QBE Insurance Group

QBE Insurance’s share price bucked the trend yesterday, falling 5% despite the Reserve Bank cutting the official interest rate by 25 basis points. Lower interest rates in Australia penalise QBE, as they reduce investment returns and increase claims provisions (due to accounting rules). But the large share price fall was more likely a reflection of institutional investors’ fears of another capital raising. Losses from Hurricane Sandy and the drought in the US amongst other claims have put pressure on the balance sheet, and rumours abound that a capital raising isn’t far away. Recently, in Dear QBE: Cut the bloody...

QBE Insurance’s share price bucked the trend yesterday, falling 5% despite the Reserve Bank cutting the official interest rate by 25 basis points. Lower interest rates in Australia penalise QBE, as they reduce investment returns and increase claims provisions (due to accounting rules). But the large share price fall was more likely a reflection of institutional investors’ fears of another capital raising.

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