Moody’s has changed its outlook on QBE from negative to stable, affirming its A3 issuer rating.
At the same time, Moody’s said it affirmed the A1 insurance financial strength ratings (IFSR) of QBE’s main operating subsidiaries and had changed the outlooks to stable from negative.
Moody’s said in a note: “The change in outlook to stable from negative reflects Moody’s expectation that QBE’s improved underwriting performance in 2021 will sustain in the next 12-18 months, underpinned by rising premium rates, high levels of customer retention and declining attritional claims ratios. Moody’s believes the group’s operating leverage combined with improved underwriting performance should lead to stronger organic capital generation and higher levels of interest coverage.”
It added: “The rating affirmations reflect the group’s broad product and geographical diversification, strong capitalisation, low levels of financial leverage and strong asset risk profile. These positive considerations are tempered by the group’s significant aggregate worldwide catastrophe underwriting exposures, which could present a source of earnings volatility.”
Moody’s said that QBE’s product and geographical diversification is high as the group has five product lines each representing close to or above 10% of gross written premiums. It added that the credit quality of QBE’s investment portfolio is very strong with a high proportion of well-rated fixed income investments and it is one of its credit strengths. While we expect the group to rebalance the portfolio and introduce a higher weighting to growth assets, Moody’s expects its asset risk profile will remain relatively strong.