Fitch has revised the outlook on QBE to...
Fitch has affirmed the ratings of QBE and all its main operating subsidiaries. The agency also affirmed the 'A+' Insurer Financial Strength ratings of QBE's main operating subsidiaries. The outlook on all the ratings has been revised to stable from positive.
The affirmation follows QBE's plan to acquire the Praetorian Financial Group from Hannover Re for $800m. "Although funding will come from a combination of internal sources and short-term debt, the impact on leverage and capital ratios is likely to be modest," said John Miles, senior director in Fitch's financial institutions group.
The outlook change reflects Fitch's view of the heightened risk associated with managing a considerably larger programme business. While QBE already operates programmes in the US, this acquisition will more than double the size of this business and inevitably involves some execution risk.
However, from a strategic perspective, PFG appears to complement QBE's existing US business. By class of business, PFG, like QBE, is involved in auto, property, workers' compensation and casualty lines.
