Standard & Poor’s Ratings Services announced that it has raised its long-term counterparty credit and insurer financial strength ratings on Qatar-based underwriter Qatar Insurance Co. S.A.Q. (QIC) to “A” from “A-” and assigned a stable outlook.
“The upgrade is driven by QIC’s continuing dominance of the local market, as well as its growing presence across the Gulf Cooperation Council region and the resultant earnings potential for the company,” stated S&P credit analyst Jelena Bjelanovic.
S&P said: “The ratings on QIC reflect the company’s extremely strong capital adequacy, strong and established competitive position, and very strong operating performance.
“These factors are partially offset by the potential for adverse operational volatility, QIC’s very high reliance on reinsurance protection in certain lines of business, and the heavy local concentration of its investment portfolio.
“The outlook on QIC is stable, reflecting our expectations that: — QIC’s income stream will further diversify in 2006, both within the Gulf Cooperation Council region (through local branches and subsidiaries) and within the business lines it underwrites in Qatar. — Underwriting profitability will not deteriorate from the currently very strong level, and, in particular, underwriting at all current branches and subsidiaries should remain profitable. — Reinsurance utilization will remain substantial but gradually decrease, as QIC’s internal risk management expertise continues to build and the company continues to slowly move away from the fee-based, high-economic-value energy risks. — QIC will maintain a locally focused investment portfolio, although concentration risk will marginally improve year on year. The outlook does not take into account the impact of any potential M&A.”
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