S&P Affirms QBE Re (Europe) ‘A+’ Ratings

September 23, 2004

Standard & Poor’s Ratings Services announced that it has affirmed its “A+” long-term counterparty credit and insurer financial strength ratings on Dublin-based non-life reinsurer QBE Reinsurance (Europe) Ltd. (QBE Re Europe). S&P also affirmed the “A+” ratings on QBE Re Europe’s guaranteed affiliates. The outlook on all entities is stable.

“The strength of the QBE group’s commitment to QBE Re Europe, evidenced by its willingness to provide it with explicit support, has prompted Standard & Poor’s to revise its view of QBE Re Europe’s group status to core,” stated S&P credit analyst Peter Grant.

S&P noted that it has also “assigned core status to both QBE Insurance Co. (U.K.) Ltd. (formerly Iron Trades) and Equator Reinsurances Ltd. (Equator Re), whose policyholder obligations are guaranteed by QBE Re Europe.”

S&P explained: “The revision of QBE Re Europe’s group status follows the decision of the Australian regulator, APRA, to disallow an extension of the subordinated guarantee that is currently provided to QBE Re Europe’s policyholders by QBE Insurance (International) Ltd. (A+/Stable/–). The existence of this guarantee had enabled the ratings on QBE Re Europe to be equalized with those on the group’s core operating subsidiaries, despite Standard & Poor’s previous view that QBE Re Europe was strategically important, but not core, to the group.

“The decision to assign core status to QBE Re Europe was reinforced by the recently announced restructuring of the group’s European operations, which will bring QBE Re Europe under the remit of Peter Grove in his revised role as the chief underwriting officer of the European subgroup, and by the group’s decision to bring Equator Re under the day-to-day control of the management team at QBE Re Europe.

“The assignment of core status to QBE Insurance Co. (U.K.) Ltd. reflects the extent of its operational integration with the remainder of QBE’s European operations, its recent rebranding as a QBE company, and the strength of its competitive position in the U.K. employers’ liability market.”

S&P also noted that “Equator Re is the group’s captive reinsurer, domiciled in Bermuda. Its core status is predicated on its growing significance to the group’s overall risk management capabilities.

“The stable outlook on QBE Re Europe and its affiliates reflects the stable outlook on QBE Insurance Group Ltd. (A-/Stable/–), which is underpinned by Standard & Poor’s expectation that the group’s strong operating profitability and adequate capitalization will be maintained.”

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