The UK has ruled in favour of policyholders being able to claim on their insurance in the business interruption test case. While an appeal is possible, UBS notes this does not change QBE Insurance’s net exposure of -US$70m given reinsurance protection.
Morgan Stanley notes QBE’s reinsurance caps second half catastrophe losses and any excess BI claims at -US$20m. Tighter wordings in some of QBE’s policies will limit claims, expects the broker.
Overweight retained. The target remains unchanged at $12.75. Industry view: In-line.
Target price is $12.75.Current Price is $9.20. Difference: $3.55 – (brackets indicate current price is over target). If QBE meets the Morgan Stanley target it will return approximately 28% (excluding dividends, fees and charges – negative figures indicate an expected loss).