LONDON--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a+” of QBE Europe nv/sa (Belgium), QBE UK Limited (United Kingdom), and all the pooled members of QBE North America Insurance Group (see list below), with the exception of National Farmers Union Property and Casualty Company (NFU P&C) (Sun Prairie, WI). These companies are key operating subsidiaries of QBE Insurance Group Limited (QBE) (Australia), the non-operating holding company of the QBE group of companies. Concurrently, AM Best has affirmed the Long-Term ICR of “bbb+” of QBE. The outlook of these Credit Ratings (ratings) remains stable. For NFU P&C, AM Best has maintained the under review with negative implications status for the FSR of A (Excellent) and the Long-Term ICR of “a+”.
NFU P&C’s ratings were placed under review with negative implications due to the announcement by QBE that it has entered an agreement to sell the company to National General Holdings Corp. (NGHC) (headquartered in New York, NY). The transaction is expected to close in the second half of 2019.
The ratings of QBE reflect its balance sheet strength, which AM Best categorises as very strong, as well as its strong operating performance, favourable business profile and appropriate enterprise risk management.
QBE’s balance sheet strength is underpinned by consolidated risk-adjusted capitalisation, which was maintained at the very strong level at year-end 2018, as measured by Best’s Capital Adequacy Ratio (BCAR).
However, following a reduction in BCAR scores resulting from a post-tax loss in 2017, the recovery of the scores in 2018 was below AM Best’s expectation, due to continued share buybacks and foreign exchange impact. AM Best expects prospective risk-adjusted capitalisation to improve due to management actions aimed at portfolio de-risking, such as the purchase of a stronger reinsurance protection and the disposal of some high-risk portfolios.
QBE’s favourable business profile is supported by its geographic diversification and strong competitive position in its core markets. Following depressed performance, the group initiated a portfolio remediation exercise in 2017. As part of this, the group exited a number of unprofitable segments in 2018, in particular in Latin America, Asia and the United States. In addition, the group has focused on improving its pricing and risk selection capabilities, aiming to optimise capital allocation and improve the underlying loss experience. As a result of these actions, 2018 results showed moderately improved attritional loss ratios and good rate increases across the group’s main business divisions. The combined ratio fell to 96% from the prior (2017: 105%, as calculated by AM Best), benefiting from a significantly lower impact from catastrophe losses during the year. Continued portfolio de-risking and proactive underwriting performance management are expected to improve prospective performance and reduce the volatility of key performance metrics.
The FSR of A (Excellent) and the Long-Term ICRs of “a+” have been affirmed with stable outlooks for the following pooled members of QBE North America Insurance Group:
- General Casualty Company of Wisconsin
- General Casualty Insurance Company
- Hoosier Insurance Company
- NAU Country Insurance Company
- North Pointe Insurance Company
- Praetorian Insurance Company
- QBE Insurance Corporation
- QBE Reinsurance Corporation
- QBE Specialty Insurance Company
- Regent Insurance Company
- Southern Fire & Casualty Company
- Southern Pilot Insurance Company
- Stonington Insurance Company
- Unigard Insurance Company
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
AM Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit www.ambest.com for more information.
Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.