Shares in QBE Insurance Group Ltd (ASX: QBE) are soaring this morning on news reports in Germany that insurance giant Allianz is preparing to make a $15 per share takeover offer for its Aussie rival.
The German paper apparently reporting that sources had informed it that the two insurers' chief executives held informal talks before Christmas during which the Allianz boss suggested a $15 per share takeover offer.
QBE has moved to dismiss the speculation and this sounds a story for gullible investors who are this bidding up the share price this morning as others take the opportunity to sell at prices inflated by stories that sound like nonsense.
In fairness the global insurance industry has seen a trend towards large mergers and acquisitions in recent years as operators struggle to attract more customers in mature markers, while emerging markets have proven something of a minefield leaving many global operators burned in their attempts to move into them.
QBE itself is a good example of the problems insurers have encountered in attempts to expand overseas, with its South and North American operations regularly throwing up unexpected problems to the detriment of shareholders.
The stock has been in a strong uptrend ever since the election of President Trump in the U.S. due to investor expectations that groups like QBE will see far better returns on their floats invested in U.S. dollar denominated debt securities.
Others like Suncorp Group Ltd (ASX: SUN) and Insurance Australia Group Ltd (ASX: IAG) have also performed well in recent months and offer investors attractive fully franked dividends.
It's true that the outlook for these kinds of businesses is improving alongside expectations that the global interest rate cycle is now on the move up, but I'm not a buyer of their shares.
If you're interested in big dividends, there may be a better bet for your investing dollars…
