QBE Insurance Group

Yesterday QBE Insurance announced that it had received subscriptions from more than 75,000 retail shareholders for its share purchase plan. Although details haven’t yet been announced, a fairly severe scale back is certainly coming. With QBE to issue 14m shares through the SPP, our guess is that applicants will only receive roughly $2,000 worth of shares each at the SPP price of $10.70, with the remainder refunded. It’s a disappointing but not unexpected outcome. The stock is up 9% since QBE share purchase plan arbitrage of 16 Mar 12 (Buy – $13.00) and we’ll update the situation again when the scale back...

Yesterday QBE Insurance announced that it had received subscriptions from more than 75,000 retail shareholders for its share purchase plan. Although details haven’t yet been announced, a fairly severe scale back is certainly coming. With QBE to issue 14m shares through the SPP, our guess is that applicants will only receive roughly $2,000 worth of shares each at the SPP price of $10.70, with the remainder refunded. It’s a disappointing but not unexpected outcome. The stock is up 9% since QBE share purchase plan arbitrage of 16 Mar 12 (Buy – $13.00) and we’ll update the situation again when the scale back details are confirmed. Our recommendation remains BUY.

Note: The model Growth and Income portfolios own shares in QBE Insurance.

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