QBE Insurance (QBE) has a maintained Outperform recommendation and a $28.84 share price target after the AGM from Australian sharemarket analyst Macquarie Research.

QBE: Margins Looking Up

QBE Insurance is one of the leading provider’s of general insurance and reinsurance services in Australia, the Pacific, Asia, Americas and Europe. In the last 3 weeks the share price has rebounded 26% as renewed sentiment returned to the battered Australian equities market; and at the firms’ AGM last Friday, QBE reaffirmed their outlook. Macquarie Research Equities (MRE) highlights the key facets of this meeting and provides their outlook for the insurance magnate.

The QBE Insurance AGM

The AGM emphasised the following key factors fundamental to MRE’s Outperform recommendation on the stock:

• Management reaffirmed previous CY08 financial guidance: GWP growth and NEP growth of 7.5% and 10% respectively;
• Premium rate expectations have improved: QBE anticipates CY08 rate reductions of only 3% compared to 4% previously forecast;
• Equity hedges partially unwound: With the unwind of 50% of the hedges against the 1.66bn equity portfolio , QBE have positioned themselves to take advantage of a rebound in equity markets;
• Franking rate to decline 20 -25%: The fall in the company’s franking rate to 50% indicates an increase in the firms offshore income;

OBE Action and Recommendation

MRE maintain their $28.84 price target with an Outperform recommendation and their preferred pick in the general insurance space. Finally with the firms’ improved diversification, global catastrophe losses would have to reach record levels to impinge the outlook for the firm.