LONDON--(BUSINESS WIRE)--A.M. Best has affirmed the financial strength rating (FSR) of A (Excellent) and the issuer credit ratings (ICR) of "a" of Qatar Insurance Company S.A.Q. (Qatar) (QIC) and its main subsidiaries: QIC International LLC (Qatar) (QICI) and Qatar Reinsurance Company Limited (Bermuda) (Qatar Re). The outlook for all ratings remains stable.
The ratings for QIC reflect its very strong risk-adjusted capitalisation, robust underwriting performance and global business diversification. Offsetting rating factors are QIC's investment concentration in Qatar and the execution risk associated with the rapid growth of group, particularly within its reinsurance arm.
QIC's risk-adjusted capitalisation remains very strong, despite considerable additional capital requirements created by the acquisition of Antares Holdings Limited (Antares) during 2014 and the rapid expansion of Qatar Re. A.M. Best expects risk-adjusted capitalisation to remain strong, benefiting from a high level of internal capital generation. Additionally, QIC's supportive shareholders provide the company with good financial flexibility.
The company has a strong track record of operational performance, with a five-year weighted average return on equity of 18.6%. Underwriting performance remained profitable in 2014, with a combined ratio of 94.4%, which reflected strong results in QIC's domestic market dampened by weak technical profitability at Qatar Re. QIC's profit for the year was QAR 1.0 billion (USD 281.8 million), although profitability remains heavily weighted toward investment income. In the first three quarters of 2015, QIC generated an operating profit of QAR 715 million (USD 196 million), with a combined ratio of 89.2%. Headwinds for regional investment markets during 2015 have weakened QIC’s investment income and resulted in QAR 382 million in unrealised losses during the first three quarters.
The acquisition of Antares and expansion of Qatar Re during 2014 produced year-on-year growth of 59%, to reach gross premiums written of QAR 5.6 billion (USD 1.5 billion). Organic growth in 2015 is expected to be approximately 20%. QIC enjoys a dominant position in the Qatari market and has a global reach, with 76% of gross premiums emanating from abroad. QIC consolidates QICI, which has a sound position in the United Arab Emirates market, Antares, which gives the group access to a portfolio of marine, casualty and aviation business written through Lloyd's, and Qatar Re, which is a global top 50 reinsurer writing an internationally diversified portfolio.
The establishment of QIC Europe Limited expands the group’s access to direct business in the European Economic Area (EEA). The rapid expansion of Qatar Re continues to represent material execution risk. Furthermore, given the changing complexity of the group, QIC has made significant improvements in group-wide risk management, incorporating capital modeling into strategic decisions and bolstering catastrophe modeling and actuarial capabilities.
The ratings for QICI and Qatar Re incorporate a strong level of support from QIC, as evidenced by a guarantee provided to both companies, as well as capital injections and an internal quota share arrangement to support business written at Qatar Re.
In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure.
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