QBE: Unbowed and on the prowl

The company might be on the nose with some investors, but inside the company it seems to be business as usual

Scott Phillips (TMFGilla)

Scott Phillips is The Motley Fool’s Chief Investment Officer in Australia. He is Advisor of The Fool’s flagship investment service, Motley Fool Share Advisor and the Portfolio Manager of Motley Fool Everlasting Income and Premier Portfolio, as well as running our most premium service, Motley Fool Platinum. He is passionate about investing, having managed his own portfolio for over 15 years. A dyed-in-the-wool Fool (in the best way), he has been a member of The Motley Fool since 1999. Scott holds a Bachelor of Commerce (Management) and a Graduate Diploma of Accounting. Before joining The Fool, Scott worked in various Sales and Finance roles in industry, which has allowed him to see the good, bad and the ugly of corporate management close-up. Giving him a great understanding of the way businesses run – and what separates the business wheat from the chaff – Scott wholeheartedly agrees with Warren Buffett when he said he was a ‘better investor because I am a businessman and a better businessman because I am an investor’. Scott left a successful career to follow his passion – helping our members achieve the best possible investment returns, and helping Australians learn to better manage their money. It’s no surprise he ended up at The Motley Fool.

Published March 7, 2012 2:03 pm AEDT

QBE Insurance Group Limited (ASX: QBE) may be on the nose with investors at the moment, with a share price not all that far from six-year lows, but the company is anything but a deer in the headlights.

Recent news hasn't been kind. Profits are under siege from poor investment returns in the United States (due to low bond yields) and a nasty series of natural disasters, and the current CEO, Frank O'Halloran, has announced he will be departing the insurer. Add in a capital raising, and – on the surface at least – there are plenty of reasons for investors to be a little gun shy

Despite all of the external pressures, QBE is refusing to be spooked into rewriting its playbook. Instead, the company today announced a $400m deal to buy some of HSBCs insurance operations in Hong Kong and Argentina.

O'Halloran has built the Australian insurance giant into a truly global insurer by judiciously choosing between organic growth and growth by acquisition, depending on the stage of the insurance cycle and the returns on offer. This buy seems to be straight from the QBE handbook, a reassuring sign that the company isn't allowing the market noise to distract it from running its business.

The company is yet to comment on any impact from the current round of Australian floods – we should assume there will be some impact – but those semi-regular occurrences are to be expected. (Suncorp Group Ltd (ASX: SUN) and RACV recently released early figures on the impact, but Insurance Australia Group (ASX: IAG) considered it too soon to estimate losses.)

Insurance is necessarily a lumpy business – that is why we take out insurance after all – and this latest purchase is simply another sign that QBE is taking these things in its stride and concentrating on business as usual.

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Scott Phillips is a Motley Fool investment analyst. Scott owns shares in QBE Insurance. You can follow him on Twitter @TMFGilla. The Motley Fool's purpose is to educate, amuse and enrich investors.This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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