- On July 24, 2022, we revised our IICRA for the Australian mortgage insurance sector to low, from intermediate.
- We are affirming our 'A' financial strength and issuer credit ratings on QBELMI, with no effect on the ratings from the revised IICRA.
- We are also affirming our 'A' financial strength and issuer credit ratings on QBE MI Asia, a subsidiary of QBE LMI.
- The stable outlook on both entities reflects the stable outlook on their ultimate parent, QBE, as well as QBELMI's stand-alone strengths, which we expect the insurer will maintain over the next two years.
On Aug. 31, 2022, S&P Global Ratings affirmed its 'A' financial strength and issuer credit ratings on QBE Lenders' Mortgage Insurance Ltd. (QBELMI). The outlook is stable.
At the same time, we affirmed our 'A' ratings on QBE Mortgage Insurance (Asia) Ltd. (QBE MI Asia), a core subsidiary of the QBE Lenders' Mortgage subgroup. The outlook is stable.
The affirmation of the ratings on QBELMI follows the revision of our insurance industry and country risk assessment (IICRA) for Australia's mortgage insurance sector to low risk, from intermediate risk (see "Risks Ease For Australia's Mortgage Insurers," published July 24, 2022).
We affirmed the ratings on QBELMI as the revised IICRA has no impact on the ratings. The IICRA score improvement to low risk from intermediate risk does not change our business risk profile given our assessment of QBELMI's competitive position as strong.
The 'A' rating on QBELMI reflects the insurer's 'a' stand-alone credit profile (SACP). This assessment is driven by its strong market position, as the second-largest mortgage insurer in Australia, and strong capital position. QBELMI's SACP is further supported by its strong profitability, with its solid earnings in 2021 to carry over into 2022.
We assess QBELMI as core to the QBE Lenders Mortgage subgroup, as it comprises the bulk of its earnings and capital. In turn, we assess the QBE Lenders Mortgage subgroup as highly strategic to QBE Insurance Group Ltd. (QBE Group; core operating entities rated 'A+'). While supportive, this group ownership provides no ratings uplift.
We affirmed the ratings on QBE MI Asia to reflect our view that it is a core subsidiary of the QBE Lenders Mortgage subgroup. We view QBE MI Asia, a Hong Kong-based mortgage insurer, as an integral part of the Lenders Mortgage subgroup and expect that it would receive extraordinary support from the subgroup, and the broader QBE Group, if required.
Our stable outlook on QBELMI reflects the outlook on QBE, as well as QBELMI's stand-alone credit strengths, which we expect it will maintain.
Although unlikely, we could lower the ratings on QBELMI over the next two years if we lower the ratings on QBE's core subsidiaries to below the 'A' level.
We could lower QBELMI's SACP, with a neutral impact on the rating, if:
- We assess the insurer's prospective capital adequacy to be below the 'A' level under our global mortgage insurance capital model; or
- Its business risk profile deteriorates due to materially weakened operating performance relative to our expectations.
We could raise the rating on QBELMI over the next two years if we:
- Raise the rating on QBE;
- Assess the QBE Lenders Mortgage subgroup's group status to QBE group to have strengthened to core; or
- Assess QBELMI's SACP as having improved.
We could revise QBELMI's SACP upward, and subsequently raise our rating on the insurer, if our assessment of QBELMI's prospective capital adequacy improves to the 'AA' level or stronger.
QBE MI Asia
The stable outlook on QBE MI Asia reflects the outlook on QBELMI, as well as our view that the insurer will remain a core subsidiary of the QBE Lenders Mortgage subgroup over the next two years.
We could lower the ratings on QBE MI Asia if:
- We lower the ratings on QBELMI; or
- QBE MI Asia's group status to the QBE Lenders Mortgage subgroup weakened.
We could upgrade QBE MI Asia if we raise the ratings on QBELMI.
Ratings Score Snapshot
|Financial strength rating||A||A|
|Capital and earnings||Strong||Strong|
|Risk exposure||Moderately low||Moderately low|
|Comparable ratings analysis||0||0|
|IICRA--Insurance Industry And Country Risk Assessment.|
ESG credit indicators: E-2, S-2, G-2
- General Criteria: Environmental, Social, And Governance Principles In Credit Ratings, Oct. 10, 2021
- Criteria | Insurance | General: Insurers Rating Methodology, July 1, 2019
- General Criteria: Group Rating Methodology, July 1, 2019
- Criteria | Insurance | General: Methodology: Mortgage Insurer Capital Adequacy, March 2, 2015
- General Criteria: Principles Of Credit Ratings, Feb. 16, 2011
- Criteria | Insurance | General: Refined Methodology And Assumptions For Analyzing Insurer Capital Adequacy Using The Risk-Based Insurance Capital Model, June 7, 2010
- Risks Ease For Australia's Mortgage Insurers, July 24, 2022
QBE Lenders' Mortgage Insurance Ltd.
QBE Mortgage Insurance (Asia) Ltd.
|Issuer Credit Rating|
|Financial Strength Rating|
S&P Global Ratings Australia Pty Ltd holds Australian financial services license number 337565 under the Corporations Act 2001. S&P Global Ratings' credit ratings and related research are not intended for and must not be distributed to any person in Australia other than a wholesale client (as defined in Chapter 7 of the Corporations Act).
Certain terms used in this report, particularly certain adjectives used to express our view on rating relevant factors, have specific meanings ascribed to them in our criteria, and should therefore be read in conjunction with such criteria. Please see Ratings Criteria at www.standardandpoors.com for further information. Complete ratings information is available to subscribers of RatingsDirect at www.capitaliq.com. All ratings affected by this rating action can be found on S&P Global Ratings' public website at www.standardandpoors.com. Use the Ratings search box located in the left column.
|Primary Credit Analyst:||Julian X Nikakis, Sydney (61) 2-9255-9818;|
|Secondary Contact:||Michael J Vine, Melbourne + 61 3 9631 2013;|
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