With 30% of QBE’s insurance business in North America, the 20% drop in the share price after Hurricanes Harvey and Irma now looks excessive.
It’s estimated that the net impact of these events for QBE was $600 million, comfortably short of the $1.1 billion gross costs implied as the storms made landfall.
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However, based on after-tax earnings of the Australia and New Zealand operations only, we estimate that QBE’s 2H17 dividend will fall from 33 cents per share down to 10 cents.
After posting an intra-day low of $9.65 on October 3rd, the share price has recovered back over $10.80 in early trade.
In our view this bounce back is approaching technical resistance and internal momentum indicators are suggesting a move lower in the near-term.
Investors should exit long QBE positions and look to reenter in the lower $10.00 handle.
QBE
