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 robb.stewart@wsj.com
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