The QBE Insurance Group Ltd (ASX: QBE) share price hit a 2017 low at $9.65 yesterday after the company updated the market following the natural disasters of hurricanes Harvey, Irma, Maria and the Mexican earthquakes. The company advised that it will take a US$600 million hit to its earnings and its 2017 combined operating ratio target will likely rise to between 100%–102%.
Following yesterday’s sell off, QBE’s share price was up 2.5% this morning after analysts at Morgan Stanley declared that it was “time to buy” shares in QBE. This is because the market has priced in the downside in claims to be paid due to these natural disasters but none of the potential upside from future premium and interest rate hikes.
QBE has said 2017 will likely prove to be the costliest year in the history of the global insurance industry. Investors will need to consider whether they expect the material increase in 2017 claims costs to repeat in 2018 or if they forecast large individual and catastrophe claims to return to long-run levels. Analysts like Morgan Stanley certainly expect the latter.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of February 15th 2021
Motley Fool contributor Kevin Gandiya owns shares in QBE Insurance Group Ltd.
You can find Kevin on Twitter @KevinGandiya
The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
- Warren Buffett is buying banks – should you too? – November 16, 2018 10:34am
- Telstra CFO to replace Elon Musk as Chair on Tesla Board – November 9, 2018 11:08am
- 5 ASX shares that I think are your best bet on Melbourne Cup Day – November 6, 2018 7:00am