The QBE Insurance Group Ltd (ASX: QBE) share price is looking to finish Friday's trading session in the red. This comes after the insurance giant provided a market release in relation to a divestment of its United States-based business.
At the time of writing, QBE shares are down 1.28% to $10.77 apiece. In comparison, the S&P/ASX 200 Index (ASX: XJO) is down 0.54% to 7,112.6 points.
Let's take a closer look at what the company updated the ASX with today.
What did QBE announce?
In today's statement, QBE advised it has entered into an agreement to sell its Westwood Insurance Agency to Baldwin Risk Partners (NASDAQ: BRP).
Based in California, Westwood is a leading full service personal lines agency, specialising in builder sourced homeowners' insurance.
Under the deal, QBE will receive a total consideration of $375 million, subject to regulatory approval.
The transaction is expected to increase the group's Australian Prudential Regulation Authority (APRA) prescribed capital amount (PCA) multiple by around 0.05x.
The capital adequacy prudential standards require an insurance company to maintain enough capital against any risks associated with its activities. It is also a requirement that the insurer make certain public disclosures about its capital adequacy position.
QBE group CEO, Andrew Horton commented:
QBE's strategy in North America is focused on building its Commercial, Specialty and Crop insurance portfolios. Whilst an attractive franchise, the Westwood business does not align with this strategy, and following this transaction QBE will no longer own any agency businesses in North America.
The sale is anticipated to be finalised by 1 May 2022.
In addition to the announcement, QBE touched on the recent flooding in Queensland and New South Wales.
Since the heavy rains swept a number of regions, around 3000 claims were lodged by customers. While a majority of those were personal lines, QBE is anticipating further claims in the coming weeks.
Management noted that it is still too early to assess the financial impact of the weather-related event.
However, the group has a maximum event retention of $125 million for non-peak events in the Australia Pacific Division. QBE's FY22 catastrophe allowance is $962 million including a first-quarter allowance of $248 million.
About the QBE share price
Over the past 12 months, QBE shares have been somewhat volatile, moving in peaks and troughs throughout the period.
While its shares have gained around 13% since this time last year, it's still heavily down from pre-pandemic levels. In early 2020, the QBE share price was swapping hands for as high as $15.19, before plummeting to record lows.
Based on today's price, QBE commands a market capitalisation of roughly $15.92 billion, with more than 1.48 billion shares outstanding.
