A.M. Best affirms A (Excellent) rating of QIC and its main subsidiaries
A.M. Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” of Qatar Insurance Company S.A.Q. (QIC) (Qatar) and its main subsidiaries: QIC International LLC (QICI) (Qatar) and Qatar Reinsurance Company Limited (Qatar Re) (Bermuda). The outlook of these Credit Ratings (ratings) remains stable.
The ratings reflect QIC’s balance sheet strength, which A.M. Best categorises as very strong, its neutral business profile, strong operating performance and appropriate enterprise risk management (ERM) framework.
QIC’s balance sheet strength is supported by risk-adjusted capitalisation at the strongest level, excellent financial flexibility, a diversified investment portfolio and low reinsurance dependence. Partly offsetting these strengths are the potential volatility due to the rapid growth of the company’s reinsurance business in a soft market and the concentration of its assets in Qatar and the Gulf Cooperation Council (GCC) countries. Additionally, QIC continues to opportunistically pursue inorganic growth opportunities, which could exert negative pressure on the company’s balance sheet strength. However, A.M. Best expects strong internal capital generation and long-term capital support from shareholders to continue to underpin QIC’s growth strategy.
The company has a track record of strong operating performance, demonstrated by a five-year (2012-2016) weighted average return on equity of 15.4%. Underwriting results deteriorated in 2016, with the combined ratio worsening to 98.2% from 96.8% in 2015, due to an increase in the number of large industry loss events. QIC’s profit for 2016 remained essentially flat year on year at QAR 1.1 billion (USD 289 million), compared with QAR 1.1 billion (USD 292 million) in 2015, and continued to be heavily weighted toward investment income. In the first three quarters of 2017, QIC generated an operating profit of QAR 308 million (USD 84 million), significantly lower than the same period in 2016, with a combined ratio of 108.2%. The drop in earnings was primarily due to North American hurricane losses and reserve strengthening associated with the Ogden rate adjustment in the United Kingdom.
Continued expansion in the company’s operations translated into year-on-year growth of 19% in 2016, with gross premiums written (GWP) reaching QAR 9.9 billion (USD 2.7 billion). In the first nine months of 2017, QIC reported GWP growth of 16%, driven by growth in its Qatari insurance operations as well as its international insurance and reinsurance operations. QIC enjoys a dominant position in Qatar’s market and has a global reach, with 70% of gross premiums emanating from abroad in 2016. QIC consolidates QICI, which has a sound position in United Arab Emirates’ market; Antares, which gives QIC access to a portfolio of marine, casualty and aviation business written through Lloyd’s; and Qatar Re, which is a top 50 global reinsurer writing an internationally diversified portfolio. QIC Europe Limited extends QIC’s reach to direct business in the European Economic Area.
QIC has made significant improvements in company-wide risk management, bolstering its catastrophe modeling and actuarial capabilities. However, as the company continues to expand, further improvements will be necessary to support the increasing size and complexity of its operations.
The ratings for QICI and Qatar Re reflect their importance to QIC’s strategy and incorporate a strong level of financial support from QIC, as evidenced by a guarantee provided to both companies, historical capital injections and an internal quota share arrangement to support business written at Qatar Re.
This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media – Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
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