By Robb M. Stewart
MELBOURNE, Australia--QBE Insurance Group Ltd. (QBE.AU) has
moved to further pare back operations it doesn't view as core,
striking a deal to sell its North American mortgage and lender
services unit for US$90 million.
The company said the business will be acquired by New York-based
National General Holdings Corp. (NGHC).
It follows on the heels of a deal in January to sell its U.S.
underwriting-agency businesses to Alliant Insurance Services Inc.,
for an upfront cash payment of US$217 million plus more to be paid
over the next five years, and an agreement in February to sell its
Australian agency businesses for as much as 348 million Australian
dollars (US$257 million).
The latest exit is expected to close Sept. 30 and will lead to a
loss of about US$120 million, largely due to one-time non-cash
charges and write offs, some of which the Australian insurer said
would be booked with its interim 2015 results. Still, it said the
sale is expected to free up more than US$100 million in capital
that can be reinvested elsewhere in QBE's wider North American
operations.
As well, the sale will reduce QBE's gross written premium by
about US$400 million but should improve the remaining North
American business's budgeted 2016 operating ratio and return on
allocated capital by about 1.5% and 1.8%, respectively.
Sydney-based QBE, which traces its roots back more than 125
years to North Queensland Insurance Co., returned to a full-year
profit last as its North American underwriting operations recovered
and there was no repeat of the hefty impairment charges recorded a
year earlier. It recorded a 2014 net profit of US$742 million from
a loss of US$254 million a year earlier, when it was hurt by
restructuring costs and one-off charges at its North American
arm.
Write to Robb M. Stewart at robb.stewart@wsj.com
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