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Best’s News & Research Service - May 05, 2023 08:40 AM (EDT)

AM Best Revises Issuer Credit Rating Outlook to Stable for QBE Insurance Group Limited’s Key Subsidiaries

  • May 05, 2023 08:40 AM (EDT)
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London //BestWire// - AM Best has revised the outlook to stable from negative for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term ICR of “a+” (Excellent) of QBE Europe SA/NV (Belgium), QBE UK Limited (United Kingdom), and the pooled members of QBE North America Insurance Group (see below for a list of pooled members). The outlook of the FSR is stable. These companies are key operating subsidiaries of QBE Insurance Group Limited (QBE) (Australia), the non-operating holding company of the QBE group of companies.

The Credit Ratings (ratings) reflect QBE’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, favourable business profile and appropriate enterprise risk management.

The revision of the Long-Term ICR outlook to stable reflects sustained improvements in QBE’s underwriting and operating performance metrics to a level more aligned with AM Best’s expectations for the strong operating performance assessment. QBE reported improved combined ratios of 94.2% in 2022 and 93.7% in 2021 (85.7% and 91.5%, respectively, including the impacts of changes in risk-free rates), which compare favourably with weaker underwriting returns in 2020 (104.1%; or 107.4% including the impact of changes in risk-free rates) and the group’s longer-term averages. Furthermore, overall operating returns have strengthened, with QBE’s return on equity, as calculated by AM Best, standing at 8.7% in both 2021 and 2022, compared with -18.2% in 2020 and an average of 2.2% and 1.8% over the past five and 10 years, respectively. AM Best expects these recent performance improvements to prove sustainable over the underwriting cycle, supported by QBE’s executed actions to enhance performance and increase the resilience of the group’s earnings.

QBE’s balance sheet strength assessment is underpinned by consolidated risk-adjusted capitalisation at the very strong level as of year-end 2022, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best expects prospective risk-adjusted capitalisation to remain at least at the very strong level and resilient to challenging operating conditions and underwriting portfolio growth. QBE’s balance sheet strength assessment is also supported by the group’s conservative and liquid investment portfolio and strong financial flexibility, as a regular capital markets participant. The group employs a prudent reserving approach, with a significant reserve margin held over the central estimate. Nonetheless, a partially offsetting factor is adverse development of the central estimate observed over recent years (on an underlying basis), largely impacting the group’s North America and International operations.

QBE’s favourable business profile assessment reflects its excellent geographic diversification and strong competitive positions in its core markets, with an established focus on commercial lines insurance.

The FSR of A (Excellent) and the Long-Term ICR of “a+” (Excellent) have been affirmed, for the following pooled members of QBE North America Insurance Group:

  • General Casualty Company of Wisconsin

  • General Casualty 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 Pilot Insurance Company

  • Stonington 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 use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.

North America Australia Financial Strength Press Release United Kingdom A.M. Best Rating Services, Inc. Insurance Property And Casualty Insurers Belgium Best's Credit Rating Action Issuer Credit Rating

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