S&P Global Ratings has reaffirmed its A+ financial strength and issuer credit ratings for QBE Lenders' Mortgage Insurance, offering a stable outlook for the firm.
The outlook represents the agency’s assessment of QBELMI’s standalone credit profile following an increase in internal reinsurance with Equator Re (a captive reinsurer of QBE Group).
“We no longer view QBELMI as a partially insulated subsidiary of QBE Group due to a greater interdependency between the two entities,” S&P’s analysts wrote.
The agency has also revised its view of the company’s financial flexibility, changing this to adequate from strong.
“This change reflects our view that QBELMI has limited ability to raise additional capital independently of QBE Group.”
Despite this, S&P believes that the insurer retains a strong competitive position as the second largest player in the national LMI market.
“The insurer has also maintained sound operating performance in the context of the current market headwinds and increased intensity of competition in the local LMI market.”
S&P expects this stable outlook to be maintained for the next two years.
Downwards ratings pressure could occur with a loss of major clients that weakened the market share of QBELMI, the analysts wrote, while an upwards ratings movement was unlikely.
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