AM Best Affirms Credit Ratings of Qatar General Insurance & Reinsurance Company QPSC
June 20 2024 - 12:25PM
Business Wire
AM Best has affirmed the Financial Strength Rating of B++
(Good) and the Long-Term Issuer Credit Rating of “bbb” (Good) of
Qatar General Insurance & Reinsurance Company QPSC (QGIRC)
(Qatar). The outlook of these Credit Ratings (ratings) is
negative.
The ratings reflect QGIRC’s consolidated balance sheet strength,
which AM Best assesses as very strong, as well as its adequate
operating performance, limited business profile and appropriate
enterprise risk management (ERM).
The negative outlooks reflect continued pressure on QGIRC’s ERM
and operating performance assessments. The company has reported
material unrealised losses arising from its concentrated real
estate investment portfolio, which have resulted in it reporting
net losses in three of the past five years (2019-2023).
Additionally, whilst QGIRC has taken remedial actions to strengthen
internal controls, processes and governance, AM Best views the
company’s risk management capabilities in certain key risk areas as
not yet time-tested.
QGIRC’s balance sheet strength assessment is underpinned by
risk-adjusted capitalisation at the very strong level, as measured
by Best’s Capital Adequacy Ratio (BCAR). AM Best projects the
company’s prospective risk-adjusted capitalisation to remain at
least at the very strong level, supported by internal capital
generation. QGIRC’s balance sheet is highly concentrated, with just
two real estate holdings accounting for over one third of the
company’s investment portfolio, exposing it to significant capital
volatility, which is evident by the 27.2% capital reduction in 2023
due to revaluations. Further offsetting balance sheet strength
factors include QGIRC’s high reinsurance dependence and borrowings
of a generally short duration, which expose the company to
refinancing risk.
QGIRC’s earnings have been supported by a track record of
adequate underwriting profitability, with the company generally
reporting positive technical results. However, over the past six
years (2018-2023), QGIRC has reported cumulative unrealised
investment losses of QAR 2.4 billion (of which QAR 1.3 billion was
in 2023), which have more than offset its profitable underwriting
performance. AM Best expects prospective operating results to be
supported by the company’s increased focus on selective
underwriting and a reduction in investment risk.
QGIRC has implemented robust corrective actions since governance
failures under the previous management team, which contributed to
material write-downs in asset values in recent years. However, the
ERM assessment considers AM Best’s expectation that the new
management team will continue to develop its risk management
framework and risk culture.
This press release relates to Credit Ratings that have been
published on AM 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 AM Best’s Recent Rating
Activity web page. For additional information regarding the use and
limitations of Credit Rating opinions, please view Guide to Best’s
Credit Ratings. For information on the proper use of Best’s Credit
Ratings, Best’s Performance Assessments, Best’s Preliminary Credit
Assessments and AM Best press releases, please view Guide to Proper
Use of Best’s Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and
data analytics provider specialising in the insurance industry.
Headquartered in the United States, the company does business in
over 100 countries with regional offices in London, Amsterdam,
Dubai, Hong Kong, Singapore and Mexico City. For more information,
visit www.ambest.com.
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Romeo Berti Senior Financial Analyst +44 20
7397 0267 romeo.berti@ambest.com
Christopher Sharkey Associate Director, Public
Relations +1 908 882 2310
christopher.sharkey@ambest.com
Mahesh Mistry Senior Director, Analytics +44 20
7397 0325 mahesh.mistry@ambest.com
Al Slavin Senior Public Relations Specialist +1
908 882 2318 al.slavin@ambest.com