Ratings agency Standard & Poor’s (S&P) has warned that QBE’s credit rating may come under “negative pressure” should its capital adequacy not improve by the end of this year.

S&P credit analyst Mark Legge made the comment in an announcement affirming its A+ and A financial strength ratings for QBE and its core subsidiary companies, with a stable outlook.

“In our opinion, QBE group’s capital adequacy was not commensurate with a rating in the A category based on results at December 31, 2011,” Mr Legge said.

“However, we anticipate this position to be temporary and that capital will be in line with the ratings by end of 2012. Should this improvement not be realised, the rating may come under negative pressure.”

But he says the rating affirmation reflects S&P’s expectation that QBE’s capital position will continue to strengthen during the year.

He says the agency believes QBE’s capital position will improve following its equity-raising earlier this year, based on the expectation of a “material uplift” in earnings and as a result of a “more creditor-friendly” dividend policy that was announced recently.

Aside from QBE’s capital position, Mr Legge says downward pressure on its rating could also result from “a material-adverse financial or operating risk event that impaired market confidence in the group” or “failure to maintain good underwriting and operating profitability relative to [its] peers”.

S&P expects QBE to report a combined operating ratio of about 90% for the year to December 31, as long as major catastrophes are limited for the rest of the year, and based on premium rises on average of above 5% across its business.