Market Overview

A.M. Best Affirms Credit Ratings of QBE Insurance Group Limited and Its Key Subsidiaries


A.M. Best has affirmed the Financial Strength Rating (FSR) of A
(Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of
"a+" of QBE Insurance (Europe) Limited (United Kingdom), QBE
Re (Europe) Limited
(United Kingdom), and the pooled members of QBE
North America Insurance Group. These companies are key operating
subsidiaries of QBE Insurance Group Limited (QBE) (Australia),
the non-operating holding company of the QBE group of companies. At the
same time, A.M. Best has affirmed the Long-Term ICR of "bbb+" of QBE.
The outlook of these Credit Ratings (ratings) remains stable.

The ratings reflect QBE's balance sheet strength, which A.M. Best
categorises as very strong, as well as its strong operating performance,
favourable business profile and appropriate enterprise risk management.

QBE's balance sheet strength is underpinned by consolidated
risk-adjusted capitalisation, which remained at the very strong level as
at year-end 2017, as measured by Best's Capital Adequacy Ratio (BCAR),
despite the impact of catastrophe losses, poor experience on the
emerging market portfolios and a one-off write-down of the deferred tax
asset on capital. The group's write-down of goodwill of USD 700 million
in 2017 does not impact A.M. Best's assessment of risk-adjusted
capitalisation as goodwill is excluded from available capital in the
calculation. A.M. Best expects consolidated risk-adjusted capitalisation
to improve in 2018 due primarily to a reduction in claims reserves as
catastrophe losses are paid down, as well as the sale of the group's
Latin America business, which is expected to complete in the fourth
quarter of 2018. A.M. Best's assessment takes into account QBE's
commitment to its three-year scheme to buy back up to AUD 1 billion of

QBE's adjusted financial leverage deteriorated in 2017, but remains
supportive of the very strong balance sheet strength assessment. The
group is actively managing down financial leverage through the early
redemption and buyback of selected outstanding notes.

The operating performance assessment of strong takes into account QBE's
strong and stable long-term performance track record. Over the past 15
years, QBE has reported underwriting profits in all years with the
exception of 2017. The group's five-year (2013-2017) average combined
ratio is 97.5%, which includes 2017's elevated combined ratio of
approximately 104%. The group's prospective underwriting performance,
assuming normalised catastrophe experience, is expected to improve
compared with 2017. The group is focusing on simplifying and remediating
its portfolio, which includes exiting unprofitable segments such as its
Latin American business.

The business profile assessment reflects QBE's favourable position as a
global top 20 general insurance and reinsurance group with operations
across the key insurance markets and a focus on commercial specialty
lines of business.

The FSR of A (Excellent) and Long-Term ICRs of "a+" have been affirmed,
both with a stable outlook, for the following pooled members of QBE
North America Insurance Group:

• General Casualty Company of Wisconsin

• General Casualty Insurance Company

• Hoosier Insurance Company

• National Farmers Union Property and Casualty Company

• NAU Country Insurance Company

• North Pointe Insurance Company

• Praetorian Insurance Company

• QBE Insurance Corporation

• QBE Reinsurance Corporation

• QBE Specialty Insurance Company

• Regent Insurance Company

• Southern Fire & Casualty Company

• Southern Pilot Insurance Company

• Stonington Insurance Company

• Unigard Indemnity Company

• Unigard Insurance Company

This press release relates to Credit Ratings that have been published
on A.M. Best's website. For all rating information relating to the
release and pertinent disclosures, including details of the office
responsible for issuing each of the individual ratings referenced in
this release, please see A.M. Best's
Rating Activity
web page. For additional information
regarding the use and limitations of Credit Rating opinions, please view
Best's Credit Ratings
. For information on the proper media
use of Best's Credit Ratings and A.M. Best press releases, please view
for Media - Proper Use of Best's Credit Ratings and A.M. Best Rating
Action Press Releases

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