A.M. Best Affirms Credit Ratings of Doha Insurance Group Q.P.S.C.

LONDON--(BUSINESS WIRE)-- A.M. Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Doha Insurance Group Q.P.S.C. (DIG) (Qatar). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect DIG’s very strong risk-adjusted capitalisation, good business profile in Qatar’s insurance market and track record of solid operating performance. An offsetting rating factor is the company’s weak, albeit improving risk management function.

DIG’s risk–adjusted capitalisation remains very strong, benefiting from low underwriting leverage, and a well-rated reinsurance panel to mitigate counterparty credit risk. Capital consumption continues to be driven by investment risk, due to the company’s material exposure to domestic equities. Nevertheless, DIG holds a sufficient level of capital and surplus to protect the company against investment market volatility. A.M. Best expects DIG to maintain strong risk-adjusted capitalisation, due to good internal capital generation, and a capital buffer that is sufficient to support its expansion outside Qatar and higher retention of underwriting risk. Additionally, DIG has an excellent liquidity position with a ratio of liquid assets to net technical reserves of 559% at year-end 2016.

During 2017, the company made a number of key changes to its senior management team, aimed at succession planning and enhancing technical capabilities. The company has an established profile in Qatar’s insurance market, where it benefits from being one of the leading national insurance companies. DIG has a well-diversified underwriting portfolio. Gross written premiums grew by 4% to QR 516 million (USD 142 million) in 2016, driven primarily by large commercial risks in property, engineering and energy lines. DIG has targeted certain lines of business over the past few years, with the intention of reducing its reliance on reinsurers and maximising profit from its underwriting operations. Consequently, premium retention has risen to 43% as of 30 June 2017, from 20% in 2013.

DIG has a track record of solid operating results, and in 2016, produced a profit of QR 73 million (USD 20 million). Underwriting profitability remains strong, highlighted by a five-year combined ratio of 82%, however, earnings remain weighted toward investment income as a result of the company’s large invested asset base. Profit for the first half of 2017 increased to QR 34 million (USD 9 million) from QR 21 million (USD 6 million) for the same period in 2016, despite underwriting returns being depressed as a result of a reserve strengthening exercise.

DIG’s risk management is considered to be a negative rating factor. At present, the company operates a silo approach to risk management, managing underwriting and credit risks independently. Whilst the company has taken initial steps to improve its risk management function, A.M. Best expects it to take time to disseminate the risk management framework into the company’s culture and decision making process.

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. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

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A.M. Best

Thomas Bateman, +44 20 7397 0329

Financial Analyst

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Mahesh Mistry, +44 20 7397 0325

Senior Director, Analytics

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Christopher Sharkey, +1-908-439-2200, ext. 5159

Manager, Public Relations

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Jim Peavy, +1-908-439-2200, ext. 5644

Director, Public Relations

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Source: A.M. Best