AM Best has affirmed the Financial Strength Ratings (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 the pooled members of QBE North America Insurance Group (see list below). 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) is stable.
The ratings reflect QBE’s 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 assessment is underpinned by consolidated risk-adjusted capitalisation at the strongest level at year-end 2019, as measured by Best’s Capital Adequacy Ratio (BCAR). Balance sheet strength is supported by the company’s conservative and liquid investment portfolio and strong financial flexibility. During the first half of 2020, QBE executed several actions to strengthen its balance sheet and increase its resilience to adverse underwriting and investment impacts arising from the COVID-19 pandemic. These actions included raising equity, the issuance of hybrid capital instruments, the disposal of certain higher-risk components of the group’s investment portfolio and the purchase of additional reinsurance protection.
The group’s strong operating performance assessment reflects a track record of robust underwriting performance, supported by a diverse earnings profile. QBE has a 10-year (2010-2019) weighted average combined ratio of 96.7%, as calculated by AM Best. Technical performance over more recent periods has been impacted by a number of weather events, while the contribution from favourable prior-year reserve development has reduced, with releases in QBE’s Australia Pacific division offset by deterioration in its North American operations. The group reported a combined ratio of 109.5% for the first half of 2020, inclusive of underwriting losses related to COVID-19 (103.4% excluding the impact of changes in risk free rates). However, QBE has observed improvements in attritional loss ratios and good rate increases in core segments since 2017, reflecting the group’s focus on pricing and on enhancing its risk selection capabilities. AM Best expects QBE’s focus on rate adequacy, coupled with improving market conditions in its core segments, to contribute positively to technical performance over the coming years.
QBE’s favourable business profile assessment reflects its excellent geographic diversification. The group benefits from strong competitive positions in its core markets, with an established focus on commercial lines insurance.
The FSRs 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 Guide to 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.
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Alex Rafferty, ACA
Associate Director, Analytics
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Senior Financial Analyst
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Manager, Public Relations
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Director, Public Relations
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