(Source: Reuters)
(The following was released by the rating agency)
Fitch Ratings has assigned QBE Re (Europe) Limited an Insurance Financial Strength (IFS) Rating of 'A+' with Stable Outlook and withdrawn the rating on QBE Reinsurance (Europe) Limited. Fitch has also affirmed all other ratings for QBE Insurance Group Limited (QBE). A full rating list is shown below.
KEY RATING DRIVERS
The new rating and rating withdrawal follow a restructuring of QBE's reinsurance operations, and reorganisation of Dublin-based QBE Reinsurance (Europe) Limited. London-based QBE Re (Europe) Limited consolidates the reinsurance operations of QBE Reinsurance (Europe) Limited and Brussels-based Secura N.V. The rating of QBE Reinsurance (Europe) Limited has been withdrawn as it now operates as a branch of QBE Re (Europe).
The affirmation of the group's other ratings reflect improving capital ratios; financial leverage consistent with Fitch's expectations for QBE's rating levels and historically robust operating performance.
The rating of QBE Lenders' Mortgage Insurance Limited (QBELMI) is underpinned by it strong standalone capital ratios, historically prudent underwriting and risk acceptance, and a conservative investment portfolio.
Fitch will complete a review based on full year 2012 results in mid-2013.
RATING SENSITIVITIES
The key rating triggers that could result in a downgrade include:
-Weaker capital ratios. Under the Australian regulators' previous prudential standards Fitch considers coverage in excess of 1.6x the group's regulatory minimum capital requirement, as consistent with the group's ratings.
-Financial leverage in the short-term above 30%, and interest coverage averaging over a multi-year period below 7x.
-Underwriting underperformance over the longer term including combined ratios in excess of 103% and reserve deficiencies.
The key rating trigger that could result in a downgrade for QBELMI would be failure of the group to provide capital support in a very severe economic downturn, although Fitch considers this unlikely. A downgrade of the group's ratings could also result in a downgrade to QBELMI's rating. However, this would ultimately be subject to Fitch's assessment of QBELMI's capital ratios.
Fitch considers an upgrade to be unlikely as QBE has, in the agency's view, been comfortable in running lower capital ratios and higher leverage ratios to support profitability. These weaker metrics offset QBE's historically solid financial performance, financial flexibility, reserving adequacy and low level of investment risk.
An upgrade of QBELMI's rating is unlikely given its monoline profile. However, a higher group rating could result in a higher rating for QBELMI.
List of rating actions
QBE Re (Europe) Limited
IFS rating assigned at 'A+', Outlook Stable
QBE Reinsurance (Europe) Limited
IFS rating 'A+' with Outlook Stable withdrawn
QBE Insurance Group Limited (QBE)
Long-Term IDR affirmed at 'A', Outlook Stable
GBP190,692,000 senior unsecured debt affirmed at 'A-'
USD210,770,000 senior unsecured debt affirmed at 'A-'
GBP300,000,000 perpetual preferred securities affirmed at 'BBB'
USD1,000,000,000 subordinated debt affirmed at 'BBB'
GBP325,000,000 subordinated debt affirmed at 'BBB'
QBE Insurance (Australia) Limited
IFS rating affirmed at 'A+', Outlook Stable
QBE Insurance (International) Limited
IFS rating affirmed at 'A+', Outlook Stable
QBE Insurance Corporation
IFS rating affirmed at 'A+', Outlook Stable
QBE Insurance (Europe) Limited
IFS rating affirmed at 'A+', Outlook Stable
QBE Hongkong & Shangjai Insurance Limited
IFS rating affirmed at 'A+', Outlook Stable
QBE Reinsurance Corporation
IFS rating affirmed at 'A+', Outlook Stable
QBE Lenders' Mortgage Insurance Limited
IFS rating affirmed at 'AA-', Outlook Stable
Source link: http://www.reuters.com/article/2013/02/15/markets-ratings-idUSWNB0036520130215
