AM Best Affirms Credit Ratings of QBE Insurance Group Limited�s Key Subsidiaries

LONDON–(BUSINESS WIRE)–#insurance—AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Rating (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 list below). The outlook of the FSR is stable, while the outlook of the Long-Term ICR is negative. These companies are key operating subsidiaries of QBE Insurance Group Limited (QBE) (Australia), the non-operating holding company of the QBE group of companies.

These Credit Ratings (ratings) reflect QBE’s consolidated 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 negative outlook on the Long-Term ICR reflects pressure on QBE’s strong operating performance assessment following weaker-than-expected results over recent years, including underwriting losses and a significant impairment of goodwill in 2020. The group is executing actions to strengthen earnings and has demonstrated underlying performance improvements in recent periods and a return to underwriting profitability in 2021. However, should these performance improvements not prove sustainable, a negative rating action on the Long-Term ICR is likely. The outlook on the FSR is stable.

The group’s strong operating performance assessment reflects a track record of robust underwriting performance, supported by a diverse earnings profile. However, comparatively weaker underwriting performance in several recent years has weighed on QBE’s five- (2017-2021) and 10-year (2012-2021) weighted average combined ratios of 99.6% and 97.8%, respectively (as calculated by AM Best and inclusive of the impact of changes in risk-free rates). QBE reported an improved combined ratio of 91.5% in 2021 (93.7% excluding the impact of changes in risk-free rates), comparing positively with the long-term averages and recent performance.

QBE’s balance sheet strength assessment is underpinned by consolidated risk-adjusted capitalisation at the very strong level as of year-end 2021, as measured by Best’s Capital Adequacy Ratio (BCAR). The group’s risk-adjusted capitalisation was resilient to the adverse underwriting and investment impacts arising from the COVID-19 pandemic in 2020, although it deteriorated in 2021 due to increased underwriting risk from significant portfolio growth achieved in the year. QBE’s balance sheet strength assessment is also supported by the group’s conservative and liquid investment portfolio and strong financial flexibility. The group employs a prudent reserving approach, with a significant reserve margin held over the central estimate. Nonetheless, a partially offsetting factor is the further adverse development of the central estimate observed over 2021 (excluding COVID-19-related releases), largely driven by deterioration in the group’s North America operations.

QBE’s favourable business profile assessment reflects its excellent geographic diversification and its 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. For more information, visit www.ambest.com.

Copyright © 2022 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Contacts

Alex Rafferty, ACA
Associate Director, Analytics
+44 20 7397 0312
alex.rafferty@ambest.com

Edward Zonenberg
Senior Financial Analyst
+1 (908) 439-2200, ext. 5135
edward.zonenberg@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
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Jim Peavy
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