Australia's largest global insurer has maintained its strong credit ratings, but had its ratings outlook downgraded from positive to stable by S&P Global Ratings.
QBE Insurance Group had its 'A-' issuer credit ratings, as well as the 'A+' issuer credit ratings and financial strength ratings of its core operating companies affirmed, thanks to the group's “very strong” competitive position in both developed and developing casualty markets, solid underwriting and risk-management capabilities, high-quality capital, and diversified and well-structured reinsurance cover.
“Following an especially challenging year which included an unprecedented cost of catastrophes, the affirmation of QBE's current ratings is pleasing and confirms the continued strength of QBE's balance sheet,” said QBE Group CEO Pat Regan.
The multi-line insurer's ratings outlook has been revised, however, because S&P was of the opinion that QBE “is unlikely to realize the material benefits of its remediation activities across the group in the near term,” particularly in its North American operations.
“While it announced further initiatives to strengthen risk selection, pricing, and claims, we believe the group will only progressively realize the benefits,” S&P said. “We anticipate QBE's headline and underlying earnings will rebound in fiscals 2018 and 2019 reflecting lower attritional claims, an improved expense base, and progressive benefits flowing from remediation. We also anticipate reserve stability during the period and effective reinsurance cover for large and weather-related risks, and that the insurer will maintain its very strong capital adequacy.”
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