Two actuarial reports have recommended the transfer of Elders Insurance’s business to QBE Insurance.

QBE actuary Benoit Laganiere and Ernst & Young partner Warrick Gard say the move will have no impact on policyholders.

Subject to a Federal Court hearing in Sydney on October 19, all Elders policies and assets will be transferred to QBE.

The actuarial reports put Elders’ assets at $144.4 million on March 31, with the same amount of total liabilities. They say that the transfer will therefore have no impact on QBE’s business.

Elders had $187 million of outstanding claims at December 31 last year. The largest area was public liability, with $69 million, followed by farm insurance on $52 million.

Outstanding reinsurance on the Elders portfolio at December 31 was $136.8 million, giving it an estimated net balance of $50.2 million.

Mr Laganiere estimates there are $85 million of future claims liabilities, with reinsurance covering $76.8 million. This will leave QBE facing a shortfall of just $8.2 million.

The bulk of Elders’ reinsurance contracts (80.51%) are with QBE Insurance (Australia), while Swiss Re and Munich Re have about 18% of the reinsurance program. Elders’ total reinsurance program in March was $247.7 million.

Subject to court approval, the transfer of home and motor policies will be completed by the end of next month. Farm product and other insurance classes will start to be written directly by the end of this year, with the first renewals to be handled by QBE in January.

The cost of the transfer will be covered in QBE’s normal operating costs, the actuary reports say, and operational savings on compliance and administration will be realised in the medium to long term.