S&P Global Ratings has affirmed its positive outlook and A+ financial strength rating for QBE after the insurer warned its earnings will take a hit from US hurricanes and earthquakes in Mexico.

The ratings agency says QBE’s full-year operating performance will be lower than expected due to “atypical natural disasters and extreme weather events”, rather than a deterioration in underlying performance.

“The rating remains underpinned principally by the very strong competitive position spanning developed and developing property and casualty markets,” S&P says.

“The insurer supplements its solid underwriting and risk management capabilities with high-quality capital, providing solid cover or risks. It also has diversified reinsurance cover.”

QBE’s underlying operating performance in the half-year was sound, although there was some volatility in the emerging markets division, S&P says.

The agency is monitoring progress in the remediation of operations across global regions, particularly North America, and the extent of changes to capital management objectives.

This month QBE warned of a pre-tax earnings impact of about $US600 million ($771 million) this year due to the high level of global catastrophes. It raised its combined operating ratio target range to 100-102%.

“In the midst of a challenging period for the global insurance industry, I am pleased that both S&P and Moody’s recognise QBE’s balance sheet strength and continued favourable prior-year reserve development,” CEO John Neal said last Thursday.