QBE Moving Ahead With Its Restructuring Plans After Getting UK High Court’s Approval

With the deadline of Brexit coming closer, QBE Insurance Group Limited (ASX: QBE) is looking well prepared to handle it with the recently received approval from UK’s High Court for its post-Brexit restructuring plans in the UK. With the Court’s approval, the company has completed its Part VII Transfer under which the QBE group’s European division was undertaken through a legal process, which was subject to the Court’s approval.

In June 2017, QBE Insurance Group had first announced its plan to establish a new subsidiary in Belgium, so that it could continue its operations across the European Economic Area. By establishing a new subsidiary in Belgium, the insurance group expects to continue its services to European policyholders irrespective of the results of Brexit.Â

At the time of announcing the new Subsidiary in Belgium, the CEO of QBE European Operations, Richard Pryce had told that the company’s priority is to provide certainty for its customers and staff. He said that the company’s decision to set up a legal entity in Belgium ensures that the company can provide continuity of service irrespective of the outcome of Brexit negotiations. QBE will continue its operations from and across mainland Europe and its European Operations’ headquarters will remain in London.

The company had started its preparation for Brexit in 2016 when it created a guide to the possible implications of Brexit, way before the date for the Brexit referendum was set, and the referendum campaign had begun. As part of the company’s restructuring process, the company will bring together its (re)insurance platforms in Europe into one Belgium-based (re)insurer, QBE Europe, which will help the company to continue its operations in the post Brexit scenario. The National Bank of Belgium has already given insurance and reinsurance licenses to QBE Europe in May 2018, which was a major step forward in the restructuring process.

Under the restructuring process, QBE Insurance (Europe) Limited will transfer a major part of its general (re)insurance business to QBE Europe whereas QBE Re (Europe) Limited will transfer all of its general and long-term reinsurance business written through its Belgian, Bermudan and Irish branches to QBE Europe.

After the restructure QBE Insurance (Europe) Limited will be renamed to QBE UK Limited and it will continue to write the UK and other non-European insurance business.

In 1H 2018, the company reported a Statutory net profit after tax of $358 million. The company’s Statutory return on equity increased to 8.2 percent in 1H 2018 from 6.6 percent in 1H 2017. The cash profit after tax of the company increased by 3 percent to $385 million in 1H 2018 as compared to the previous corresponding year. The debt to equity ratio reduced to 36.9% in 1H 2018 which was 40.8 percent in FY 2017. Meanwhile, in the last one year, the share price of QBE increased by 4.69 percent as on 17 January 2019. QBE’s shares last traded at $10.960 with a market capitalization of circa $14.52 billion as on 18 January 2019.


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