LONDON--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings of “a” (Excellent) of Qatar Insurance Company Q.S.P.C. (QIC) (Qatar) and its subsidiary, Qatar Reinsurance Company Limited (Qatar Re) (Bermuda). The outlook of these Credit Ratings (ratings) is negative.
The ratings reflect QIC’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).
The negative outlooks reflect pressure on AM Best’s current operating performance assessment of strong due to poor underwriting performance in the group’s international operations (QIC Global) outside of the Middle East region. Since 2017, QICs Global’s results have been impacted adversely by catastrophe losses, changes to the U.K.’s Ogden discount rate and COVID-19-related losses in 2020. As a consequence, the group has produced a five-year (2016-2020) average combined ratio of 104%.
The pressure on QIC’s underwriting earnings highlight governance and underwriting control deficiencies in the group’s decision-making process. Although QIC’s ERM framework has improved in recent years, AM Best believes there is further development required in order for QIC to manage risk holistically at group level. Recent regulatory solvency breaches in global subsidiaries, which have since been resolved, have highlighted this requirement.
The group’s balance sheet strength is underpinned by its risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Other positive factors include good financial flexibility, a diversified investment portfolio, which is low risk by asset class and moderate reinsurance dependence. Offsetting factors are uncertainty surrounding the quality of reserving, and the concentration of assets toward Qatar and Gulf Cooperation Council countries. QIC recovered its QAR 953 million (USD 262 million) loan balance due from MarkerStudy Group Limited during 2021, removing the credit risk associated with this asset.
In 2020, QIC reported gross written premium (GWP) of QAR 12.2 billion (USD 3.4 billion), an increase of 1% over 2019. Approximately 80% of GWP is derived from QIC Global, which benefits from a geographically diversified multi-platform approach, including a Lloyd’s platform (Antares), a Bermuda reinsurer (Qatar Re) and carriers for primary insurance in Europe. QIC has a leading position in Qatar and a strong competitive position in the United Arab Emirates. While QIC’s business mix has been volatile in recent years, the group has increased its focus on low volatility lines, with over half of GWP emanating from motor insurance in the U.K., Continental Europe and the Middle East.
This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
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