20 August 2014 Insurance

Moody’s downgrades QBE LMI’s outlook

Moody's Investors Service has downgraded the rating outlook of QBE Lenders’ Mortgage Insurance following the announcement of a partial initial public offering (IPO) of the company.

Moody’s upgraded its outlook to negative, from stable, while affirming the financial strength rating of the company.

"Should the announced IPO proceed and be successful, it would reduce the linkages between the credit profile of QBE LMI and that of its parent. QBE LMI's current rating incorporates one notch of uplift from its standalone credit assessment due to potential support from its parent", said Ilya Serov, a Moody's senior credit officer.

"The change in outlook to negative reflects the potential that QBE's support for QME LMI may diminish after the IPO, as a result of the parent company's reduced shareholding.

"At the same time, on a standalone basis, we view the IPO as a moderate positive since it would improve QBE LMI's financial flexibility by providing it with greater access to the capital markets and increasing the diversity of its funding sources," added Serov.

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