A.M. 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 PJSC (QGIR) (Qatar), the operating holding company of the QGIR group. The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect QGIR’s strong risk-adjusted capitalisation, improving risk management capabilities and track record of solid operating performance. A partly offsetting rating factor is the group’s high investment concentration in Qatari real estate and equity assets.

A.M. Best expects QGIR’s prospective risk-adjusted capitalisation to remain at a strong level, supported by its large capital base, low net underwriting leverage and the good credit quality of its reinsurance panel. However, the group’s balance sheet remains heavily concentrated to real estate assets, which accounted for approximately 75% of total investments as at Sept. 30, 2016. Although QGIR’s investment policy exposes the group’s risk-adjusted capitalisation to significant volatility, its large capital buffers provide some cushion against potential investment losses. To date, QGIR has demonstrated its ability to prudently manage its investment exposures.

QGIR’s enterprise risk management practices continue to evolve in line with its risk profile. The group has strengthened its capital management capabilities by developing an internal capital model that incorporates sensitivity and scenario analysis, in order to protect its balance sheet. This has enabled the company to manage prudently its underwriting and investment exposures in recent years, and enhanced its ability to maintain sufficient liquidity to support its insurance operation.

The group’s operating performance is solid, with the bulk of profits generated from its investment activities, particularly from the substantial unrealised gains arising from the real estate portfolio. While unrealised gains are likely to reduce in the next few years, earnings are expected to remain dependent on investment income. Management actions taken to restore the technical results of QGIR and its Shari’a-compliant subsidiary, General Takaful Company W.L.L. (General Takaful), have started to materialise, as demonstrated by improvement in the positive underwriting results during 2016. A.M. Best anticipates that General Takaful will maintain its underwriting discipline as it expands.

With gross written premium of QAR million 513 million (USD 141 million) as at Sept. 30, 2016, QGIR has a good business profile domestically as a leading Qatari insurer. The company has maintained its domestic market position and achieved growth in recent years by focusing on developing its personal lines book of business. QGIR’s profile is enhanced by General Takaful, which generated QAR 231 million (USD 63 million) of gross contributions (not consolidated within QGIR’s premium) in 2015.

This press release relates to Credit Ratings that have been published on A.M. 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 A.M. 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.

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