QBE first glance

Operationally sound, gross written premiums are up strongly, the returns to float (investment returns across the fixed income portfolio) are vastly larger than two years ago, and the balance sheet is in good nick.

Guidance (which was updated only a month out from the result) for the full year was maintained.

Catastrophic claims are running higher than one would like (e.g. New Zealand floods) but that is part and parcel of being an insurance company.

Similar to SUN yesterday, the results are strong, and there is the hope of an even better result this coming year if catastrophic claims behave (which you can’t know, in advance) and the general business momentum from higher pricing and volume underpins the investment thesis.

SUN trades at 12-13x, QBE below 11x, compared to a market multiple of ~15x, strikes us a good deal.

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Please note that past performance is not a reliable indicator of future performance.

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