Shares in QBE rose 1.9%, to $14.67 yesterday after the insurer revealed it would be taking a $120 million loss on selling part of its North American business.
The company told the ASX that it had sold the mortgage and lender services business in North America for $90 million.
The buyer is US group National General Holdings in a deal that is expected to generate a loss of $120 million.
QBE said the losses are due to one-off non-cash charges and write-offs, some of which will be booked in the half year results in August.
“As previously advised, we have been evaluating a range of strategic options with regards to the M&LS business in North America,” QBE chief executive John Neal said in a statement to the ASX.
“The sale of this business is a pleasing result as we look to focus on commercial lines and significantly build out our specialty underwriting capabilities in North America,” he said.
QBE 1Y – QBE unloads US business
QBE expects the sale to free up over $100 million of capital which will be used for reinvestment in other areas of the North American business.
Revenue, or gross written premium, will also fall by $US400 million following the sale. But QBE however expects the sale to improve its North American operations’ combined operating ratio and return on allocated capital.
The latest deal comes after QBE sold its agency businesses to Alliant Insurance Services for $US300 million earlier this year.
