QBE has announced the new Ogden Rate in the UK will result in a -US$60m impact to pre-tax earnings in the first half. This is more severe than Morgan Stanley had estimated.
The charge implies a -11% reduction to first half and -6% reduction to FY19 cash earnings, all else being equal.
Overweight rating maintained. Target is $12.70. Industry view is In-Line.
Target price is $12.70.Current Price is $11.70. Difference: $1.00 – (brackets indicate current price is over target). If QBE meets the Morgan Stanley target it will return approximately 8% (excluding dividends, fees and charges – negative figures indicate an expected loss).