AM Best has affirmed the financial strength rating of A- (Excellent) and the long-term issuer credit ratings of “a-” (Excellent) of Qatar Insurance Company and its Bermudian-based subsidiary, Antares Reinsurance Company Ltd.

The outlook of these credit ratings is stable.

The ratings reflect QIC’s consolidated balance sheet strength, which AM Best assesses as very strong, as well as the group’s adequate operating performance, neutral business profile and appropriate enterprise risk management.

The ratings of Antares Re factor in its strategic importance to QIC.

The group’s balance sheet strength is underpinned by its risk-adjusted capitalisation at the strongest level, as measured by Best’s capital adequacy ratio, and is supported by good financial flexibility, a conservative investment portfolio by asset class and low reinsurance dependence.

The ratings agency said an offsetting factor is the concentration of QIC’s assets toward Qatar and the Gulf Cooperation Council countries, even though a little more than half of the group’s business is sourced from Britain, Europe and Bermuda.

AM Best said: “QIC’s underwriting results have been unprofitable and volatile during the period 2018-2022, evidenced by a five-year weighted average IFRS 4 combined ratio (including discontinued operations) of 107 per cent and a standard deviation of 6 per cent.

“Over this period, the group was negatively impacted by natural catastrophe losses and other events such as changes in the Ogden discount rate and Covid-19-related business interruption losses.

“In 2023, QIC achieved break even results on its underwriting operations, with a net/gross combined ratio of 100 per cent. Going forward, the group is expected to report improved underwriting performance as a result of corrective measures implemented by management.

“Despite historically challenging underwriting results, investment returns have helped QIC achieve positive net profits. QIC’s return-on-equity ratio improved to 10 per cent in 2023, up from its five-year (2018-2022) weighted average of 4 per cent.”

AM Best said the group is geographically well-diversified, with insurance operations in the Middle East and multi-channel international platforms under the Antares Global brand, including a Bermudian-domiciled reinsurer (Antares Re), a Lloyd’s platform (Syndicate 1274) and carriers in Europe.

The agency said the business mix has changed in recent years, with motor insurance representing a growing portion of premium in 2022. However, the group’s decision to rebalance its portfolio has resulted in materially reduced exposure to British motor business, a trend that AM Best expects to continue over the medium term.

While QIC’s ERM capabilities have steadily improved in recent years, AM Best said it believes there is room for further development in order for QIC to manage risk holistically at group level.

The appropriate ERM assessment therefore takes into account AM Best’s expectation that further steps will be taken to strengthen governance and controls, enabling more proactive ERM across the group.