QBE Insurance Group Secures ‘BBB’ Rating on A$600 Million Capital Notes Issue
QBE Insurance Group has successfully issued A$600 million in subordinated Tier 2 notes, which Fitch Ratings has assigned a ‘BBB’ rating. The Australian insurer structured the offering through its note issuance program, with the securities categorized as direct, unsecured, and subordinated debt.
Strategic Financial Move
The offering included two components: A$275 million in floating-rate notes and A$325 million in fixed-to-floating-rate notes. Both tranches carry an 11-year maturity and feature call options exercisable after six years, contingent on regulatory approval from the Australian Prudential Regulation Authority (APRA). The floating-rate notes are pegged to the three-month bank bill swap rate (BBSW) plus 1.95%, while the fixed-to-floating notes offer a 5.802% fixed coupon for six years, resetting to BBSW plus 1.95% thereafter. QBE plans to apply the proceeds for general corporate use.
Rating Rationale
Fitch assigned the notes a rating two levels below QBE’s Issuer Default Rating (IDR) of ‘A-‘, citing structural subordination and assumed recovery outcomes. The agency’s methodology considered such instruments to have limited recovery potential in a default scenario. As subordinated instruments, these notes rank below senior obligations but above equity and Additional Tier 1 securities in the capital structure.
Continued Premium Growth
QBE’s Q1 2025 update showed gross written premiums increasing 8% year over year on a constant currency basis. Growth was driven by both rate improvements and underwriting volume, especially in international and North American markets. A US$100 million headwind from runoff in non-core North American operations partially offset this expansion. Natural catastrophes resulted in net claims of approximately US$420 million, measured against a first-half allowance of US$549 million.
Investment Income Supports Bottom Line
Investment income totaled US$410 million for the quarter, aided by higher yields and performance in risk assets. The group’s funds under management grew to US$31.6 billion, with risk asset allocation increasing to 15%. QBE reaffirmed its full-year guidance, including mid-single-digit premium growth and a combined operating ratio target of 92.5%.
Looking forward, QBE aims to deepen its focus on artificial intelligence in underwriting, optimize portfolio management, and align sustainability reporting with evolving regulatory standards in Australia. The company will release its half-year results on Aug. 8.
