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Fitch places ratings of QBE Insurance, units on Rating Watch Negative

Fitch Ratings placed the ratings of Australia-based QBE Insurance Group Ltd. and its subsidiaries on Rating Watch Negative.

The rating agency on Feb. 2 placed the insurer's A- long-term issuer default rating and the A+ insurer financial strength ratings of QBE Insurance Corp., QBE Insurance (Europe) Ltd., QBE Re (Europe) Ltd., QBE Hongkong & Shanghai Insurance Ltd., QBE Reinsurance Corp. and Equator Reinsurances Ltd. on Rating Watch Negative.

The ratings action reflects the significant decline in the insurer's financial performance for 2017 and uncertainty over a recovery in its profitability.

In January, QBE said it expects to report an after-tax loss of approximately US$1.2 billion for the 2017 full year on the back of a higher combined operating ratio and two significant one-off, noncash items. The company is due to report its 2017 full-year results on Feb. 26.

The insurer's ratings reflect its strong financial fundamentals, with stable capital ratios, strong financial leverage ratios and low-risk investment portfolio.

The Rating Watch Negative placement could be resolved when Fitch has ample information on the final outcome of QBE's 2017 performance. Fitch notes that the group's ratings would be downgraded if there is a significant deterioration in its core financial fundamentals.