QBE Insurance Group (QBE)

By Jason Fittler

QBE is one of the world's top 20 general insurance and reinsurance companies, with operations in more than 40 countries.

The company has grown strongly since listing on the ASX through a combination of organic growth and ongoing acquisitions in Australia and abroad.

QBE is currently a constituent of the S&P/ASX20 benchmark on the ASX.

Given softening trends in the US and persistent tough conditions in Australia and Europe, QBE's expectation of "broadly flat" global pricing continues to appear optimistic. 

Despite this backdrop, cost savings, specific initiatives and continued re-weighting to growth assets should support their 2015 and 2016 underlying margins.

With large loss experience to date tracking broadly in line with expectations – US slightly better, Australia and Pacific worse, individual risk benign. We continue to believe a margin around the mid-point of 8.5-10.0% guidance is achievable.

Currently trading around $13.95, we have a price target of $15.00 and forecast gross dividend of 7.3% giving an expected return over the next 12 months of 8%.

QBE has struggled over the past years on the back of two issues, higher than expected high-value claims and low-interest rates.

With claim down back in line with expectations and long-term bonds rate point to increase, QBE is one to accumulate at the current price.

Over the past 12 months, we saw the price of the company below $13 per share and above $14.50 per shares.

QBE is a company I would look to buy on weakness and hold for the income and long-term growth.

For more information about QBE Insurance Group (QBE) please contact us on 07 4771 4577.