QBE Completes Sale of Argentine Workers’ Compensation Business

QBE announced it has completed of the sale of the group’s workers’ compensation business in Argentina to La Caja Aseguradora de Riesgos de Trabajo ART SA, a company wholly owned by the Werthein Group, which has had a significant presence in the Argentine insurance market over the past two decades.

The effective sale date was August 10, 2015.

Total proceeds after settlement of a pre-disposal dividend are around AUD$55 million (USD$39.8 million), representing approximately 1.8x AIFRS* book value. Profit on sale before tax is approximately AUD$21 million (USD$15.2 million), QBE said in a statement.

As required by Australian Accounting Standards (AASB 121), QBE will recognize a foreign currency translation reserve (FCTR) reclassification charge of AUD$65 million (USD$47.1 million) out of equity and into the income statement, the statement continued. This is a non-cash item and will not impact shareholders’ funds.

The FCTR recycling charge, together with funding and transaction costs and taxes, will give rise to an overall loss on sale of around AUD$73 million (USD$52.9 million), the company continued.

The sale of the Argentine workers’ compensation business will positively affect the group’s prescribed capital amount (PCA), as well as its S&P capital position, the company said, explaining that this is due to the removal of significant risk charges and approximately AUD$19 million (USD$13.8 million of

*Australian International Financial Reporting Standards

Source: QBE