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 Q.S.P.C. (QIC) (Qatar), and its subsidiary, Antares Reinsurance Company Limited (Antares Re) (Bermuda). The outlook of these Credit Ratings (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 (ERM). 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 (BCAR), and is supported by good financial flexibility, a conservative investment portfolio by asset class and low reinsurance dependence. An offsetting factor is the concentration of QIC’s assets toward Qatar and the Gulf Cooperation Council countries, despite the majority of the group’s business being sourced from the United Kingdom, Europe and Bermuda. Furthermore, QIC is developing, but currently lacks, a consistent group-wide approach to reserving. Reserves are held at the best estimate, with limited buffers to absorb volatility.

QIC’s underwriting results have been unprofitable and volatile in recent years, with a five-year (2018-2022) weighted average combined ratio (including discontinued operations) of 107% and a standard deviation of 6%. Over this period, the group has been negatively impacted by natural catastrophe losses and other events such as changes in the Ogden discount rate and COVID-19-related business interruption losses. Despite negative underwriting results, robust investment returns have helped the group achieve overall profitability, evidenced by a five-year weighted average return-on-equity ratio of 4%.

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 Bermuda-domiciled reinsurer (Antares Re), a Lloyd's platform (Syndicate 1274) and carriers in Europe. The business mix has been volatile in recent years, with a growing focus on motor insurance, which reached 56% of consolidated gross written premium (GWP) in 2021. However, QIC's announcement stating its intention to divest from its Gibraltar-based carriers -- which largely write U.K. motor -- has halted this growth and resulted in a decline of motor premium to 50% of 2022 consolidated GWP, a trend that AM Best expects to continue over the medium term.

Although QIC’s ERM capabilities have improved in recent years, AM Best believes there is further development required in order for QIC to manage risk holistically at group level. Recent regulatory solvency breaches in global subsidiaries, which have since been resolved, highlight this requirement. 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.

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.

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