I spent Saturday night in the Blue Mountains, about an hour west of Sydney. Unlike the sensible people on this cold, wet, foggy night, I wasn’t perched next to a fire with a good book. I was in a trail running race, the 20km Narrowneck Night Run.

Last year, the sunset views from the Narrowneck ridge were spectacular. This year you couldn’t see 10 metres in front of you. About 14km in it was pitch black and my headlamp worked like the high-beam lights on your car; in the fog I couldn’t see a metre in front of me.

It’s a strangely conducive environment for thinking. The field of runners spreads out until you can’t see any headlamps in front of you and can’t hear anyone behind. There’s the sound of your own feet, instinct alone landing them securely on the gravel, sight unseen. The only other sounds were some light drizzle and heavier breathing. So I start thinking about What We’re Missing on QBE.

And it strikes me that it was a bit of a silly post. The QBE argument is not about the numbers. It’s about management, faith in management and the current loss of faith in management. All of a sudden, I could see myself sitting on the other side of the argument.

For the most part, serial acquirers end up blowing up. From Centro, Allco and Babcock and Brown to ABC Learning and Transpacific, we’ve done a great job identifying them and giving them a wide berth. Where we’ve bent the rules, we’ve usually come off second best. Look no further than Photon Group.

Why is QBE any different? If we’d long been skeptical of this company and its hundreds of acquisitions, would we view the current profit woes as a buying opportunity? Or would we see it as evidence of the acquisition-binge coming unstuck? Perhaps the later, would be my guess, had we started on the opposite side of the fence.

There’s no guarantee that QBE’s woes this year are all catastrophe related. That’s what they tell us, of course, but it’s been the perfect year to brush all sorts of problems under the carpet. The line between catastrophe claims and ‘normal’ insurance claims is not a clear one.

Instead of one bad year, as we’ve been assuming, perhaps QBE’s underwriting standards have deteriorated, its latest acquisitions are duds and shareholders are going to wear the consequences for years to come. Management hubris could well exacerbate the problem.

How do we tell if this is indeed the case? The crucial test for me is how QBE’s competitors’ results compare. As they report over the next month or so, I’ll be lining them up against QBE. If this really has been the year from hell for global insurance companies, they should all be suffering equally. As one of the world’s best (that’s our thesis at least), QBE’s combined operating ratio of 96 should still be better than its peers. If it’s not, we’ve got a lot more thinking to do.

All of a sudden lights, voices and the smell of a barbeque appeared out of the fog blanket in front of me. I crossed the line 10^th 11^th in 96 minutes. Not bad. Running definitely helps my thinking; perhaps thinking helps my running as well?

PS Sunday night was a much more civilised evening at the theatre. If you’re Sydney based, get yourself along to A History of Everything as part of the Sydney Festival. It is brilliant.