QBE-HSBC (HBC) Deal Does Not Affect QBE’s Ratings: Fitch

New York, March 9 (FinanceEnquiry.com) – Fitch Ratings stated that QBE Insurance Group Limited’s (QBE) ratings will not be affected by its planned acquisition of HSBC Holdings’ (NYSE: HBC) general insurance businesses in Argentina and Hong Kong.
 
The ratings agency sees the impact of the likely USD420 million transaction on QBE’s credit metrics to be relatively neutral. Generally, goodwill and other intangibles of approximately USD230 million will aid in increasing deductions from the group’s capital base. Larger offsetting factors are expected to more likely result in some improvement in the group’s capital ratios, as the deal is not expected to be completed until mid 2012.

Unil June 30, 2012, QBE will finalize a AUD600 million share placement to fund the buy back of USD500 million of lower tier 2 subordinated debt. The company will also have profited from involvement in the dividend reinvestment plan and have 6 months of powerful group earnings.

The Argentinean business is likely to generate annual gross written premiums (GWP) of approximately USD450 million, while the smaller Hong Kong business will generate around USD75 million in Gross World Product (GWP) annually. The Argentinean business will boost QBE’s presence in Argentina along with supporting the group’s growth ambitions in Latin America, whereas the Hong Kong business will provide some scale benefit to QBE as a more complementary business to the group’s existing Hong Kong business.

 

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