undervalued insurance stock, page-15

From a business perspective, a buyback is something that is most appealing. A business should not have to rely on borrowed funds to keep sustaining its operations. The ability of using free cash flow shows the abililty of a company with good fundamentals.

With your COR statement... a strong operating company (albeit the environment its operating in) would see COR below 100. QBE's Australian operations as an example has COR in the high 80s. But, we are not to judge too critically at a COR above 100 if in a period it is breached. Factoring in investment income, a COR can be as high as 110-115 before it starts eating into profitability. As we never want to see this occuring, it is extremely important that instead of carefully watching % GWP growth from year to year...the quality of book is far more important.