LONDON–(ZEEST MEDIA)–AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Qatar Islamic Insurance Group Q.P.S.C. (QIIG) (Qatar). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect QIIG’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.
QIIG employs a hybrid takaful model, whereby the shareholders’ fund charges the policyholders’ fund (PHF) a Wakala fee based on gross written contributions (GWC) and a Mudarabah fee based on investment income. QIIG’s ability to accumulate surpluses within the PHF, whilst regularly distributing surplus back to policyholders, supports the sustainability of its takaful model.
QIIG’s balance sheet strength is underpinned by its risk-adjusted capitalisation, which was at the strongest level at year-end 2022, as measured by Best’s Capital Adequacy Ratio (BCAR), and is expected to remain comfortably at this level over the medium term. Supporting the balance sheet strength assessment is QIIG’s consistent demonstration of internal capital generation. In 2022, the company reported capital and surplus of QAR 456.3 million (USD 126.1 million), growing 8.3% compared with 2021 (5.7% growth when including the PHF to QAR 701.2 million [USD 193.8 million]). While maintaining sufficient liquidity to support its insurance operations, QIIG’s investments portfolio continues to carry exposure to higher risk real estate assets and investments in associates, which accounted for 40% of its total investments as at year-end 2022, albeit reducing in recent years. QIIG is moderately dependent on reinsurance, as the group cedes a high proportion of its large commercial risks.
QIIG’s ability to generate strong operating returns is demonstrated by its five-year weighted average return-on-equity ratio of 13.8% (2018-2022). Profitability is driven mainly by QIIG’s strong and stable technical results, which have generated positive returns in each of the last 10 years. The company’s earnings have been moderately supported by investment income; however, investment yields have experienced some volatility in recent years driven by fair value losses arising on real estate and the impairment of investments in associates.
QIIG holds a niche position within its domestic insurance market, as an established provider of Sharia-compliant products. In 2022, QIIG reported a 9% increase in contributions compared with 2021, writing GWC of QAR 467.3 million (USD 129.1 million). Whilst the group looks to expand its geographical presence, operations remain concentrated in Qatar, where it maintains a strong reputation benefiting from its track record of distributing surpluses back to its policyholders.
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