Best’s News & Research Service - February 06, 2019 11:20 AM (EST)
AM Best Affirms Credit Ratings of Qatar General Insurance & Reinsurance Company QPSC
- February 06, 2019 11:20 AM (EST)
London //BestWire// - AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Qatar General Insurance & Reinsurance Company QPSC (QGIRC) (Qatar). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect QGIRC’s balance sheet strength, which AM Best categorises as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.
QGIRC’s balance sheet strength is underpinned by risk-adjusted capitalisation, which, as measured by Best’s Capital Adequacy Ratio, is consistent with the strongest assessment. The balance sheet strength assessment also benefits from high levels of liquidity to sustain its insurance operations, low premium leverage and a largely well-rated reinsurance panel. AM Best expects prospective risk-adjusted capitalisation to benefit from good internal capital generation. QGIRC’s balance sheet strength, however, is offset somewhat by its concentrated investments portfolio, which is exposed significantly to real estate assets, accounting for approximately 72% of total investments as at year-end 2017. Despite exposing the group’s risk-adjusted capitalisation to significant volatility, large capital buffers provide some cushion against potential investment losses. To date, QGIRC has demonstrated its ability to prudently manage its investment exposures.
The group’s historically strong operating performance, which generated a five-year return on equity of 15.3% (2013-2017), is driven principally by returns derived from its investment operations. In particular, net earnings have benefited materially from fair value gains on its real estate portfolio. The company’s technical performance has improved in recent years, following remedial action taken to reduce the company’s loss ratio at QGIRC and General Takaful Company W.L.L. (General Takaful). Consequently, the company’s combined ratio has declined to 97.0% in the first nine months of 2018 from 103.8% in 2015. Going forward, AM Best expects the company to maintain its underwriting discipline and deliver solid combined ratios.
QGIRC writes a diverse book of business across many product lines, providing conventional (QGIRC) and Takaful insurance (General Takaful). On a consolidated basis, QGIRC commands a strong position within its domestic market, reporting consolidated gross written premiums of QAR 796 million in 2017. The company, however, remains highly concentrated geographically; following the closure of its Dubai branch in December 2018, premium generation will emanate solely from Qatar.
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 Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
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