Global (re)insurance leader has captive upgraded
QBE Insurance Group’s captive has had its financial strength rating upgraded to A- (excellent) from B++ (good) and issuer credit rating to “a-” from “bbb”.
AM Best removed both ratings for review with positive implications and assigned a stable outlook to Puerto Rico-based QBE Optima Insurance Company.
On February 3, 2012, Australian QBE Insurance Group completed its acquisition of Optima Insurance Group, the former ultimate parent of the captive, hence the captive was re-named QBE Optima Insurance Company.
The rating actions follow the completion of the planned intercompany reinsurance agreement between QBE Optima and QBE’s Bermuda reinsurance subsidiary, Equator Reinsurances.
AM Best believes Equator Re will provide considerable quota share reinsurance support for QBE Optima’s guaranteed automobile protection, automobile physical damage and personal lines property lines of business.
Further consideration is being given to the support that Equator Re may give in 2013 to QBE Optima’s other commercial lines other than automobile physical damage exposures.
QBE Optima has proved to have a strong risk-adjusted capitalisation, profitable operating earnings augmented by solid investment income and enhanced reinsurance programme, especially regarding expanded limits of coverage at the top layers of the programme.
AM Best also increased the ratings because of benefits provided by the company’s affiliated insurance agency, Colonial Insurance Agency.
The outlook recognises QBE Optima’s strong capital position and projections for solid operating earnings that AM Best expects will help to further fortify its capitalisation and support efforts to continue growing the operation.
QBE Optima’s ratings or outlook could be upgraded again if there is long-term improved underwriting and operating results, fuelling the company’s heightened balance sheet strength, along with a boost in its business profile from being a part of the QBE organisation.
Downgrades in ratings or an outlook revision could result from material deterioration in the profitability of maturing accident years, which may lead to a notable decline in the company’s balance sheet strength.