Best Affirms QBE’s U.S. Subsidiaries Ratings; Upgrades North Pointe

October 1, 2009

A.M. Best Co. has affirmed the various financial strength ratings (FSR) and issuer credit ratings (ICR) of the operating entities of QBE the Americas, which include the New York-based QBE Re Group, the Delaware-based QBE Regional Insurance Group and its members, Praetorian Financial Group and its members, National Farmers Union Property and Casualty Company, United Security Insurance Company and North Pointe Insurance Company (NPIC).

Best also upgraded the FSR to ‘B++’ (Good) from ‘B+’ (Good) and ICR to “bbb” from “bbb-” of North Pointe Casualty Insurance Company (NPCIC) of Jacksonville, Fla. Best noted that the “financial performance of NPCIC over the recent five-year period has been commensurate with that of other ‘B++’ (Good) rated organizations.”.

The outlook for all of the ratings is stable. (See link below for a detailed listing of the companies and ratings.)

“Each rating action considerers the strategic importance of the rated operating company to the overall operations of the QBE the Americas, and also reflects the adequate risk-adjusted capitalization and operating performance of each individual rated operating subsidiary and the consolidated group,” Best explained. “The ratings also contemplate the niche and/or regional focus and diversified book of business within the respective operating groups.”

Best also pointed out that “the QBE the Americas segment remains strategically important within the overall organization of QBE Insurance Group Limited (QBE) (Australia), which is the ultimate parent and holding company. QBE has demonstrated an historical track record of supporting its operations throughout the world, which is a positive rating attribute.

“Partially offsetting these positive rating factors is the significant acquisition activity, which is central to the QBE the Americas strategy.”

In discussing QBE the Americas rapid growth, Best noted that since the beginning of 2007 it has “more than doubled its footprint within the United States. There are numerous inherent risks associated with a growth by acquisition strategy, which include but are not limited to integration issues, strain on management’s time, as well as the potential for legacy issues to emerge. Despite these concerns, QBE the Americas does have a successful track record integrating acquisitions profitably.”

Lastly, Best said it has “placed the FSR of ‘B++’ (Good) and ICR of “bbb+” under review with negative implications for Capital City Insurance Company, Inc. (Capital City) (Columbia, SC). These rating actions reflect Capital City management’s consideration of various options to explicitly support this entity’s future operation and business strategy.”

For a complete listing of QBE the Americas subsidiaries’ FSRs, ICRs and debt ratings, go to:

Source: A.M. Best

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