Global insurance and reinsurance company’s captive is on the up
A captive of Sydney-based QBE Insurance Group has had its financial strength rating upgraded to “A- (Excellent)” from “B++ (Good)” and its issuer credit rating upgraded to “a-” from “bbb”.
A.M. Best has removed both ratings from review with positive implications and assigned a stable outlook. QBE Insurance Group acquired the former owner of the Puerto Rico-based captive Optima Insurance Company in February through its Latin American subsidiary. The captive was then renamed QBE Optima Insurance Company. The rating actions follow the completion of a planned intercompany reinsurance agreement between QBE Optima and QBE’s Bermuda reinsurance subsidiary, Equator Reinsurances. In statement, A.M. Best said: “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 additional support that Equator Re may give in 2013 to QBE Optima’s other commercial lines outside of automobile physical damage exposures.” The ratings agency said that QBE Optima’s ratings reflect its strong risk-adjusted capitalisation, profitable operating earnings that have been augmented by solid investment income and its enhanced reinsurance programme. Its ratings have also been upgraded because of its affiliated insurance agency, Colonial Insurance Agency. Colonial Insurance gives QBE Optima access to profitable business with demonstrated loss experience that should support profitable growth. A.M. Best also underlined the importance of the support that QBE Insurance Group gives to the captive. It said: “This support includes the enhanced business profile of QBE Optima via its recent name change, particularly considering QBE’s status as one of the largest global insurance and reinsurance organisations in the industry.” “Additionally, expert investment guidance, information technology support, potential savings through common services and significantly improved financial flexibility to support the company’s growing operations should all yield tangible benefits to QBE Optima. The outlook recognises QBE Optima’s strong capital position and projections for solid operating earnings that A.M. Best expects will help to further fortify its capitalisation and support efforts to continue growing the operation.”