QBE Sells U.S. Insurance-Agency Businesses -- Update

By Robb M. Stewart 

MELBOURNE, Australia-- QBE Insurance Group Ltd. of Australia has struck a deal to unload its U.S. underwriting agency businesses for about $300 million, a plank in an overhaul foreshadowed last year.

The insurer said it would sell the agency businesses, which are only part of QBE's operations in the U.S., to Alliant Insurance Services Inc. The agreed deal with the California-based distributor of insurance products will include an upfront cash payment of $217 million, with the remainder to be paid over the next five years.

QBE in August said it aimed to raise about $1.5 billion by issuing new shares and through the sale of its U.S. agency businesses and other assets, including a proposed initial public offering in 2015 of QBE LMI, a specialist Australian mortgage insurer. The planned measures came after an 18% fall in QBE's first-half profit and following a sharp fall in the company's shares amid several profit warnings.

Under the terms of the U.S. sale, QBE said it would retain the underwriting business provided by the agencies. The deal--which covers businesses including Community Association Underwriters and Deep South--is expected to close early in February.

The planned sale price represents about 12 times earnings before interest, tax, depreciation and amortization, QBE said.

The company has said the capital measures it is taking should improve its finances and ability to withstand a range of possible negative scenarios for its businesses.

QBE traces its roots back more than 125 years to the launch of the North Queensland Insurance Co., a company that within four years had established close to 40 agencies around the world, including in Singapore and Hong Kong. It now employs more than 17,000 people in 43 countries.

Write to Robb M. Stewart at [e-mail]

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Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US74728G6052

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