QBE – Morgan Stanley rates the stock as Overweight

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Hurricane Florence is set to make landfall on Friday on the east coast of the US. Morgan Stanley observes QBE’s catastrophe budget has US$635m remaining   for the second half. The benign first half leaves US$900m aggregate largely preserved, lifting capacity for large losses to US$1.5bn.

Applying QBE’s market share to the potential loss ranges implies a US$50-$100m impact. The broker suggests, given the company’s market share, potential losses are unlikely to hit the maximum allowed for the event.

Overweight rating. Target is $12.00. Industry view is In-Line.

Sector: Insurance.

Target price is $12.00.Current Price is $10.79. Difference: $1.21 – (brackets indicate current price is over target). If QBE meets the Morgan Stanley target it will return approximately 10% (excluding dividends, fees and charges – negative figures indicate an expected loss).

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