Best’s News & Research Service - August 24, 2018 01:18 PM (EDT)
A.M. Best Revises Outlooks to Negative for QBE Seguros
- August 24, 2018 01:18 PM (EDT)
Oldwick //BestWire// - A.M. Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” for QBE Seguros (San Juan, PR).
The ratings reflect QBE Seguros’ balance sheet strength, which A.M. Best categorizes as adequate, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management. The ratings also consider the extensive reinsurance support provided by its affiliate, Equator Reinsurances Limited, and the organizational support it historically has received from its U.S. affiliates, as well as capital and other financial support measures provided to QBE Seguros by QBE Insurance Group Limited (QBE).
The revised rating outlook to negative reflects the pressures and financial constraints placed on the company in the aftermath of Hurricane Maria and its long-term role in QBE’s global enterprise, as QBE continues to divest of its non-performing businesses worldwide. The company specifically was excluded from the sale of QBE’s Latin America operations to Zurich Insurance Group Ltd, which was announced in February 2018.
Despite record losses from Hurricane Maria, capital currently and prospectively is viewed as adequate as QBE is injecting $14.3 million of redeemable capital in 2018, and Equator Reinsurances Limited posted over $500 million in collateral via letters of credit and financial guarantees to support these reinsurance recoverables. Furthermore, QBE Seguros has a limited business profile as all of its business is written in Puerto Rico, a highly competitive market with a number of highly reputable, long-standing brand name insurers. QBE Seguros’ highly concentrated geographic footprint also exposes the company to extreme tail events, such as Hurricane Maria.
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