Insurance Group and its subsidiaries’ financial strength rating outlook has been revised from stable to negative by a rating agency due to the insurer’s full forecast “falling short of expectations”.
A.M Best revised the outlook for QBE
Insurance (Europe) Limited (United Kingdom), QBE
Re (Europe) Limited (United Kingdom) and QBE
Insurance (International) Limited (Australia).
It also downgraded the issuer credit ratings to ‘a’ from ‘a+’, downgraded QBE
’s ICR and senior debt ratings to “bbb” from “bbb+”, as well as the debt ratings of the perpetual preferred securities to “bb+” from “bbb-”.
The outlook for all ICRs and debt ratings remains negative, however A.M. Best affirmed QBE
’s financial strength ratings of A (Excellent).
A statement read that the downgrades “follow the announcement on 9 December 2013 that QBE
has revised its full year forecast for 2013 to a level that falls short of A.M. Best’s expectations”.
It went on to say that the group’s consolidated risk-adjusted capitalisation and financial leverage position are expected to improve by year-end 2013, but not to a level supportive of the “a+” ratings held by QBE
’s operating entities prior to this rating action.
“Moreover, the revised forecast brings QBE
’s recent performance to a level that falls short of A.M. Best’s expectations with regard to technical profitability,” it added. “This is due to a number of revisions including greater than expected reserve strengthening on liabilities associated with US programme business. Furthermore, the group’s profit-after-tax has been negatively affected by material write-downs of goodwill and other intangible assets.”
this week admitted that it expects net losses of $250m
for the full year 2013 mainly due to claims provisioning, intangibles, and goodwill write downs in North America.