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Moody’s may upgrade QBE ratings

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Moody’s has placed QBE Insurance Group’s Baa2 stable rating under review for an upgrade after action by the insurer to reduce financial leverage and lift earnings and profitability.

The ratings are for group issuer and senior unsecured debt.

Other ratings are also on review for upgrade, including on backed preferred securities of QBE Capital Funding LP and QBE Capital Funding II LP – rated at Baa1(hyb) – and backed subordinated debt of QBE Capital Funding III and QBE Capital Funding IV.

Moody’s says the ratings review follows management actions to redirect corporate strategy.

“The sustainability of QBE’s current capital structure, with lower levels of financial leverage, and the sale of underperforming businesses may, over time, improve the underlying performance of the group,” Moody’s VP and Senior Analyst Frank Mirenzi said.

However, Moody’s has withdrawn the A2 negative insurance financial strength rating on QBE Lenders’ Mortgage Insurance for business reasons.

In its recent half-year results announcement, QBE said regulatory pressure on banks to tighten mortgage lending has hit new lenders’ mortgage insurance business flows.

A QBE Australia spokesman said: “We have multiple ratings agencies and asked Moody's to withdraw the rating for our Lenders’ Mortgage Insurance business as it no longer provides us with sufficient commercial benefit.”