I agree that lack of 'trading update' etc etc is good news.. The...

I agree that lack of 'trading update' etc etc is good news..

The positives are that QBE are on a cost cutting mission and that should directly impact Insurance Profit..

I expect Underwriting profit to be up slightly as a percentage of NEP and the same for return on funds invested which should push that Insurance profit up as a %

There are some favourable factors that are hard to quantify such as AUS$, discount rate, impact of cost savings, etc etc

Looking at Suncorp, it seems they are trading on a p/e of around 14 on past earnings but they do pay a higher dividend than QBE which is the primary driver for SUN share price i believe.. there is not much scope there for capital growth in the SP based on future earnings

With 1369M shares on issue QBE would need to be earning US $0.77 per share to justify a p/e of 14 on current share price...because on past results they are trading at p/e of approx 25

Herein lies the risk.. if interim results point to full year earnings in the range of US$0.75-0.85 then I believe it is reasonable to have a share price at current levels and also to expect an increasing dividend, especially if they review the payout % which they have flagged..


There is also upside risk in terms of reduced claims, better expense management, more growth assets in portfolio etc etc

The downside risk is that some of the future earnings potential is already priced in so IMHO anything less than a full year guidance of earnings around the US$0.75 would be cause for pressure on the share price