is to partially sell strata CHU Underwriting Agencies
and Underwriting Agencies of Australia (UAA
) businesses as it moves to create a joint venture structure for the two businesses.
Yesterday Insurance Business reported the company plans to create a joint venture structure
for the two businesses and that the agencies would only be partially sold.
Group CEO John Neal
stressed that the insurer will maintain 100% of the underwriting and retain a share in the ownership of the business, although it is undecided how much.
has appointed advisors in Australia to handle the sale. QBE
will gauge the interest and then decide how to structure the transactions.
CHU specialises in strata and UAA
has a focus on mobile plant. Speaking at a first half of the year results media briefing yesterday, Neal explained why the insurer has chosen those agencies: “The only other agencies we own are inextricably linked with the underwriting […] so you wouldn’t really deems them to be independent underwriting agencies.”
In an analyst call, also yesterday, Neal explained the insurer does not receive “capital recognition” from owning the agencies.
“Our agency businesses are highly valued but in reality, from QBE
’s perspective, we value the underwriting that comes with these businesses in that no regulator or rating agency will give us any capital recognition for ownership of these agencies.”
revealed it would also complete the sale of its Central and Eastern European businesses in the second half of the year and divest its US agency business. QBE
will retain its middle market business in North America. Neal stressed this is not due to lack of interest and that the company was in fact “overwhelmed” by the amount of interest in acquiring it.
He said the middle market business in North America had bounced back: “In the first half of the year we have seen the performance stabilise, client retention rates are back to the level we were targeting and the claims ratio is doing exactly what it needed to.
”We value it and consider it a key component of our North American plans going forward.”