QBE Insurance Group
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- Indepth analysis of ASX listed shares
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The details of the scaleback of QBE’s share purchase plan (SPP), announced today, are a good example of why value investors prefer share prices to fall in the short term. Had QBE’s share price not rebounded strongly over the past six weeks, it’s likely there would have been far fewer applications for the SPP.
As expected on 29 Mar 12 (Buy – $14.19), the scaleback has been severe. Subject to you owning at least 10 shares, QBE has generally decided to allot applicants 8.34% of the value of their shareholding. So, for example, if you had 1,000 shares on the record date of 27 February, you’ll be allocated 83 shares at $10.70, worth $888.10. You’ll be refunded any difference.
The allotment date has been pushed back to 11 April. If you want to know the actual number of shares you’ll get before receiving your notification, you can contact Link Market Services from that date on 1800 645 237. Bear in mind that, if you applied for multiple holdings under similar names, you may have been scaled back even more severely.
In other news, QBE held its annual general meeting yesterday. After the horror year that was 2011, the first quarter of 2012 has been much brighter. Large claims expense for the first quarter is expected to be $700m lower than last year, while rises in bond yields will also help. Premium rate increases are also exceeding management’s expectations.
This is all good news, and confirms management’s 13% insurance margin forecast could prove very conservative. The stock is down slightly since 29 Mar 12 (Buy – $14.19) and remains a BUY.
The model Growth and Income portfolios own shares in QBE Insurance.
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