Fitch has today affirmed the 'A' long-term issuer default rating of QBE and the 'A+' insurer financial strength ratings of all its main operating subsidiaries. The agency also affirmed the 'A-' (A minus) rating on QBE's GBP175,000,000 senior unsecured debt. The Outlook on all the ratings is Stable.
The affirmation follows the announcement that QBE is to buy Winterthur US from AXA SA for $1.16bn and will also repay an existing intra-group loan of $557m. This will be QBE's second US acquisition in the past thirty days.
"While the Winterthur businesses appear largely complementary, QBE will face the added burden of having to integrate two relatively large acquisitions simultaneously," said John Miles, senior director in Fitch's Financial Institutions group. Nevertheless, QBE does have a long track record for executing integrations successfully.
Funding for the acquisition will come from a range of sources and is structured to ensure that leverage and regulatory capital ratios are not materially affected.
By class of business, Winterthur is similar to QBE being involved in auto, property, workers' compensation and casualty lines. These are distributed via 1,700 independent agents across 33 US states.
