Global insurance rating agency A M Best has affirmed the financial strength rating of 'A-(Excellent)' and the long-term issuer credit rating of “a-” of the Qatar General Insurance and Reinsurance Company (QGIRC) with "stable" outlook.
The ratings reflect the insurer's balance sheet strength, which Best categorises as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.
The insurance company'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.
The rating agency 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, 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% (2013-17), 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.
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," it said.
QGIRC writes a diverse book of business across product lines, providing conventional and Takaful cover. On a consolidated basis, it commands a strong position within its domestic market, reporting consolidated gross written premiums of QR796mn in 2017.
