The Long-Term Issuer Credit Rating (Long-Term ICR) outlook of QBE Insurance Group, an Australia-based re/insurance company, has been revised to stable from negative by credit rating agency AM Best.
QBE’s Financial Strength Rating (FSR) of A (Excellent) was also affirmed by AM Best, as well as 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.
The outlook of the FSR, the credit agency noted, is stable.
The ratings reflect QBE’s 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 revision of the Long-Term ICR outlook to stable reflects sustained improvements in QBE’s underwriting and operating performance metrics to a level more aligned with AM Best’s expectations for the strong operating performance assessment,” said the rating agency.
In 2022, QBE reported improved combined ratios of 94.2%, and in 2021 a 93.7% was reported (85.7% and 91.5%, respectively, including the impacts of changes in risk-free rates).
This, AM Best explained, compares favourably with weaker underwriting returns in 2020 (104.1%; or 107.4% including the impact of changes in risk-free rates) and the group’s longer-term averages.
Furthermore, overall operating returns have strengthened, it added, with QBE’s return on equity, as calculated by the agency, standing at 8.7% in both 2021 and 2022, compared with -18.2% in 2020 and an average of 2.2% and 1.8% over the past five and 10 years, respectively.
AM Best expects these recent performance improvements to prove sustainable over the underwriting cycle, supported by QBE’s executed actions to enhance performance and increase the resilience of the group’s earnings.
