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A.M. Best Revises Outlooks to Negative for QBE Seguros

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A.M. Best has revised the outlooks to negative from stable and
affirmed the Financial Strength Rating of A- (Excellent) and the
Long-Term Issuer Credit Rating of "a-" for QBE Seguros (San Juan, PR).

The ratings reflect QBE Seguros' balance sheet strength, which A.M. Best
categorizes as adequate, as well as its adequate operating performance,
limited business profile and appropriate enterprise risk management. The
ratings also consider the extensive reinsurance support provided by its
affiliate, Equator Reinsurances Limited, and the organizational support
it historically has received from its U.S. affiliates, as well as
capital and other financial support measures provided to QBE Seguros by
QBE Insurance Group Limited (QBE).

The revised rating outlook to negative reflects the pressures and
financial constraints placed on the company in the aftermath of
Hurricane Maria and its long-term role in QBE's global enterprise, as
QBE continues to divest of its non-performing businesses worldwide. The
company specifically was excluded from the sale of QBE's Latin America
operations to Zurich Insurance Group Ltd, which was announced in
February 2018.

Despite record losses from Hurricane Maria, capital currently and
prospectively is viewed as adequate as QBE is injecting $14.3 million of
redeemable capital in 2018, and Equator Reinsurances Limited posted over
$500 million in collateral via letters of credit and financial
guarantees to support these reinsurance recoverables. Furthermore, QBE
Seguros has a limited business profile as all of its business is written
in Puerto Rico, a highly competitive market with a number of highly
reputable, long-standing brand name insurers. QBE Seguros' highly
concentrated geographic footprint also exposes the company to extreme
tail events, such as Hurricane Maria.

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
Recent
Rating Activity
web page. For additional information
regarding the use and limitations of Credit Rating opinions, please view
Understanding
Best's Credit Ratings
. For information on the proper media
use of Best's Credit Ratings and A.M. Best press releases, please view
Guide
for Media - Proper Use of Best's Credit Ratings and A.M. Best Rating
Action Press Releases
.

A.M. Best is a global rating agency and information provider with a
unique focus on the insurance industry. Visit
www.ambest.com
for more information
.

Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its
affiliates. ALL RIGHTS RESERVED.

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