QBE Share price drop
- Thread starter eternit
- Start date
A year ago QBE announced
"We anticipate that market pricing will strengthen further post the substantial claims of Superstorm Sandy.
In addition we consider it important to segregate the US run-off business and to recognise at the earliest opportunity any further expected losses, thereby allowing the North American Operations to move forward on a firm footing.
It is frustrating to be reporting disappointing news at a time when the vast majority of our ongoing businesses are performing in line with, or better than, expectations. QBE has a unique franchise in the global insurance and reinsurance markets and we remain positive that we can achieve the level of return our shareholders expect."
So due to a bad year for claims and some provisioning for under performing North American businesses acquired in earlier years they issued a profit downgrade.
This was another downgrade following several years of profit downgrades so the share price slumped.
Over the last 12 months it has been a benign year for natural disasters and people presumed that the previously announced provisioning for the North American businesses would have been adequate so the expectation was that they would be announcing better results, especially against a background of a declining Aus - Us dollar exchange rate. Consequently over the year the sp steadily recovered.
Alas instead they surprised the market by announcing further provisioning against their North American businesses and as a result write-downs in the associated goodwill.
So now we have a situation of uncertainty caused by successive years of profit write-downs where the company has failed to meet their guidance.
QBE carries around $US4bn of goodwill so now people are concerned about how much of that goodwill is supportable.
There are other concerns as well around the fact that they underwrite some of their own insurance and people are wondering just how transparent their books really are after years of acquisitions and the associated leverage percentage if they have further write-downs of intangibles and difficult trading conditions.
Perhaps their European acquisitions will follow the North American scenario in the years to come.
"We anticipate that market pricing will strengthen further post the substantial claims of Superstorm Sandy.
In addition we consider it important to segregate the US run-off business and to recognise at the earliest opportunity any further expected losses, thereby allowing the North American Operations to move forward on a firm footing.
It is frustrating to be reporting disappointing news at a time when the vast majority of our ongoing businesses are performing in line with, or better than, expectations. QBE has a unique franchise in the global insurance and reinsurance markets and we remain positive that we can achieve the level of return our shareholders expect."
So due to a bad year for claims and some provisioning for under performing North American businesses acquired in earlier years they issued a profit downgrade.
This was another downgrade following several years of profit downgrades so the share price slumped.
Over the last 12 months it has been a benign year for natural disasters and people presumed that the previously announced provisioning for the North American businesses would have been adequate so the expectation was that they would be announcing better results, especially against a background of a declining Aus - Us dollar exchange rate. Consequently over the year the sp steadily recovered.
Alas instead they surprised the market by announcing further provisioning against their North American businesses and as a result write-downs in the associated goodwill.
So now we have a situation of uncertainty caused by successive years of profit write-downs where the company has failed to meet their guidance.
QBE carries around $US4bn of goodwill so now people are concerned about how much of that goodwill is supportable.
There are other concerns as well around the fact that they underwrite some of their own insurance and people are wondering just how transparent their books really are after years of acquisitions and the associated leverage percentage if they have further write-downs of intangibles and difficult trading conditions.
Perhaps their European acquisitions will follow the North American scenario in the years to come.
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