QBE INSURANCE GROUP LTD (QBE): QBE net profit beat market
consensus due to better-than-expected underwriting and claim management. Net
investment yield was at 2.4% as investment portfolio remains defensively
positioned for continued global volatility. QBE financial strength
remains robust with solvency ratio at healthy levels at 1.79x up from 1.73x,
above S&P’s minimum AA capital requirement of 1.5x.
Investors who prefer a yield pick-up in exchange for the
risk that the bond is written off at point of non-viability, could look at QBE
USD 6.75% 2044NC2024 (Tier 2 bond) which is trading at YTW and YTM of 5.26% and
6.01% respectively. We draw comparisons to another Swiss Re Tier 2 bond with
similar duration, we think that QBE's paper could be trading around 30bps
tighter.
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