- At <$10, in my view QBE has little downside risk (despite the weak 2018 earnings outlook, P/E still low teens and P/BV about 1), some good core businesses, a messy portfolio that is being cleaned up via non core divestments, and a new mgt team with the license to set this up for good growth off a low base over the next few years. In addition, the buyback alone should provide EPS uplift of about 8% once completed.
- QBE is not the best insurer, but investing isn't about which is best. Its about which has the biggest gap between price and value and QBE stacks up well on that basis, at least in my view.