QBE Selling LPI Business To National General For $90 Million

Posted by Patrick Barnard on July 17, 2015 No Comments
Categories : Residential Mortgage

QBE North America is selling its lender-placed insurance (LPI) business to National General Holdings Corp. for $90 million.

The transaction, which is still subject to the usual regulatory approvals, includes the acquisition of certain assets, including loan-tracking systems and technology, client servicing accounts, intellectual property and vendor relationships, as well as the assumption of all related insurance liabilities in a reinsurance transaction through which National General will receive the loss reserves, unearned premium reserves and invested assets at closing. As of June 30, these amounts were approximately $92 million, $247 million and $342 million, respectively.

For QBE, the transaction will result in a pretax loss of about $120 million this year on non-cash charges and write-offs, according to a Bloomberg News report citing a regulatory filing.

John Neal, CEO of QBE North America, says in the filing that the sale is in keeping with the company's strategy to focus on its core businesses. Moving forward, he says, QBE will ‘look to focus on commercial lines and significantly build out our specialty underwriting capabilities in North America.’

The insurer has reportedly had to deal with significant write-downs in North America and higher claims in Latin America. Neal sold shares and some businesses last year after QBE reported in 2013 its first annual loss in 12 years.

The sale is expected to close on Sept. 30.

QBE became the second-largest LPI business in the U.S. after its purchase of Balboa Insurance Co. from Bank of America Corp. in 2011.

Two years later, the company was fined $10 million by the New York Department of Financial Services after an investigation revealed a kickback scheme.

‘While the lender-placed business has had difficulties in the past, we believe it is now an area of great opportunity after numerous changes that have been enacted throughout the industry,’ says Michael Karfunkel, CEO of New York-based National General, in a statement.

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