Best Assigns ‘B++’ Rating to Qatar General

A.M. Best Co. announced that it has assigned a financial strength rating of “B++” (Very Good) to Qatar General Insurance and Reinsurance Company (S.A.Q.) (QGIR), a Qatar-based direct insurer, with a stable outlook.

“The rating reflects the company’s superior risk-adjusted capitalisation, excellent financial performance and very good business position,” said Best. “Offsetting factors include business and investment concentration and high reliance on reinsurance cover.”

Best said it “expects QGIR to maintain superior risk-adjusted capital at year-end 2003 and 2004, supported by substantial retained earnings (a 55 percent increase in 2002 shareholders funds is anticipated by year-end 2004).” It noted, however, that QGIR cedes between 65 percent and 75 percent of gross premium income, “leaving it highly dependent upon the pricing and availability of reinsurance cover.”

The rating agency termed QGIR’s current and prospective operating performance as “excellent,” indicating that it has “reported operating profits in each of the last 10 years.” Best said that “assuming normal loss experience,” it expects the company’s combined ratio to be between 87 percent and 95 percent at year-end 2003 and 2004 (compared with 99.7 percent in 2002) “as the company cuts back on its loss making business (a motor fleet account historically written in the Dubai office).”

The company also enjoys a “very good business position within the markets in which it operates,” which Best expects it to maintain. It writes “an account that largely consists of direct energy (approximately 60 percent of gross premium income in 2003), motor (20 percent) and fire business (7 percent). The Qatari market (which accounts for 95 percent of QGIR’s business) is served by a limited number of insurers (five national companies) with no foreign competition.”

Best indicated it would continue to “closely monitor QGIR’s business position should the market be opened up to other Gulf Cooperation Council (GCC) companies in the medium term. QGIR is well positioned to take advantage of new business available as a result of increased investment in the country’s oil and gas sectors.”