The ratings reflect the insurer’s balance sheet strength, which AM Best assesses as “very strong”, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.
Qatar Islamic Insurance is a takaful insurer and operates through a hybrid model, whereby the shareholders’ fund charges the policyholders’ fund (PHF) a Wakala fee based on gross written contributions (GWC) and a Mudaraba fee based on investment income.
The insurance company’s balance sheet strength is underpinned by its risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR).
The rating agency assesses the company’s risk-adjusted capitalisation on a combined basis, including its policyholders’ and shareholders’ funds, due to the strength of domestic regulation and requirement that the shareholders’ fund would have to support the PHF.
Other positive factors include the company’s track record of internal capital generation through the retention of earnings and its ability to accumulate surpluses within the PHF whilst distributing surplus back to policyholders.
In 2023, it saw capital and surplus of QR702.8mn (including QR173mn of accumulated policyholder surplus), a 0.3% year-on-year increase.
While maintaining sufficient liquidity to support its insurance operations, Qatar Islamic Insurance’s investment portfolio carries exposure to higher risk real estate assets and investments in associates, which accounted for 37.8% of its total investments as at year-end 2023.
The insurer’s operating performance as strong on robust consistent technical performance with a five-year (2019-23) weighted average combined ratio of 72%, AM Best said.
Whilst a small component of overall earnings, investment returns have continued to be positive in each of the past five years, it added.
The company has good diversification by line of business, offering a range of Shariah-compliant insurance products. In 2023, Qatar Islamic Insurance wrote GWC of QR523.5mn.
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