Best Affirms QBE Re (U.S.) ‘A’ Ratings

A.M. Best Co. has affirmed the financial strength rating of ‘A’ (Excellent) and issuer credit ratings of “a” of the New York-based QBE Re Group (U.S.) and its members. The rating actions apply to QBE Reinsurance Corporation, QBE Insurance Corporation (QBE
Insurance), both of Philadelphia, and QBE Specialty Insurance Company of Bismarck, N.D. The outlook for all ratings is stable.

Best said the “ratings reflect QBE Re’s adequate risk-adjusted capital position as well as support from the group’s ultimate parent, QBE Insurance Group Limited, one of Australia’s largest insurance/reinsurance organizations, which provides capital and facilitates reinsurance support.

“Broadly speaking, QBE Americas Group, which includes QBE Re, has been evolving as several acquisitions have helped expand their platform. As the enterprise continues to streamline these acquisitions, business plans are being modified to meet management’s strategic objectives.”

Best also explained that historically, “QBE Insurance and QBE Specialty ceded approximately 80 percent of their business to QBE Reinsurance Corporation; however, this reinsurance relationship was terminated, and going forward both entities have entered into a reduced quota share agreement with QBE’s Bermuda-based captive reinsurer.

“In addition, the recent acquisition of the ZC Sterling agency has brought on new premium volume for both QBE Insurance and QBE Specialty, which management believes will be an area of growth over the next several years. QBE Specialty also expanded its footprint by having the former Praetorian Specialty Insurance Company merged into its book of business.”

Best also noted that QBE’s management “continues to make progress with regard to the North American operations.”

The rating agency indicated that it “understands that QBE Re is strategically important to the organization’s long-term plans. QBE Re remains conservative regarding its investment philosophy with a substantial portion of its investment portfolio allocated to cash and cash equivalents. This conservative investment philosophy has greatly reduced the volatility associated with the financial markets over the past several months.”

“Partially offsetting the aforementioned positive rating factors are some concerns about QBE Re’s adverse loss reserve development, which has reduced operating results over the last two years.”

Source: A.M. Best –