Fitch upgrades QBE outlook to positive

Fitch Ratings has revised the outlook on all the ratings of Australia-based QBE Insurance Group and its subsidiaries to positive from stable. 

Fitch said that the positive outlook reflects QBE's improving financial performance and solid capitalisation metrics, which compare favourably against Fitch's criteria guidelines for the 'A' IFS Rating category. The affirmation reflects the non-life insurance group's 'Favourable' company profile.

Improving Financial Performance: QBE's underwriting performance has improved significantly in the past three years, supported by continued premium rate increases and various underwriting efforts across the group to reduce earnings volatility. Its Fitch-calculated combined ratio improved to 91% in 1H24 and 93% in 2023 (2022: 95%), while return on equity rose to 16% and 14% over the same period (2022: 7%).

Fitch expects the group's reserve risk volatility to ease following recent reserve transactions, which reinsured up to $3.5 billion of long-tail reserves in its North American and international businesses. QBE's reported net profit doubled to $806 million in the first half of 2024, from $404 million in the same period of 2023, on a stronger insurance service result that reflected lower catastrophe costs and more stable reserve development. All segments recorded an underwriting surplus, including the North American business, which had previously reported weak results.

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