Best Sees No Ratings Change for QBE Despite Lowered Profit Estimates

January 24, 2012

A.M. Best Europe – Rating Services Limited has commented that the ratings of Australia’s QBE Insurance Group Limited and its main insurance subsidiaries are unchanged following the market update issued by QBE on January 12, 2012, in which it revised its guidance for profit after tax for 2011 to a level 40 to 50 percent lower than the US$1.3 billion it reported in 2010.

Best noted that “higher than expected catastrophe losses in the second half of the year combined with a volatile investment environment mean that earnings and year-end 2011 risk-adjusted capitalization are likely to be lower than previously anticipated.”

However, Best also indicated that “QBE’s management is taking actions to strengthen risk-adjusted capitalization in 2012, including the reduction to the year-end 2011 dividend -” a process which the rating agency is continuing to monitor. Best said it would analyze the “impact of these actions and QBE’s prospective operating performance on risk-adjusted capitalization and financial flexibility.”

On October 12, 2011, A.M. Best Europe affirmed the financial strength rating (FSR) of’ A’ (Excellent) and issuer credit ratings (ICR) of “a+” of UK-based QBE Insurance (Europe) Limited, QBE Insurance (International) Limited (Australia) and QBE Reinsurance (Europe) Limited, which is based in Ireland, the “key operating subsidiaries of QBE, the non-operating holding company of the QBE group.”

Best also affirmed the ICR of “bbb+” and all debt ratings of QBE, and upgraded the FSR to ‘A’ (Excellent) from ‘A-‘ (Excellent) and the ICR to “a+” from “a-” for Penna.-based North Pointe Insurance Company, as well as affirming the FSR of ‘A’ (Excellent) and ICRs of “a+” of QBE Regional Insurance Group and its members.

In addition Best affirmed the FSR of ‘A’ (Excellent) and ICRs of “a” of QBE Re Group – US and its members, as well as, NAU Country Insurance Company, which is based in Ramsey, Minn., and Praetorian Insurance Company, based in Harrisburg, Penna.

Best’s outlook for all of these ratings is stable.

Source: A.M. Best

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